02/13/2024 01:30 PM Senate TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| SB105 | |
| SB199 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 105 | TELECONFERENCED | |
| *+ | SB 199 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
9ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
February 13, 2024
1:34 p.m.
MEMBERS PRESENT
Senator James Kaufman, Chair
Senator David Wilson, Vice Chair
Senator Löki Tobin
Senator Jesse Kiehl
Senator Robert Myers
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 105
"An Act authorizing the Alaska Railroad Corporation to issue
revenue bonds to finance the replacement of the Alaska Railroad
Corporation's passenger dock and related terminal facility in
Seward, Alaska; and providing for an effective date."
- HEARD & HELD
SENATE BILL NO. 199
"An Act relating to access roads; relating to state land;
relating to contracts for the sale of state land; relating to
the authority of the Department of Education and Early
Development to dispose of state land; relating to the authority
of the Department of Transportation and Public Facilities to
dispose of state land; relating to the authority of the
Department of Natural Resources over certain state land;
relating to the state land disposal income fund; relating to the
sale and lease of state land; relating to covenants and
restrictions on agricultural land; and providing for an
effective date."
- HEARD & HELD
PREVIOUS COMMITTEE ACTION
BILL: SB 105
SHORT TITLE: RAILROAD CORP. FINANCING
SPONSOR(s): TRANSPORTATION
03/15/23 (S) READ THE FIRST TIME - REFERRALS
03/15/23 (S) TRA, FIN
03/21/23 (S) TRA AT 1:30 PM BUTROVICH 205
03/21/23 (S) <Bill Hearing Canceled>
02/13/24 (S) TRA AT 1:30 PM BUTROVICH 205
BILL: SB 199
SHORT TITLE: STATE LAND: DISPOSAL/SALE/LEASE/RESTRICT
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
01/22/24 (S) READ THE FIRST TIME - REFERRALS
01/22/24 (S) TRA, RES, FIN
02/13/24 (S) TRA AT 1:30 PM BUTROVICH 205
WITNESS REGISTER
EMMA TORKELSON, Staff
Senator James Kaufman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Explained the summary of changes for SB 105
on behalf of the Senate Transportation Standing Committee.
EDISON WALLACE-MOYER, intern
Senator James Kaufman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented the sectional analysis for SB 105
on behalf of the Senate Transportation Standing Committee.
BILL O'LEARY, President and CEO
Alaska Railroad Corporation
Anchorage, Alaska
POSITION STATEMENT: Gave a presentation on SB 105.
PRESTON CARNAHAN, Regional Vice President of Destinations
Royal Caribbean Group
Seattle, Washington
POSITION STATEMENT: Answered questions on SB 105.
KAT SORENSON, Executive Director
Seward Chamber of Commerce
Seward, Alaska
POSITION STATEMENT: Gave invited testimony on SB 105.
TOM TOUGAS, Owner
Major Marine Tours
Seward, Alaska
POSITION STATEMENT: Gave invited testimony on SB 105.
JILLIAN SIMPSON, President and CEO
Alaska Travel Industry Association
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 105.
JOSH HOWES, President
Premier Alaska Tours
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 105.
BRENT GOODRUM, Deputy Commissioner
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Introduced SB 199 on behalf of the
administration.
RACHEL LONGACRE, Chief of Operations
Division of Mining, Land and Water (DMLW)
Department of Natural Resources (DNR)
Anchorage, Alaska
POSITION STATEMENT: Gave a presentation on SB 199.
HEATHER O'CLARAY, Chief,
Statewide Right-of-Way
Department of Transportation (DOT)
Juneau, Alaska
POSITION STATEMENT: Answered questions on SB 199.
MARGARET STERN, Director,
Programs and Communications
Susitna River Coalition
Talkeetna, Alaska
POSITION STATEMENT: Testified in opposition to SB 199.
ACTION NARRATIVE
1:34:59 PM
CHAIR JAMES KAUFMAN called the Senate Transportation Standing
Committee meeting to order at 1:34 p.m. Present at the call to
order were Senators Wilson, Tobin, Kiehl, Myers, and Chair
Kaufman.
SB 105-RAILROAD CORP. FINANCING
1:35:56 PM
CHAIR KAUFMAN announced the consideration of SENATE BILL NO. 105
"An Act authorizing the Alaska Railroad Corporation to issue
revenue bonds to finance the replacement of the Alaska Railroad
Corporation's passenger dock and related terminal facility in
Seward, Alaska; and providing for an effective date."
He said this is the first hearing of SB 105 in the Senate
Transportation Committee
1:36:10 PM
CHAIR KAUFMAN noted that the Alaska Railroad Corporation (ARRC)
requested a committee substitute for SB 105.
1:36:18 PM
CHAIR KAUFMAN solicited a motion from the committee.
1:36:22 PM
SENATOR WILSON moved to adopt the committee substitute (CS) for
SB 105, work order 33-LS0606\B, as the working document.
1:36:34 PM
CHAIR KAUFMAN objected for purposes of discussion.
1:36:45 PM
EMMA TORKELSON, staff, Senator James Kaufman, Alaska State
Legislature, Juneau, Alaska, explained the summary of changes
for SB 105:
[Original punctuation provided.]
SB 105 Explanation of Changes, Version A to B
"An Act authorizing the Alaska Railroad Corporation to
issue revenue bonds to finance the replacement of the
Alaska Railroad Corporation's passenger dock and
related terminal facility in Seward, Alaska; and
providing for an effective date."
Section 1. Page 1, Line 5: Reduces the amount of
bonding authority the Railroad is requesting from $150
million to $135 million.
1:37:19 PM
CHAIR KAUFMAN removed his objection. He found no further
objection and CSSB 105 was adopted as the working document.
1:37:48 PM
EDISON WALLACE-MOYER, Intern, Senator James Kaufman, Alaska
State Legislature, Juneau, Alaska, read from the following
sponsor statement:
Sponsor Statement for SB 105 Bill Version B
"An Act authorizing the Alaska Railroad Corporation to
issue revenue bonds to finance the replacement of the
Alaska Railroad Corporation's passenger dock and
related terminal facility in Seward, Alaska; and
providing for an effective date."
