Legislature(2001 - 2002)
04/19/2002 03:32 PM Senate RES
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ALASKA STATE LEGISLATURE
SENATE RESOURCES COMMITTEE
April 19, 2002
3:32 p.m.
MEMBERS PRESENT
Senator John Torgerson, Chair
Senator Gary Wilken, Vice Chair
Senator Robin Taylor
Senator Ben Stevens
Senator Kim Elton
MEMBERS ABSENT
Senator Rick Halford
Senator Georgianna Lincoln
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 48
Relating to federal land withdrawals.
MOVED HJR 48 OUT OF COMMITTEE
CS FOR HOUSE BILL NO. 358(CRA)
"An Act relating to an optional exemption from municipal property
taxes for certain land from which timber is harvested and for
certain improvements used in or necessary to the harvest of
timber; and providing for an effective date."
MOVED CSHB 48(CRA) OUT OF COMMITTEE
HOUSE BILL NO. 447
"An Act relating to the interest rates that may be charged on
loans by the Commercial Fishing and Agriculture Bank."
HEARD AND HELD
PREVIOUS COMMITTEE ACTION
HJR 48 - No previous action to consider.
HB 358 - See CRA minutes dated 4/8/02.
HB 447 - No previous action to consider.
WITNESS REGISTER
Ms. Judy Ohmer
Staff to Representative Pete Kott
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on HJR 48.
Mr. Jeff Jahnke, Director
Division of Forestry
Department of Natural Resources
550 W 7th Ave, Ste 1450
Anchorage AK 99501
POSITION STATEMENT: Supported HB 358.
Mr. Tim Navarre, President
Kenai Peninsula Borough Assembly
144 N. Binkey
Soldotna AK 99669
POSITION STATEMENT: Supported HB 358.
Mr. Dale Anderson
Staff to Representative Mulder
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Commented on HB 447.
Mr. Ed Crane, President
Alaska Commercial Fishing and Agriculture Bank
No address provided
POSITION STATEMENT: Supported HB 447.
Mr. Jerry Weaver, Senior Vice President
Wells Fargo Bank of Alaska N.A. and
Secretary, Alaska Bankers Association
305 W. Northern Lights Blvd.
Anchorage AK 99503
POSITION STATEMENT: Comment on HB 447.
ACTION NARRATIVE
TAPE 02-21, SIDE A
Number 001
HJR 48-TERMINATION OF FED LAND WITHDRAWALS
CHAIRMAN JOHN TORGERSON called the Senate Resources Committee
meeting to order at 3:32 pm and announced HJR 48 to be up for
consideration. Present were Senators Wilken, Stevens, Taylor,
Elton and Chairman Torgerson.
MS. JUDY OHMER, staff to Representative Pete Kott, said HJR 48
encourages Congress to amend its public lands laws to provide a
timely way to return withdrawn land to fuller public use.
Throughout much of the United states, especially the
Western states and Alaska, the federal government has
withdrawn lands for various reasons. Withdrawn lands
are then off limits to other selections and
designations such as state's right-of-ways, state
selections, mining claims, Native allotments, etc. Many
federal withdrawals were for public purposes such as
parks and refuges; others were withdrawn to give
agencies the flexibility to consider proposed uses of
the land; and still others have been withdrawn for
seeming arbitrary political purposes. When federal land
is withdrawn it is closed until the withdrawal is
remove, which in some instances requires an act of
Congress. This creates the problem where land remains
close to entry even when the original purpose for the
withdrawal has been accomplished or has lapsed.
In Alaska many of these federally withdrawn lands have
been selected by the State of Alaska in accordance with
the Alaska Statehood Act for transfer to become state-
owned lands. Some of these lands in withdrawal status
have high mineral potential that could benefit the
state's economy. Other lands were selected for access
corridors. In all cases, these state selected lands
cannot be transferred and Alaska loses opportunities.
HJR 48 requests that Congress amend our country's
public lands laws so that the land withdrawals sunset
in 10 years unless the agency responsible for managing
the land provides Congress with a justification.
HJR 48 also requests that Congress require the federal
land managing agencies to compile a comprehensive
listing of the withdrawn lands under their
jurisdictions to include (1) the exact geographical
coordinates of the withdrawals, (2) the legal authority
for the withdrawal and (3) the document establishing
the withdrawal and (4) the proposed disposition of the
affected land and file a plan with Congress within one
year defining how the withdrawals will be terminated.
