00 CS FOR SENATE BILL NO. 97(RES) 01 "An Act relating to access roads; relating to state land; relating to contracts for the sale 02 of state land; relating to the authority of the Department of Education and Early 03 Development to dispose of state land; relating to the authority of the Department of 04 Transportation and Public Facilities to dispose of state land; relating to the authority of 05 the Department of Natural Resources over certain state land; relating to the state land 06 disposal income fund; relating to the leasing and sale of state land; relating to covenants 07 and restrictions on agricultural land; and providing for an effective date." 08 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 09  * Section 1. AS 14.07.030(a) is amended to read: 10 (a) The department may 11 (1) establish, maintain, govern, operate, discontinue, and combine area, 12 regional, and special schools; 13 (2) enter into contractual agreements with the Bureau of Indian Affairs 01 or with a school district to share boarding costs of secondary school students; 02 (3) provide for citizenship night schools when and where expedient; 03 (4) provide for the sale or other disposition of abandoned or obsolete 04 buildings and other state-owned school property; 05 (5) prescribe a classification for items of expense of school districts; 06 (6) acquire and transfer personal property, acquire real property, and 07 transfer an interest in real property according to terms, standards, and conditions  08 established by the commissioner [TO FEDERAL AGENCIES, STATE AGENCIES, 09 OR TO POLITICAL SUBDIVISIONS]; 10 (7) enter into contractual agreements with school districts to provide 11 more efficient or economical education services; reasonable fees may be charged by 12 the department to cover the costs of providing services under an agreement, including 13 costs for professional services, reproduction or printing, and mailing and distribution 14 of educational materials; 15 (8) provide for the issuance of elementary and secondary diplomas to 16 persons not in school who have completed the equivalent of an 8th or 12th grade 17 education, respectively, in accordance with standards established by the department; 18 (9) apply for, accept, and spend endowments, grants, and other private 19 money available to the state for educational purposes in accordance with AS 37.07 20 (Executive Budget Act); 21 (10) set student tuition and fees for educational and extracurricular 22 programs and services provided and schools operated by the department under the 23 provisions of (1) of this section and AS 14.07.020(a)(9), (11), and (12); 24 (11) charge fees to cover the costs of care and handling with respect to 25 the acquisition, warehousing, distribution, or transfer of donated foods; 26 (12) establish and collect fees for the rental of school facilities and for 27 other programs and services provided by the schools; 28 (13) develop a model curriculum and provide technical assistance for 29 early childhood education programs; 30 (14) notwithstanding any other provision of this title, intervene in a 31 school district to improve instructional practices under standards established by the 01 department in regulation, including directing the 02 (A) employees identified by the department to exercise 03 supervisory authority for instructional practices in the district or in a specified 04 school; 05 (B) use of appropriations under this title for distribution to a 06 district; 07 (15) notwithstanding any other provision of this title, redirect public 08 school funding under AS 14.17 appropriated for distribution to a school district, after 09 providing notice to the district and an opportunity for the district to respond, when 10 (A) necessary to contract for services to improve instructional 11 practices in the district; or 12 (B) the district has failed to take an action required by the 13 department to improve instructional practices in the district; if funding is 14 redirected under this subparagraph, the department shall provide the redirected 15 funding to the district when the department has determined that the required 16 action is satisfactorily completed. 17  * Sec. 2. AS 19.30.080 is amended to read: 18 Sec. 19.30.080. Construction standards and maintenance. An access road 19 constructed under AS 19.30.060 - 19.30.100 shall be of low standard, not necessarily 20 suitable for all weather use. The state is not under obligation to maintain an access 21 road constructed under AS 19.30.060 - 19.30.100. If an access road is constructed 22 outside a municipality that has zoning ordinances, the right-of-way width for the road 23 shall be determined by the division of lands and the Department of Transportation and 24 Public Facilities. If an access road under AS 19.30.060 - 19.30.100 is constructed 25 within the boundaries of a municipality that has zoning ordinances, the right-of-way 26 width must [SHALL] conform to the subdivision control ordinances of the 27 municipality in the same manner and to the same extent as private landowners. 28 Contracts for the work on an access road are governed by AS 36.30 (State 29 Procurement Code). 