The Alaska Railroad Corporation (ARRC) owns and
operates a passenger dock and an associated intermodal
terminal facility in Seward, Alaska. These facilities
serve cruise ships, other passenger and freight
vessels; and provide cruise ship passengers who help
support Southcentral Alaska's economy.
The current port in Seward was built in 1966 and is
now past its design life expectancy. Until the dock
can be replaced, weight restrictions have been imposed
to ensure the dock can still be used safely. Further
degradation of the dock will lead to increased
restrictions, placing limits both on the people coming
through Seward and the revenue they bring with them.
The railroad, along with their longtime cruise
partner, Royal Caribbean Group, have developed a plan
for the Seward Port that will ensure maximum use of
the port long into the future.
Senate Bill 105 will allow the Alaska Railroad
Corporation to pursue the replacement and expansion of
the port by authorizing the Railroad to issue an
additional $75 million in revenue bonds in addition to
$60 million the legislature authorized in 2022. This
will allow the railroad to issue up to a total of $135
million in revenue bonds for the Seward dock
replacement project. The railroad is looking to
finalize their construction plans and timeline this
year which makes the passage of this bill within this
session a priority. Once the dock is functioning, it
will be a guaranteed source of revenue for the
railroad, Seward and the surrounding area for many
years to come.
Per the railroad statutes, the state will not be
liable for any of these bonds.
1:39:47 PM
MS. WALLACE-MOYER read the sectional analysis for SB 105:
[Original punctuation provided.]
Sectional Analysis for SB 105 Bill Version B
"An Act authorizing the Alaska Railroad Corporation to
issue revenue bonds to finance the replacement of the
Alaska Railroad Corporation's passenger dock and
related terminal facility in Seward, Alaska; and
providing for an effective date."
Section 1. Authorizes the Alaska Railroad Corporation
to issue an additional $75 million (not exceeding a
total $135 million) in revenue bonds to finance the
replacement of ARRC's passenger dock and related
terminal facility in Seward, Alaska.
Section 2. Sets an immediate effective date.
1:40:23 PM
CHAIR KAUFMAN announced a presentation by ARRC and the Royal
Caribbean Group.
1:40:54 PM
BILL O'LEARY, President and CEO, Alaska Railroad Corporation,
Anchorage, Alaska, began the presentation on SB 105, titled
"Seward Passenger Dock & Terminal Replacement Project" by the
Alaska Railroad and the Royal Caribbean Group. He moved to slide
1:
[Original punctuation provided.]
Alaska
Railroad
Seward Passenger Dock & Terminal Replacement Project
Senate Transportation Committee
Bill O'Leary, President & CEO, Alaska Railroad
Corporation
Preston Carnahan, Regional Vice President,
Destinations
February 13, 20
MR. O'LEARY expressed appreciation for the opportunity to speak
in support of SB 105. He noted the legislative approval for the
$60 million bond authorization in 2022 and that this discussion
is about the additional increment to "make this project a
reality."
1:42:14 PM
MR. O'LEARY moved to slide 2:
[Original punctuation provided.]
NEED FOR REPLACEMENT
• Current Seward dock facility is rapidly approaching
end of useful life
• Seward cruise port is critical infrastructure for
Alaska's travel industry: 188,124 passengers cruised
to or from Seward in 2023, many adding on travels in
Southcentral and Interior
1:43:11 PM
MR. O'LEARY moved to slide 3:
[Original punctuation provided.]
FUNDING & TIMELINE
2022: $60 million in bond authorization approved
2024: Requesting additional $75 million bond
authorization Fall
Fall 2025: Construction begins Spring
Spring 2026: New dock and terminal complete
Bonds issued by ARRC are not a liability of the state,
and no state dollars will be used for repayment; ARRC
bonds will be secured by a long-term use agreement
with anchor tenant Royal Caribbean Group.
The new dock and terminal facility will support the
next 50 years of industry growth and visitor demand.
MR. O'LEARY explained that the project partners: the Alaska
Railroad (the owner), the Seward Company (the developer) and
Royal Caribbean Group (the prime customer/anchor tenant) took a
"strategic pause" to come together to develop the scope, the
model and the financing plan for the project. He noted the
request for bond authorization was reduced from $90 million in
2023 to $75 million through that planning. The total request is
for a $135 million bond authorization. The plan of finance
includes issuing tax exempt debt and an infusion of equity from
the Alaska Railroad for a total $137 million project.
MR. O'LEARY expressed excitement on behalf of the Alaska
Railroad and emphasized that the request is time sensitive
because the facility is planned to be operational for the 2026
cruise season. He stated that approval of the bond authorization
would need to occur this session. He emphasized that bonds, by
statute, are not obligations of the state of Alaska nor can any
state dollars be used to secure or pay the debt service.
1:46:41 PM
SENATOR WILSON commented that the plan seems to be an aggressive
construction time schedule. He asked if contractors and
materials have been sourced. He expressed concern about the
current supply chain and related construction challenges.
1:47:21 PM
MR. O'LEARY suggested deferring the question to Preston
Carnahan; and observed that the current plan is to work with a
contractor well versed in dock construction and materials
sourcing. Once financing is in place, that contractor can move
forward to execute the plan.
1:48:06 PM
PRESTON CARNAHAN, Regional Vice President of Destinations, Royal
Caribbean Group, Seattle, Washington, said infrastructure
remains a key component of the state's economic engine; the
Seward Dock Replacement Project solves one of the challenges to
the infrastructure at a crucial time. He opined that the
railroads operation of the port is in everyone's best interest.
Royal Caribbean sees strong demand in Alaska for the cross-gulf
product from Vancouver to Seward as well, which also benefits
Alaskan owned businesses. He said Royal Caribbean is a strong,
capable, and responsive partner.
1:50:16 PM
SENATOR KIEHL asked for details on the plan to structure the
debt for the project.
1:50:37 PM
MR. O'LEARY answered that a port user agreement between ARRC and
Royal Caribbean Group has not yet been finalized. The term of
the agreement and the term of the bonds are expected to be 30
years. He said rates are unknown at this point.