This requirement would extend to all agencies in the
United States that manage public lands, as a lot of
federal departments and agencies are involved in land
management, but some are ones that wouldn't immediately
come to mind like the Post Office, the Department of
Agriculture, the Department of Defense, the Bureau of
Land Management, the National Park Service, the Fish
and Wildlife Service, etc.
CHAIRMAN TORGERSON said on page 2, line 4 that "several states"
are mentioned, but that the resolution wouldn't be sent to them.
He asked states that refers to.
MS. OHMER replied that she thought it referred to the western
states.
SENATOR WILKEN moved to pass HJR 48 from committee with
individual recommendations and the attached zero fiscal note.
There were no objections and it was so ordered.
CSHB 358(CRA)-EXEMPTION FROM PROPERTY TAX: TIMBER
CHAIRMAN TORGERSON announced CSHB 358(CRA) to be up for
consideration.
REPRESENTATIVE CHENAULT, sponsor, said that HB 358 gives
municipalities an additional tool to lower the threat of wild
fires on the spruce bark beetle killed forest land by giving the
municipalities the option of raising property taxes on roads or
other property improvements that facilitate the removal of the
beetle killed timber.
The Kenai Peninsula has about 2.2 million acres of timberland and
of that a little over 1 million acres are infested with the
spruce bark beetle. These areas have been identified as a high
fire threat with limited access to firefighting resources.
He said that the Kenai Peninsula Borough tried to adopt a
property tax and other plans as part of a beetle mitigation
effort, but it was blocked when borough attorneys found that
state law would not allow for such breaks. CSHB 358(CRA) simply
makes changes to law that would allow the Kenai Peninsula Borough
and other municipalities in a similar situation to protect them
without having to take on additional tax liabilities. It does not
mandate tax breaks but allows the option.
SENATOR ELTON said he was assuming on page 2, line 1, that the
municipalities would be the ones to determine what "at risk of
being infected by insects" means.
REPRESENTATIVE CHENAULT said that was his assumption, also.
CHAIRMAN TORGERSON said that the Kenai Borough has a forester on
staff, but the Forest Service is also right there.
SENATOR ELTON said he was assuming this problem was primarily in
the Kenai region.
CHAIRMAN TORGERSON added that the Mat-Su area was also infested.
SENATOR TAYLOR commented that language on page 1, line 10 says,
"The municipality may provide that an exemption for land under
this subsection applies only to increases in assessed value that
result from the timber harvest." He asked how the assessor in the
area would show an increase in value because the timber has been
removed.
REPRESENTATIVE CHENAULT replied that the increase would occur if
the parcel was of such a configuration that they had to build a
road into it, for instance. The road would become an improvement.
SENATOR TAYLOR said:
So, the only tax break anybody is going to get is
they're going to pay the same amount of taxes they paid
the year before or the year before that and they will
not have to pay an increased tax because they improved
the property by removing the bad timber.
REPRESENTATIVE CHENAULT replied that that was his assessment of
it.
SENATOR TAYLOR said he wanted it on the record that harvesting
timber can improve the value of property. He remarked, "A unique
concept that most people don't realize."
MR. JEFF JAHNKE, Director, Division of Forestry, Department of
Natural Resources (DNR) supported CSHB 358(CRA) and said he would
answer any question committee members might have.
MR. TIM NAVARRE, Kenai Borough Assembly, said the Assembly
supported CSHB 358(CRA) for all the reasons previously stated.
SENATOR TAYLOR moved to pass CSHB 358(CRA) from committee with
individual recommendations and its zero fiscal note. There were
no objections and it was so ordered.
HB 447-COM FISH & AGRICULTURE BANK INTEREST RATE
MR. DALE ANDERSON, staff to Representative Mulder, said that HB
447 addresses language in AS 45.45 that inhibits the ability of
the Alaska Commercial Fishing and Agriculture Bank (CFAB) from
serving its mandated purpose. He explained:
Like most states, Alaska has what is commonly called a
usury law: the limitation on the rate of interest for
certain types of loans, usually small loans. AS
45.45.010 defines a small loan as under $25,000 and
establishes a maximum annual fixed interest rate for
such loans at 5% above the Twelfth Federal Reserve
District discount rates, currently 2%.