30  * Sec. 3. AS 35.20.070 is repealed and reenacted to read: 31 Sec. 35.20.070. Vacating and disposing of land; rights in land. (a) The 01 department may vacate an easement acquired for a public works purpose by executing 02 and filing a deed in the appropriate recording district. Upon filing, title to the vacated 03 rights in land inures to the underlying real property owner in the manner and 04 proportion considered equitable by the commissioner and set out in the deed. 05 (b) If the department determines that land or rights in land acquired by the 06 department are no longer necessary for public works purposes, the department may 07 (1) sell, contract to sell, lease, or exchange the land according to terms, 08 standards, and conditions established by the commissioner; or 09 (2) at the request of the commissioner of natural resources, transfer the 10 land to the Department of Natural Resources. 11 (c) Proceeds received from the sale or lease of land under this section shall be 12 credited to the funds from which the purchase of the land was made originally. 13  * Sec. 4. AS 38.04.022 is amended to read: 14 Sec. 38.04.022. State land disposal income fund. (a) The revenue from the 15 state land disposal program shall be deposited in the state land disposal income fund in 16 the state treasury. On June 30 of each fiscal year, the portion of that fund that exceeds 17 $12,000,000 [$5,000,000] shall be deposited in the state general fund. The legislature 18 may appropriate money from the state land disposal income fund for expenditure by 19 the Department of Natural Resources for necessary costs incurred by the 20 commissioner in the implementation of state land disposal programs authorized under 21 this title or for any other public purpose. 22 (b) Within five days after the legislature convenes in regular session, the 23 Department of Natural Resources shall notify the legislature that a report reflecting all 24 money deposited in the fund established under (a) of this section during the previous 25 [PRIOR] fiscal year is available. The report may include a recommendation to  26 amend the deposit limit established in (a) of this section. 27  * Sec. 5. AS 38.05.055 repealed and reenacted to read: 28 Sec. 38.05.055. Auction sale or sealed bid procedures. (a) Unless another 29 method of sale is allowed under this chapter, AS 38.08, or AS 38.09, the sale of state 30 land shall be made at public auction or by sealed bid, at the discretion of the director, 31 to the highest qualified bidder as determined by the director. The director may accept 01 bids and sell state land under this section at not less than 70 percent of the appraised 02 fair market value of the land. 03 (b) To qualify to participate under this section in a public auction or sale by 04 sealed bid of state land that is other than commercial, industrial, or agricultural land, a 05 bidder must be a resident of the state for at least one year immediately preceding the 06 date of the sale and submit proof of that fact, as the commissioner requires by 07 regulation. A bidder may be represented by an attorney or agent at a public auction. 08 (c) An aggrieved bidder may appeal to the commissioner within five days after 09 the sale for a review of the director's determination. 10 (d) The director shall conduct a sale under this section. The successful bidder 11 at a public action, or, for a sealed bid, each bidder when submitting a bid, shall 12 provide an earnest money deposit in the amount of at least five percent of the bid 13 amount. Not later than 10 days after the public auction or sale by sealed bid, the 14 director shall issue a receipt to the successful bidder. The director's receipt shall 15 contain a description of the land or property purchased, the bid price, and the amount 16 deposited. If the bidder fails to enter into a contract to purchase or defaults in the 17 payment of the bid amount, five percent of the bid amount shall be forfeited to the 18 state. 19  * Sec. 6. AS 38.05.065(a) is amended to read: 20 (a) A [THE] contract of sale for land, an interest in land, or property sold 21 under this chapter may be issued for [AT PUBLIC AUCTION OR BY SEALED 22 BID UNDER AS 38.05.055 SHALL REQUIRE] the remainder of the purchase price 23 to be paid in monthly, quarterly, or annual installments over a period of not more than 24 20 years, with interest at the rate provided in (i) of this section. Installment payments 25 plus interest shall be set on the level-payment basis. 26  * Sec. 7. AS 38.05.065(b) is amended to read: 27 (b) The contract of sale for land sold under AS 38.05.057 or under former 28 AS 38.05.078 shall require the remainder of the purchase price to be paid in monthly, 29 quarterly, or annual installments over a period of not more than 30 [20] years. 30 Installment payments plus interest shall be set on the level-payment basis. The interest 31 rate to be charged on installment payments is the rate provided in (i) of this section. 01  * Sec. 8. AS 38.05.065(c) is amended to read: 02 (c) The director shall, for contracts under (a), (b), or (h) of this section, set out 03 in the contract for each sale the period for the payment of installments and the total 04 purchase price plus interest. The director, with the consent of the commissioner, may 05 also include in contracts under this section conditions, limitations, and terms 06 considered necessary and proper to protect the interest of the state. Violations of any 07 provision of this chapter or the terms of the contract of sale subject the purchaser to 08 appropriate administrative and legal action, including but not limited to specific 09 performance, termination [FORECLOSURE], ejectment, or other legal remedies in 10 accordance with applicable state law. 11  * Sec. 9. AS 38.05.065(d) is amended to read: 12 (d) If a contract for a sale of state land has been breached, the director may 13 issue a decision to [FORECLOSE AND] terminate the contract at any time 31 days 14 after delivering by certified mail a written notice of the breach to the address of record 15 of the purchaser. A breach caused by the failure to make payments required by the 16 contract may be cured within 30 days after the notice of the breach has been received 17 by the purchaser by payment of the sum in default together with the larger of a fee of 18 $50 or five percent of the sum in default. If there are material facts in dispute between 19 the state and the purchaser, the purchaser may submit a written request for a public 20 hearing for the review of the facts within 30 days after the notice of the breach has 21 been received. 