1:51:19 PM
MR. CARNAHAN explained that an agreement with ARRC will be
reached based on a commitment by Royal Caribbean to produce a
specific number of passengers or a set level of revenue that is
in line with the debt structure. The level of commitment is
based on 2530-year projections based on current market trends
for travelers and for interest rates.
1:52:15 PM
SENATOR KIEHL asked for clarification about the owners of "The
Seward Company".
MR. CARNAHAN answered that "The Seward Company" is a purpose-
built (financial) vessel that is owned by Turnagain Marine
Construction. Royal Caribbean considers itself to be a
development partner in The Seward Company; the owner is
Turnagain.
1:53:03 PM
SENATOR TOBIN asked why the request to raise revenue is limited
to $75 million. She suggested that it might be advantageous to
continue to raise revenue bonds and add assets in the future.
She also asked what would happen in 50 years, and if 50 years is
the projected life span for the new dock.
MR. O'LEARY answered that the request to raise bonds applies
only to the specific project currently proposed. Requests for
similar funding approval for future projects will be specific to
those projects. He affirmed that 50 years is the projected life
span of the assets being constructed; plans and proposals will
likely follow the same request for authorization.
1:54:40 PM
SENATOR KIEHL asked for clarification of ARRC's equity stake in
the proposal.
MR. O'LEARY answered that ARRC's equity in the project is the
cash ARRC is putting into the project. ARRC is investing $30
million into the project; and the remaining $107 million will be
financed through debt:
$137 million Project
$30 million ARRC cash investment
$107 million, financed through debt
He explained that financing the $135 million debt through bond
authorization will provide flexibility when considering
financing factors, such as interest rates, risk profile and debt
structure options. The timing of financing could happen anytime
between bond authorization approval and completion of
construction and will allow for optimizing the financing
factors. The project is not expected to exceed $135 million, and
they would not borrow more than they need.
1:56:45 PM
SENATOR KIEHL asked for clarification of ARRC's equity expressed
in percentage.
MR. O'LEARY explained that out of the $137 million project, $30
million would be ARRC cash, and the rest would be railroad bonds
to pay for the $137 million project cost. At the end of the
loan, ARRC will own and operate the terminal and the pier.
1:57:29 PM
SENATOR KIEHL said he understands the plan but is trying to
clarify the amount ARRC will invest, and the amount needed for
financing the project.
MR. O'LEARY explained the plan is to put $30 million of railroad
cash toward the project, allowing for flexibility for the
financing. He explained the benefit of flexibility is to
optimize the terms and conditions of the final loan.
1:58:54 PM
MR. O'LEARY moved to slide 4 and slide 5: overhead views
depicting the existing dock and pier and the proposed dock,
pier, terminal buildings and parking area.
1:59:53 PM
SENATOR TOBIN asked about the impact of the proposed pier on
boats that use the neighboring dock.
MR. O'LEARY answered that the neighboring dock had been there
since 1966 with significant use and there is no expectation that
the new facility will impact it.
2:00:45 PM
CHAIR KAUFMAN asked if the slides represent a mature design
plan. He asked if the design is near final, and ready to
execute.
MR. CARNAHAN explained this design is specifically for the
cruise industry in Alaska. The design is a proven design, a
purpose-built Alaska design like projects in Hoonah, and Ward
Cove that have floating facilities; but improved to allow the
ships to turn around. He described the plan as advanced, well
thought out and close to final.
2:02:03 PM
CHAIR KAUFMAN asked if all the geophysical work on site is
complete.
MR. CARNAHAN explained that the construction contractor could
speak specifically to that, but they have experience with
similar marine work in the Seward area. This design reflects
their experience with the challenges of the area.
2:02:38 PM
CHAIR KAUFMAN expressed appreciation for the design specific to
Seward.
2:02:45 PM
SENATOR KIEHL described having observed significant sediment
disturbed by a ship executing a turn in the bay. He asked if the
cost of dredging is built into these plans and if that would be
part of the project financing.
MR. O'LEARY answered that dredging is included in the project
plan and future dredging would be contemplated in the user
agreement between Royal Caribbean Group and ARRC.
2:04:11 PM
CHAIR KAUFMAN announced invited testimony on SB 105.
2:04:42 PM
KAT SORENSON, Executive Director, Seward Chamber of Commerce,
Seward, Alaska, introduced herself as the Seward City Manager
and noted the Seward Mayor, Vice Mayor and entire city council
are in strong support of SB 105. She explained that SB 105
represents a crucial investment in the future of the Seward
community and the future economic prosperity of the state. She
highlighted the value of the project to the community as it will
provide:
• welcoming facility for cruise passengers and local
residents
• well-designed space for year-round community use
• shore power infrastructure, allowing for a large rate payer
to participate in the locally owned electric utility,
easing the burden for small community rate payers, and
contributing to overall energy sustainability for the
community
• stable long-term employment opportunities with ARRC
2:07:20 PM
TOM TOUGAS, Owner, Major Marine Tours, Seward, Alaska, explained
that the need to replace the current dock is critical to the
community of Seward, the interior and to the state. Seward
serves the tour industry in the summer and is an important
marine repair hub with longshoremen working year-round. He
emphasized the important economic ripple effect of the Seward
Dock to Seward and statewide. He further emphasized that the
dock is a 50-year asset affecting the rail belt from Seward to
Anchorage and on through to Fairbanks and there is no option but
to do this work.
2:10:06 PM
CHAIR KAUFMAN opened public testimony on SB 105.
2:10:24 PM
JILLIAN SIMPSON, President and CEO, Alaska Travel Industry
Association, Anchorage, Alaska, testified in support of SB 105.
She testified that Alaska Travel Industry Association (ATIA)
supports transportation initiatives that enhance and support
tourism opportunities and improve visitor industry access. She
explained that the Seward dock is a vital piece of
infrastructure for most of Alaska's visitors. She noted ATIA
found that 2022 direct spending on goods and services by
visitors throughout the state came to $3.9 billion. Last year
the state saw 1.6 million cruise ship passengers and they
represent 60% of summer visitation. Of those passengers, 1/3 of
them are on ships that visit South Central and travel
extensively in the state. This does not include the cost of a
cruise or transportation to get to or from Alaska. This spending
supports local economies in all 5 regions of the state. ATIA
supports the infrastructure investment in the Seward dock and
passenger terminal as it will provide statewide benefits to
Alaska's communities and small businesses.
