HOUSE BILL NO. 168 "An Act authorizing two exchanges of land between the Alaska Railroad Corporation and the Department of Transportation and Public Facilities; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Stedman pointed out that this is the House of Representatives companion bill for SB 137, which is in Committee, but has not been heard. DAVID SCOTT, Staff to Representative Kyle Johansen, Chair, House Transportation which sponsors this bill, read from the sponsor's statement as follows. House Bill 168 would authorize the Alaska Railroad Corporation (ARRC) to exchange approximately ten acres of land with the Department of Transportation and Public Facilities (DOTPF) to accommodate two DOTPF projects. The Parks Highway Improvement project in Wasilla and the Heavy Aircraft Cargo Apron project at the Fairbanks International Airport both require an adjustment to the Alaska Railroad's track and right-of-way lands. This legislation ensures that all the appropriate titles to property can be in place for both of these important DOTPF projects. The Alaska Railroad Corporation Act, Alaska Statute 42.40.285, requires Legislative approval for the ARRC to "exchange, donate, sell or otherwise convey its entire interest in land". Mr. Scott noted that this bill was reviewed by three House Committees. Its Senate companion bill, SB 137, was reviewed by the Senate Transportation Committee. 9:17:19 AM MARY SIROKY, Special Assistant to the Commissioner, Department of Transportation and Public Facilities, identified this as an important bill to the Department. Receipt of these fee simple titles would satisfy the projects' fund sources, specifically federal agencies. 9:18:28 AM Senator Thomas understood that the land in question had originally been owned by the State. The State had conveyed it to the Railroad. Ms. Siroky affirmed. 9:18:51 AM WENDY LINDSKOOG, Assistant Vice President, Corporate Affairs, Alaska Railroad Corporation, Department of Commerce, Community and Economic Development, specified that this legislation would "clean up" matters of title as these projects move forward. Co-Chair Stedman considered the action proposed in the bill "a fairly straight forward land exchange" that would clean up the land titles. Co-Chair Hoffman asked how the expense of relocating the railroad tracks would be addressed. 9:19:52 AM Ms. Siroky pointed out that the Parks Highway track relocation project had already been completed. Co-Chair Hoffman thus asked why the title transfer for that project was being requested. Ms. Siroky communicated that when the Department began the construction process, "it entered into lease arrangements" with the ARRC. This legislation would allow the State "to get the fee simple title where it's available for the land". Co-Chair Hoffman questioned the reason for pursuing a title transfer since "the lease arrangement had been adequate" to allow for the track relocation. Ms. Siroky expressed that "it is always in the State's best interest to have fee simple title wherever possible so that we don't have to go back" and renegotiate a lease. In this case, it would be difficult to move the highway and the railroad back to its original location in the event the lease renegotiation faltered. Co-Chair Hoffman asked the cost of the lease. Ms. Siroky did not have that information and deferred to other Department of Transportation and Public Facilities (DOT) personnel. 9:21:31 AM FRAN ZIMMERMAN, Central Region, Department of Transportation and Public Facilities, testified via teleconference from an offnet location. One of the conditions of the temporary construction permit that permitted the Parks Highway project to commence was that the State would initiate the process to acquire the title. She also noted that the project was supported by federal highway funding. In response to a question from Co-Chair Hoffman, Ms. Zimmerman explained that moving the railroad tracks had been an integral component of the Parks Highway project. Co-Chair Hoffman again asked the State's cost for the right-of- way lease with ARRC. Ms. Zimmerman did not have the exact information but assured the Committee it was a "nominal fee". 9:22:49 AM JOHN BENNETT, Right-of-Way Chief, Northern Region, Department of Transportation and Public Facilities, testified via teleconference from an offnet location to speak to the Fairbanks Heavy Cargo Apron Relocation project. The right-of-entry contract the State signed with ARRC allowed DOT's contractor to enter ARRC's railroad right-of-way "and relocate it in anticipation that we will eventually transfer title". Mr. Bennett informed the Committee that this title transfer process had begun the previous year; however, the Legislature adjourned before the action could be addressed. That situation prompted the Department to enter into the right-of-entry agreement with ARRC. Mr. Bennett communicated that because the acreages being transferred were considered to be of equal value, no exchange of money would be required. He also noted that federal aviation funding would provide for the cost of relocating the rail track. Co-Chair Hoffman asked whether the land was valued in terms of acreage or dollar amount. Mr. Bennett specified that the acreages were equal, and, since the parcels were in close proximity to each other, an appraisal was not deemed necessary. The values of the land would be similar. 9:24:31 AM In response to a question from Co-Chair Stedman, Mr. Bennett affirmed the lands had not been appraised. Co-Chair Stedman asked whether not conducting an appraisal was standard operating procedure in Department right-of-way land transfers. Mr. Bennett responded in the negative. When properties are geographically distant, an appraisal would be conducted as different values would be expected. However, that is not the case with the lands in question. 9:25:21 AM PHYLISS JOHNSON, Vice President, General Counsel, Alaska Railroad, Department of Commerce, Community and Economic Development testified via teleconference from an offnet location and advised she was available to answer questions. Co-Chair Stedman asked whether she, as a representative of ARRC, deemed the value of these properties to be equal, and thus, would not warrant an appraisal. Ms. Johnson expressed that ARRC "is getting equivalent value in the sense of having an operating route covering the same stretch" from one point to another. Therefore, even were the acreage or the value to vary slightly, ARRC would consider the transfer "status quo" in that ARRC would be able to move traffic in a similar fashion as before. 9:26:22 AM Co-Chair Stedman, observing that neither of two ARRC land issues being considered by the Legislature have had appraisals done, asked whether this was the norm for ARRC. Ms. Johnson specified that both issues concerned exchanges. The land in this bill would be transferred to another State entity and thus, the land would not "be leaving the umbrella of State ownership". In addition, the land parcels were in close proximity to each other and would be "operationally very equivalent". Ms. Johnson considered ARRC's other land issue to be a "unique land transfer … it stands on its own two feet for other reasons other than an appraised value". The president of ARRC has expanded on the circumstances involved in that land transfer issue several times before the Legislature. 9:27:38 AM Co-Chair Stedman asked whether ARRC's decision not to have these parcels of land appraised was an anomaly or regular operating procedure. Ms. Johnson advised that an appraisal is conducted in the majority of ARRC's land transactions, including lease transactions. Ms. Johnson noted that an appraisal would have been conducted on the land identified in this bill were the transactions to have involved a private party rather than a State entity. Thus, this situation is an anomaly. 9:28:43 AM Co-Chair Hoffman moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. There being no objection, the HB 168 was REPORTED from Committee with previous zero fiscal note #1 from the Department of Commerce, Community and Economic Development and previous zero fiscal note #2 from the Department of Transportation and Public Facilities. AT EASE 9:29:24 AM \ 9:30:09 AM