In Alaska, conventional lending institutions, including
commercial banks and credit unions, are able to gain
exemption from state statutes by means of federal
preemption provisions. Because of CFAB's organizational
structure as a cooperative bank, it has no such option
for exemption. Subject to federal law, the organization
cannot charge too much interest. In reality a
percentage of the interest collected in excess of its
needs is given back to the borrowers. In the past the
commercial fishing community has not generated
significant demands for small loans. However, because
limited entry permits have recently begun trading in
the $20,000 - $40,000 range, there is a much greater
need for small loans.
CFAB's subjectivity to the existing statutes along with
the period of lowest financial market rates in over 20
years renders it unable to make significant numbers of
small loans to Alaskan residents, opening the potential
for a drastic shift of permit ownership demographics.
The basic purpose of HB 447 is to insure that CFAB is
able to continue serving its Alaskan member borrowers
in an efficient manner and equitably compete with other
lending institutions.
MR. ED CRANE, President, Alaska Commercial Fishing and
Agriculture Bank, said this is a simple issue from their
standpoint. He supported HB 447 and said he would answer
questions.
MR. JERRY WEAVER, Senior Vice President, Wells Fargo, and
Secretary of the Alaska Bankers' Association, said he wanted to
make a technical correction in what's been said as to whether or
not Alaska banks are subject to that statute or to the usury
limitations on loans below $25,000. The actual wording to the
1980 Federal Depository Institution Deregulatory Act basically
states that:
Interest may not be charged that is 5% above the annual
rate of interest charged member banks by the Twelfth
Federal Reserve District. However, a loan or a contract
that exceeds $25,000 is exempt from this provision.
In essence that means that the banks making loans in Alaska are
subject to the usury statute. They believe it would set a very
poor precedent to excuse one of the senior lenders in the state
from that usury standard. They don't disagree with the position
CFAB is in, in regard to limited entry permit loans, and believe
it would be useful to the state to keep the laws consistent and
add a short line to the end of HB 447 that says something like:
"money under this chapter in connection with extension of credit
using the security of limited entry permits."
MR. CRANE said he had an informal legal opinion, dated 1986, on
the Deregulatory Act of 1980 and it appears that Mr. Weaver may
be reading only part of that law. In addition, by coincidence, it
was a former senior vice president of National Bank of Alaska who
discussed this at length with him several years ago and explained
what is called "the most favored lender" doctrine and how it
applies to commercial banks in Alaska and preempts the state
usury law. The federal law that is being referred to appears to
have a limitation related to business and agricultural loans. He
noted:
Empirical evidence over the years has suggested to me
that there's some misinterpretation occurring here. The
limitations being suggested, frankly, I don't know
whether that would be any particular problem or not. I
guess I would observe that the reason CFAB seems to, at
least in my view, appear so frequently in the
legislature is because our statute, AS 44.81, has set
forth a business plan, if you will, in stone in a
sense, and we operate in a rather dynamic and evolving
industry and we have quite consistently found over the
years that things have outgrown what the statute says
and I frankly hate to see just little limitations
thrown in here and there. We're here today because of
the fact that the legislature created a platypus and we
don't fit anywhere else. At least from that standpoint,
I tend to think it's really not a good idea to throw in
some additional little limitation for CFAB. I'm not
suggesting that it would hinder us.
CHAIRMAN TORGERSON said the banking community is concerned about
the loans that they make on the last authority they give [CFAB]
for the tourism business and not having the same rules that they
do.
MR. CRANE said that some members of that community have been
happy to refer applicants to him.
CHAIRMAN TORGERSON said they would hold the bill for a legal
opinion.
MR. WEAVER responded that sounds like a very reasonable thing to
do.
CHAIRMAN TORGERSON said he didn't want just an opinion from a
banker's point of view. He wanted them to actually quote some
federal laws that they are trying to get back to.
MR. CRANE suggested checking with Representative Murkowski who
had looked into this issue at one point. The applications they
cannot entertain tend to be loans for gear or vessel
improvements.
SENATOR TAYLOR asked if he foresaw having to make loans where the
security of the limited entry permit itself might not be the
primary security that they would be looking to.
MR. CRANE replied, "Exactly."
CHAIRMAN TORGERSON said they had to check that out. There being
no further business to come before the committee, he adjourned
the meeting at 4:00 p.m.
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