2:12:35 PM
JOSH HOWES, President, Premier Alaska Tours, Anchorage, Alaska,
testified in support of SB 105. He testified that continuous
investment in infrastructure is critical to maintain a
competitive position with cruise destinations around the world.
The Seward dock and passenger facility is a critical component
of that infrastructure. He explained that one of the most
important advantages of the Seward project is that the Seward
dock will be available to other cruise lines and not exclusive
to Royal Caribbean. He said that his company moves over 100,000
guests and books over 200,000 hotel rooms and employs over 750
employees. The cruise ship industry is a heavily competitive
environment. This specific project, owned by ARRC, will keep
this facility open for competition among cruise lines, and will
serve all visiting cruise lines, not just Royal Caribbean. He
emphasized that this project is long overdue and urged
expeditious passage of the bill.
2:15:39 PM
CHAIR KAUFMAN closed public testimony on SB 105.
2:15:50 PM
SENATOR KIEHL asked if the new design for the Seward dock and
passenger facility allowed for increased security if greater
security measures become necessary.
MR. CARNAHAN answered that the security aspect starting point
will be as it exists today. The design change from fixed to
floating dock does not change the security aspect of the dock
design. The new terminal design incorporates the security
standards required by the Coast Guard and other security aspects
of business conducted at the facility.
2:17:53 PM
CHAIR KAUFMAN held SB 105 in committee.
2:18:10 PM
At ease
SB 199-STATE LAND: DISPOSAL/SALE/LEASE/RESTRICT
2:19:53 PM
CHAIR KAUFMAN reconvened the meeting and announced the
consideration of SENATE BILL NO. 199 "An Act relating to access
roads; relating to state land; relating to contracts for the
sale of state land; relating to the authority of the Department
of Education and Early Development to dispose of state land;
relating to the authority of the Department of Transportation
and Public Facilities to dispose of state land; relating to the
authority of the Department of Natural Resources over certain
state land; relating to the state land disposal income fund;
relating to the sale and lease of state land; relating to
covenants and restrictions on agricultural land; and providing
for an effective date."
2:20:17 PM
BRENT GOODRUM, Deputy Commissioner, Department of Natural
Resources (DNR), introduced SB 199 on behalf of the
administration:
[Original punctuation provided.]
• Thank you for the opportunity to present some opening
remarks for SB 199 on State Land Disposals
• As you may know the State of Alaska manages over 100
million acres of uplands, and another 65 million acres
of tidelands, all belonging to the people of Alaska.
• The legislation soon to be presented to you in SB 199
would serve to help cut bureaucratic red tape, create
flexibility and responsiveness within State
Departments and open additional opportunities to put
our state's lands to work for everyday Alaskans.
2:21:03 PM
At a very high level the bill will serve to:
o Streamline Land Transfer functions from the State
of Alaska that would enable Dept of
Transportation & Public Facilities and Dept of
Education and Early Development to directly
transfer land no longer needed for their original
purpose to private parties thus reducing
bureaucratic administration and sometimes
confusing multi-agency efforts.
o The bill will also work to create Flexible
Leasing Requirements that will allow the
Department to best decide when surveys are
necessary for long-term leases to support
applicants' needs and potentially lowers costs
for lessees.
o It will further Incorporate Adaptable Road
Standards that allow for more economical pioneer
road standards for land access and aligns right-
of-way widths with municipal zoning.
o SB 199 will also provide necessary Financial
Support for Development of State lands in
preparation for sale to Alaskans as well as
extend the contract terms of State Land sales to
30 years.
o The Legislation will also help facilitate
Commercial Land Sales by introducing a new
statute for commercial land leasing and sales and
lastly, will enable expanded agricultural use to
be inclusive of activities such as bed and
breakfast operations to help offset agricultural
development costs.
• This is an important piece of legislation that can
serve to help create new opportunities in making
Alaskan's lands open to everyday Alaskans.
2:22:54 PM
RACHEL LONGACRE, Chief of Operations, Division of Mining, Land
and Water (DMLW), Department of Natural Resources (DNR),
Anchorage, Alaska, moved to slide 2 and began a presentation on
SB 199. She thanked the committee for inviting her to present on
Senate Bill 199 for state land disposals, sales, and leases. She
said Senate Bill 199 would authorize the Department of Education
and Early Development and the Department of Transportation and
Public Facilities to directly dispose of surface land rather
than transferring land to the Department of Natural Resources
(DNR) for conveyance. It also increases the cap on the land
disposal income fund, updates and improves provisions relating
to DNR's land disposal procedures, broadens agricultural
incidental uses, and adds a new statute relating to leases and
sales of land for commercial development.
SB 199 State Land:
Disposal/Sale/Lease/Restrict:
[Original punctuation provided.]
Overview
• Authorize the Department of Education & Early
Development (DEED) and the Department of
Transportation & Public Facilities (DOT&PF) to
directly dispose of surface land, rather than
transferring land to the Department of Natural
Resources (DNR) for conveyance
• Increase the cap on the Land Disposal Income Fund
(LDIF)
• Update and improve provisions relating to DNR's
land disposal procedures in AS 19.30, AS 38.04,
AS 38.05
• Amends agricultural use restrictions
• Add a new statute relating to leases and sales of
land for commercial development
2:23:51 PM
MS. LONGACRE moved to slide 3:
[Original punctuation provided.]
Authority for Direct Disposal of State Land
• Proposed amendments allow the Department of
Education and Early Development (amending AS
14.07.030) and Department of Transportation &
Public Facilities (amending AS 35.20.070) to sell
land directly to private parties
- Streamlining land disposals, reducing multi-
agency involvement
- Expanding eligible recipients beyond federal,
state agencies, and political subdivisions
She said Section 1 amends the Department of Education and Early
Development's authority under Alaska Statute 14.07.030. The
amendment would streamline the disposal process by removing the
multi-agency process where currently the Department of Education
transfers title to DNR for this conveyance. This amendment would
eliminate the need for DNR to include any restrictions that may
be attached by DNR statutes in the process. The requirements may
be inconsistent with our sister agencies' needs. This change
would expand eligible recipients beyond just federal and state
agencies and political subdivisions. Department of Education and
Early Development (DEED) would still need to comply with Article
VIII, Section 10 of the Alaska Constitution for Public Notice
and Article IV, Section 6 of the Alaska Constitution for Public
Purpose if and when it disposes of any real property.
MS LONGACRE said Section 3 repeals and reenacts the Department
of Transportation and Public Facilities' authority under AS
35.20.070. Similarly, this amendment would streamline the
disposal process by removing the multi-agency factor by
eliminating the need for DNR to include any restrictions that
may be required by DNR statute. The amendment would still allow
DOT to transfer land to DNR if they felt that it fit their need.
If SB 199 becomes law, DOT would have direct disposal authority
for lands that it obtained for public facility projects but
where the lands are no longer needed for such a project. DOT's
current disposal regulations would still apply. These sections
would also be within public notice requirements under the
Constitution.
2:25:34 PM
MS. LONGACRE moved to slide 4 and continued her presentation:
[Original punctuation provided.]
Land Disposal Income Fund (LDIF)
• The LDIF holds deposits from the state land disposal
program
• Under current law, the portion of the fund in excess
of $5 million is to be deposited in the state
general fund
• The bill raises state land disposal income fund cap
from $5 million to $12 million
• Boosts spending authority for larger projects
• Addresses inflation since 2000; cap unchanged for 20
years
• Adjustment to funding cap, not appropriation
• Department can request limit increase in annual
report
MS. LONGACRE said the Department of Natural Resources (DNR) has
several land sale opportunities. The department holds an annual
land sale auction where 200 to 220 parcels were offered to
Alaska residents. The department holds over-the-counter sales,
agricultural sales, direct non-competitive land sales, and
remote recreational land offerings, which have been occurring
since the 1960s.
MS. LONGACRE said one of the proposed amendments is to increase
the land disposal income fund (LDIF) limit to $12 million to
bolster the fund balance, facilitating the department's efforts
in land development and disposal while accounting for inflation
since its inception in 2000. Section 4 proposes an amendment to
AS 38.04.022 to raise the LDIF cap. Concerns over a minimal fund
balance resulting from fiscal sweeps, revenue expenditure
disparities, and escalating land development costs underscored
the necessity for this increase.
The Department of Natural Resources (DNR) is closely monitoring
the fund while adjusting general fund expenses, including core
costs. Elevating the cap is an initial measure to sustain the
fund's effectiveness in supporting multi-year, large-scale
development projects. The capital authority for subdivision
improvements operates across multiple fiscal years with vigilant
oversight of contractual agreements to prevent revenue
shortfalls. However, funding constraints could hinder land
preparation for future land sales. This request is not for an
appropriation; it is a request for a higher fund balance for
land sale receipts. This LDIF supports both the Division of
Mining, Land, and Water as well as the Division of Agriculture.
2:27:27 PM
MS. LONGACRE moved to slide 5:
[Original punctuation provided.]
Agricultural Land Lease and Sale Procedures
• Amendment to AS 38.05.321 allows broader use of
agricultural land and improvements
• Currently an agricultural landowner can only use
the land for purposes that are incidental to and
not inconsistent with agricultural land
• Proposed amendment would now allow an
agricultural landowner to use land for purposes
that are consistent with and do not interfere
with the primary purpose
MS. LONGACRE said SB 199 proposes amendments to existing
statutes to broaden the scope of agricultural activities beyond
primary use, enabling ancillary endeavors such as bed and
breakfast operations to supplement and alleviate agricultural
development expenses. While preserving agricultural land for its
intended purpose is crucial, the finite availability of such
land underscores the need for flexibility. Granting the director
greater discretion and permitting diverse economic activities
within agricultural enterprises could foster a more robust
economic framework for agricultural sectors.
2:28:02 PM
MS. LONGACRE moved to slide 6:
[Original punctuation provided.]
Access Road Construction
• Amends AS 19.30.080 to specify that access roads
to surface disposals may be developed at a pioneer
standard
- Clarifying language on right-of-way widths within
municipal boundaries
- Align with municipal zoning requirements as
private developers
MS. LONGACRE said SB 199 proposes amendments to AS 19.30.080,
allowing access roads to adhere to pioneer standards instead of
mandating all-weather, all-season roads. Additionally, it
mandates that rights of way align with municipal zoning
requirements without necessarily necessitating a higher
standard. The Department of Natural Resources (DNR) would be
held to the same standard imposed on private citizens and other
land developers.
2:28:35 PM
MS. LONGACRE moved to slide 7:
[Original punctuation provided.]
Land Sale Procedures
• Land sale disposal contracts
- Longer purchase terms from 20 years to 30 years
- Consistency in terms from "Foreclosure" to
"Terminatio
- Allows for paid in full purchase when existing
infrastructure would increase liability of
financing a land sale purchase contract
MS. LONGACRE said SB 199 clarifies the requirements for earnest
money deposits on contracts and contract terminations while
extending the maximum contract term from 20 years to 30 years.
She noted that by replacing the word "foreclosure" with
"termination," the terminology is made more consistent, aligning
with administrative processes rather than banking terms. She
added that it introduces a definition for public auction, paving
the way for online auctions. While traditional DNR sale methods
like outcry auctions, lotteries, over the counter, and direct
sales will persist, the definition of public auction enhances
the structure of online platforms.
MS. LONGACRE explained SB 199 also allows for a best interest
finding to determine that a paid-in-full purchase price could be
required on parcels where the property value exceeds $10,000 and
includes any liability that the state would need to transfer.
2:29:42 PM
MS. LONGACRE moved to slide 8:
[Original punctuation provided.]
Survey Requirements for Leases
• Discretion of cadastral surveys for long-term leases
- Survey could be required where infrastructure
boundaries or access management is in the best
interest of the state
- Reduces the financial and administrative burden on
industries
- Industry is challenged by current requirements
• Ex: Renewable energy projects, grazing leases
MS. LONGACRE stated SB 199 proposes several amendments aimed at
streamlining processes and reducing barriers to development on
state land. It would grant the commissioner, through a best
interest finding, the option under AS 38.04.045(b) to determine
the necessity of a cadastral survey, providing flexibility while
maintaining state oversight. The bill eliminates the
requirements for surveys of long-term leases (10+ years). This
change acknowledges that surveys and appraisals for leases
exceeding 10 years can pose significant hurdles for industries
seeking land development, particularly in sectors such as
grazing, renewable energies, and agricultural uses. These
requirements not only deter development but also incur
prohibitive costs, especially for industries with extensive land
needs. Therefore, these amendments aim to promote economic
growth by reducing unnecessary administrative burdens and
expenses associated with land development processes.
2:30:51 PM
MS. LONGACRE moved to slide 9:
[Original punctuation provided.]
Land for Commercial Development
• Stimulate economic development
• Offers land for leasing, and sale, by requesting
proposals
o For state land identified or nominated as a
Qualified Opportunity Zone
o For state land nominated by the public
• Land nominated cannot exceed 640 acres
o For any other state land the commissioner deems
appropriate for commercial development
• Nominated land may need to be reclassified
square4 Provide additional public notice beyond
normal AS 38.05.945
MS. LONGACRE explained SB 199 creates a new statute providing
for the disposal of state lands deemed suitable for commercial
development through a lease-to-sale program. To implement the
new commercial leasing disposal program, the department will
need to evaluate land nominations, identify land offering areas,
and prepare documents relating to planning and classification or
reclassification of lands to be offered. The department will
prepare best interest findings under AS 38.05.035, complete
title due diligence and title report issuance, and provide
appraisals of the land under AS 38.05.840. This commercial
development opportunity would be a new program for the division
and has been requested. It would be advantageous to consider
land sales beyond just residential land transfers.
2:31:50 PM
MS. LONGACRE moved to slide 10 and provided the sectional
analysis for SB 199:
[Original punctuation provided.]
Sectional Analysis
Senate Bill 199 State Land:
Disposal/Sale/Lease/Restrict (33-GS2634\A)
Section 1 - Amends AS 14.07.030(a) pertaining to the
powers and duties of the Department of Education and
Early Development (DEED), allowing them to dispose of
land directly to a private party rather than just to
federal agencies, state agencies, and political
subdivisions. Under current practice, DEED transfers
land to the Department of Natural Resources (DNR) for
disposal of the parcel in compliance with DNR's
procedures detailed in AS 38, the Alaska Land Act.
Section 2 - Amends AS 19.30.080 pertaining to
construction standards and maintenance of state access
roads. The amendments allow for access roads
constructed under AS 19.30.060-19.30.100 (pertaining
to providing access to state land that is programmed
for surface disposal, and to provide access roads at
the lowest possible cost) to be of low standard and
not necessarily suitable for all weather used. The
amendments would clarify that where an access road to
state land intended for disposal is constructed within
the boundaries of a municipality, the right-of-way
width must conform to the municipality's zoning
requirements to the same extent as private landowners.
Section 3 - Repeals and reenacts AS 35.20.070
(vacating and disposing of land; rights in land),
relating to Department of Transportation & Public
Facilities (DOT&PF) authority to vacate or dispose of
land. Currently, AS 35.20.070 only permits DOT&PF to
transfer such land to DNR for disposal. The reenacted
section would allow DOT&PF to dispose of land to a
third party directly, according to the terms,
standards, and conditions established by the DOT&PF
commissioner. Such land could still be transferred to
DNR for disposal, if requested by DNR. This amendment
will streamline the disposal process and reduce multi-
agency efforts.
2:33:41 PM
SENATOR KIEHL asked what volumes of land would be subject to
disposal with passage of these changes to DOT statutes.
MS. LONGACRE answered that she would not be the subject matter
expert to speak to the inventories of lands for disposal that
DOT has, or the volume, but reiterated this is for their public
facilities. She deferred to DOTPF representative.
2:34:36 PM
CHAIR KAUFMAN called on Ms. O'Claray.
2:34:48 PM
HEATHER O'CLARAY, Statewide Right-of-Way Chief, Department of
Transportation (DOT), Juneau, Alaska, explained that (SB 199)
pertains to a very small subset of property managed by DOTPF.
DOTPF maintains approximately 827 public facilities. She stated
offhand she does not know how many were acquired or constructed
under the authorities that are being amended in SB 199 under AS
35.
2:35:56 PM
SENATOR KIEHL referred to SB 199, Section 4(b) and asked whether
selling land or transferring it to DNR takes priority when DOTPF
decides to dispose of land.
MS. LONGACRE answered that those decisions are made on a case-
by-case basis.
2:36:46 PM
SENATOR KIEHL noted that what SB 199 contemplates is that the
Commissioner of DNR is requesting land, which he surmised would
be infrequent.
2:36:56 PM
MS. LONGACRE described the Telephone Hill transaction as one
example which would have been less cumbersome to complete with
legislation like SB 199 in place.
2:37:49 PM
SENATOR KIEHL maintained his position that situations when DNR
requests land from DOTPF are infrequent and ones where the state
should give preference.
2:38:23 PM
SENATOR TOBIN referring to Section B, subsection 1, described
lands between Ingra and Gambel which were assumed by DOTPF for a
large-scale project and currently being held. She said that
under this section, those lands could be sold to private
industries or potential companies by conditions established by
the commissioner. She asserted that sales of that type by
regulation would allow for public input, reducing community
injustice and harm. She asked for further explanation of why the
commissioner should establish the terms, standards and
conditions and not regulation.
2:39:18 PM
MS. LONGACRE deferred to Ms. O'Claray.
2:39:24 PM
MS. O'CLARAY said she could not speak to that specific example,
but in general, properties acquired under AS 19 are highways and
not affected by SB 199.
2:39:56 PM
SENATOR TOBIN asked why the transaction would take place under
conditions prescribed by the commissioner and not by regulation.
SENATOR TOBIN repeated her question, pointing to SB 199
Explanation of Changes, Version A to B, page 4, line 11, which
describes conditions (for transfer of property) established by
the commissioner. She asked why the transaction in question
would not take place under a regulatory process allowing
community input.
2:40:56 PM
MS. O'CLARAY answered that the language of SB 199 is modeled
after existing authorities in AS 2 and AS 19, respectively for
airports and highways, or prior existing language in AS 35. She
affirmed that it is a good question and opined that conditions
established by the commissioner could be by regulation, and
within the power and duty of the commissioner. She explained
that there are existing regulations under 17 AAC that generally
address disposal of properties, but they are not specific to
facilities, which SB 199 seeks to amend.
2:41:47 PM
SENATOR TOBIN referred to the fiscal notes for SB 199. She
pointed out that there is no line item for regulation
propagation. She said this leads her to suspect that there is no
provision for public process, particularly for fiscal note OMB
Component 3002.
2:42:08 PM
SENATOR WILSON asked that the committee be provided with the
acreage of DOTPF land, as a follow up to Senator Kiehl's
questions.
MS. O'CLARAY explained that DOTPF doesn't have figures for the
acreage involved. The records do not specify how DOTPF acquired
property. Property acquired for highways and airports would be
excluded. Not all property was acquired under AS 35. When a
property is identified for disposal, it is researched at that
time, and it is a very small percentage of the property owned
and managed by DOTPF.
2:43:04 PM
SENATOR WILSON asserted that he would expect DOTPF to have
records and be aware of the lot sizes and value of the land for
the 127 public facilities it manages.
2:43:32 PM
CHAIR KAUFMAN requested that DOTPF provide acreage and value
information to the committee.
2:43:56 PM
MS. LONGACRE moved to slide 11 and continued presenting the
sectional analysis of SB 199:
[Original punctuation provided.]
Section 4 - Amends AS 38.04.022 pertaining to the
state land disposal income fund. Currently under
subsection (a), the portion of the fund that exceeds
$5,000,000 must be deposited in the state general
fund. This bill would raise that amount to
$12,000,000. This would increase spending authority
from the fund for higher development, multi-year
projects. The increase would also offset inflation
since the fund was established in 2000. The $5 million
cap has not been adjusted in nearly 25 years. This
would be an adjustment to the funding cap, not an
increase in appropriation. Under subsection (b), the
department is granted discretion to request an
increase of the deposit limit in its annual
statutorily required report to the Legislature.
Section 5 - Amends AS 38.04.045(b) to remove long-term
leases under AS 38.05.070 from the requirement to
accomplish an official cadastral survey. Currently, AS
38.04.045, the statute relating to survey and
subdivision, requires that a survey be completed for a
long-term lease, which is defined in statute as a term
over ten years.
Section 6 - Adds a new subsection (c) to AS 38.05.045
to provide that the DNR commissioner may require an
official cadastral survey under .045(b) before the
issuance of a long-term lease under AS 38.05.070.
Section 7 - Repeals and reenacts AS 38.05.055, which
establishes public auction or sealed bid as the
default methods for sale of state land. The re-enacted
version divides this section into four subsections to
improve readability. Each sealed bidder is required to
submit an earnest money deposit of five percent of the
bid amount, and bidders who fail to enter into a
contract to purchase, or default in the payment of the
bid amount, will forfeit the deposit.
2:46:03 PM
MS. LONGACRE moved through slide 12 and 13 and continued
presenting the sectional analysis:
[Original punctuation provided.]
Section 8 - Amends AS 38.05.065(a) to a longer term of
30 years. This longer term allows for lower monthly
payments to better assist in higher value purchases.
Sections 9 12 - Amend AS 38.05.065(c), (d), (e), and
(f) to replace the word "foreclosure" with
"termination". Foreclosures are an instrument of
financial institutions rather than state agencies.
Section 13 14 - Amend AS 38.05.065(h) for
consistency pertaining to contracts for state land
disposals. New subsections (j) and (k) require an
earnest money deposit by persons applying to purchase
land by means other than public auction or sealed bid.
The earnest money requirement in cases of auction or
bid is addressed in AS 38.05.055, as amended by the
bill. The new subsections would apply a similar
earnest money requirement to applicants for other
methods of purchasing land under AS 38.05. The
commissioner may, upon a best interest finding,
determine that the purchase price for a parcel of land
with existing improvements valued at greater than
$10,000 must be paid in full within 120 days of
closing.
Section 15 - Amends AS 38.05 by adding a new section
AS 38.05.086 pertaining to leases and sales of land
for commercial development. The new statute supports
commercial or industrial development of state land
nominated and assessed by the state as appropriate for
commercial development. Land could also be nominated
by the public. The statute includes a process for
requesting proposals from prospective lessees,
accepting bids, and then entering into a contract to
lease. This statute allows the lessee to apply to
purchase the leased land at any time during the term
of the lease if the department determines the lessee
has used the land for commercial development
consistent with their proposal. The new section also
requires notice to Native Corporation stakeholders.
Section 16 - Amends AS 38.05.321(d) to allow uses on
conveyed agricultural land that are not inconsistent
with and do not limit its use for agricultural
purposes. Currently, AS 38.05.321(d) prohibits the
commissioner of DNR from limiting use of such land for
purposes incidental to and not inconsistent with
agricultural purposes. This section would eliminate
the requirement that uses be incidental to
agricultural purposes.
Section 17 - Amends AS 38.05.965 to add the definition
of "public auction" to expressly include online
auctions in addition to oral outcry auctions.
Section 18 - Repeals AS 38.05.065(b), regarding the
contract of sale for land sold under AS 38.05.057 and
the terms of installment payments. This is a
conforming amendment to account for the changes made
under section 13 of the bill.
Section 19 Provides an immediate effective date
under AS 01.10.090(c).
2:49:24 PM
MS. LONGACRE moved to slide 14:
[Original punctuation provided.]
Fiscal Note
• FY 2025 $655.4 (5 positions)
• Two Permanent Full-Time Natural Resource
Specialists 3
• Two Permanent Full-Time Natural Resource
Specialist 2
• One Permanent Full-Time Appraiser 1
- These positions will support timely adjudication
of the expanded Land Sales with Commercial
Development program applications.
• FY 2026-2030 $630.4 annually
She explained that SB 199 creates a new statute providing for
the disposal of land suitable for commercial development for a
lease to sale program. To implement the program, DNR will need
to:
• evaluate land nominations
• identify land offering areas
• prepare documents relating to planning and classification
and reclassification of lands to be offered
• prepare best interest findings under AS 38.05.035(b)
• do title due diligence and title report issuance
2:50:11 PM
SENATOR WILSON asked whether DNR has acquired any additional
lands over the past five to ten years.
MS. LONGACRE answered that Alaska is consistently working with
federal agencies to transfer lands that are owed to the state.
She asked for clarification of the question.
2:50:40 PM
SENATOR WILSON asked for a comprehensive plan or explanation of
expectations for future acquisition and disposal of state lands.
MS. LONGACRE explained that the land sales program has been in
place since the 1960s. Our lands are constantly adjusting based
on community needs; area plans determine which land is available
for settlement and those fluctuate. The expectation is that the
program will continue. This is reflected in the request for an
increased cap for the land disposal income fund so the state can
look toward the development of higher valued parcels for
Alaskans.
2:52:05 PM
SENATOR WILSON asked whether these land sales are only for
Alaskans.
MS. LONGACRE answered that the annual land sales auction is
offered to Alaska residents first. If the land is not purchased
through auction, then the state may offer the land over the
counter, which is available to anyone, including international
purchasers.
2:52:32 PM
SENATOR MYERS asked whether more out-of-state sales are
anticipated with the advent of on-line auctions.
MS. LONGACRE answered that the terminology and definition for an
online auction would allow for having an exclusive online
auction. The state is moving toward exclusively offering online
auctions because of low turn-out for in-person auctions.
2:53:22 PM
SENATOR KIEHL asked if SB 199, Section 15 includes an Alaskan
preference or limitation.
MS. LONGACRE answered that there is not an Alaskan preference or
limitation in the statute. It has been determined that in the
same way that it is in the state's best interest to create
production of agricultural land as quickly as possible through
land sales, commercial development would benefit Alaskans.
2:54:06 PM
SENATOR KIEHL referred to an example of maritime culture
regulation and asked whether regulations have been "fixed" to
allow for flexibility in use of agricultural lands, for example
allowing for tours or demonstrations of the land use.
MS. LONGACRE answered that she will follow up with the committee
on that.
2:54:56 PM
SENATOR KIEHL described a change to mariculture regulation and
suggested it might be a "good fix" for similar land use
regulation.
2:55:03 PM
SENATOR MYERS asked for further explanation, with regard to the
qualified opportunity zone, what it is and how it relates to the
purpose of SB 199.
MS. LONGACRE explained that there was an effort by the federal
government to create economic opportunity zones. The Department
of Community and Economic Development determined where the State
of Alaska and the federal government overlap in their assessment
of those areas. The intent is to promote commercial development
in those zones.
2:56:08 PM
SENATOR MYERS asked whether there would be potential tax breaks
involved.
MS. LONGACRE affirmed there would be.
2:56:21 PM
SENATOR MYERS expressed concern about taking land that may not
have significant use, designating it as commercial, and then not
having that land used for commercial ventures for a time. That
land then is not creating revenue for the state and would
potentially increase the tax base, with road maintenance, etc.
He asked if the state examined the potential tax impact for
neighboring property owners.
MS. LONGACRE explained the commercial activity would occur under
the bid proposal and also under the lease. The assessment of the
lease and the commercial activity for the community could be
evaluated prior to the property being offered for sale.
2:58:00 PM
CHAIR KAUFMAN opened public testimony on SB 199.
2:58:29 PM
MARGARET STERN, Programs and Communications Director, Susitna
River Coalition, Talkeetna, Alaska, testified in opposition to
SB 199. She said SB 199 needs more scrutiny and is not ready to
be enacted, particularly the sections pertaining to access roads
and commercial land leasing.
2:59:33 PM
CHAIR KAUFMAN closed public testimony.
3:00:11 PM
SENATOR TOBIN expressed concern about a Knik Arm bridge coming
through communities she represents. The area is designated an
economic opportunity zone and there is land that has been taken
by DOT, particularly an asset on Government Hill. She asked how
this bill will affect communities in District 5.
MS. LONGACRE stated her belief that the commercial lease to sale
program would serve communities well and would not be a
detriment. She then described the process that occurs before a
sale and provided an example.
3:02:21 PM
SENATOR TOBIN expressed appreciation and that she has
reservations and concerns about this process. There is no
language in SB 199 supporting a robust public process. She said
she would like to continue the conversation outside the
committee to discuss the impact on the communities of Government
Hill and Fairview.
MS. LONGACRE replied that, with respect to the example of
Government Hill and Fairview, SB 199 would only apply to state
settlement land and she would be happy to show where there is
settlement land that is available for this commercial lease to
sale program.
3:03:10 PM
SENATOR KIEHL asked about the increase in the land development
income fund, which is "subject to the [end-of-fiscal-year
constitutional budget reserve] sweep." He asked how DNR
processes that money and handles its obligation at the end of
each fiscal year to protect it from meeting the 3/4 vote. He
said he would like to see how it works on the department's
annual schedule.
He also asked whether the change from "foreclose" to "terminate"
is appropriate and suggested the change could create issues.
MS. LONGACRE replied that the "clean up" of the language in SB
199 reflects that the land sales contract results in the equity
for the title to the land being transferred overnight. There is
no earned equity. It is a long-term purchase agreement. So
"terminating" the contract is more appropriate than using a
banking term such as "foreclosure" that would apply to a
mortgage.
3:05:15 PM
CHAIR KAUFMAN held SB 199 in committee.
3:05:55 PM
There being no further business to come before the committee,
Chair Kaufman adjourned the Senate Transportation Standing
Committee meeting at 3:05 p.m.