22  * Sec. 10. AS 38.05.065(e) is amended to read: 23 (e) Upon [ON] a determination that there has been a breach of the contract 24 based on the administrative record and the evidence presented at a hearing, if  25 requested, the director shall issue a decision foreclosing the interest of the purchaser 26 and terminating the contract. The obligation to make payments under the contract 27 continues through the date of the director's decision to terminate the contract 28 [FORECLOSE BY THE DIRECTOR]. 29  * Sec. 11. AS 38.05.065(f) is amended to read: 30 (f) The director shall deliver the decision to [FORECLOSE AND] terminate 31 the contract personally to the purchaser or send it certified mail, return receipt 01 requested, to the address of record of the purchaser. If the breach is a failure to make 02 payments required by the contract, the decision shall include a notice to the purchaser 03 that if within 30 days the purchaser pays to the state the full amount of the unpaid 04 contract price, including all accrued interest, and any fees assessed under (d) of this 05 section, the department shall issue to the purchaser a deed to the land. If full payment 06 is not made within 30 days or the breach is for other than failure to make payment, the 07 decision [FORECLOSES AND] terminates all legal and equitable rights the purchaser 08 has in the land. 09  * Sec. 12. AS 38.05.065 is amended by adding a new subsection to read: 10 (j) If a sale of state land is to be made by means other than a means prescribed 11 by AS 38.05.055, the director shall require a person applying to purchase land, an 12 interest in land, or property to submit an earnest money deposit of at least five percent 13 of the purchase price with the application for a contract to purchase land, an interest in 14 land, or property. This earnest money deposit shall be applied toward the purchase 15 price. If the applicant fails to enter into a contract to purchase or defaults in the 16 payment of the purchase price, five percent of the purchase price shall be forfeited to 17 the state. 18  * Sec. 13. AS 38.05 is amended by adding a new section to read: 19 Sec. 38.05.086. Leases and sales of land for commercial development. (a) 20 For purposes of stimulating economic development in the state, the commissioner may 21 lease and sell land identified in (b) of this section as appropriate for commercial 22 development. As provided in (l) of this section, if a lease is in good standing and the 23 development requirements of the lease have been satisfied, the lessee may purchase 24 the leased land. 25 (b) The department may identify land appropriate for commercial 26 development from any or all of the following categories: 27 (1) state land identified or nominated as a qualified opportunity zone 28 under 26 U.S.C. 1400Z-1 and 1400Z-2; 29 (2) state land nominated by the public; public nominations under this 30 paragraph are limited to one for each person and nominated land may not exceed 640 31 acres in size; 01 (3) any other state land the department considers appropriate for 02 commercial development. 03 (c) If land identified in (b) of this section is classified in a manner that does 04 not allow disposal of the land, the commissioner may classify or reclassify the land 05 through a classification order under AS 38.05.300 and a written decision by the 06 director under AS 38.05.035(e). 07 (d) The commissioner may open for leasing and sale certain areas of land 08 identified in (b) of this section and issue a request for proposals to develop land within 09 the areas. Before requesting proposals, a finding must be made under AS 38.05.035(e) 10 that the lease and sale of the land within the areas opened is in the best interests of the 11 state. The commissioner's request for proposals must be in writing. 12 (e) A person may apply to develop land within the areas by responding to the 13 commissioner's request for proposals and paying an application fee as provided by 14 regulation. In addition to information requested by the commissioner in the request for 15 proposals, a response to the request for proposals must include the specific 16 (1) type of commercial development proposed; and 17 (2) location, description, and size of the land requested for the 18 proposed commercial development; the size of land requested in a response to a 19 request for proposals may not exceed 20 acres and must be reasonably compact. 20 (f) The commissioner's request for proposals must be posted on the Alaska 21 Online Public Notice System (AS 44.62.175) for at least 30 consecutive days and must 22 be furnished in electronic format or by mail to each person who received notice of the 23 decision issued under AS 38.05.035(e). 24 (g) A response to the commissioner's request for proposals must be in writing 25 and submitted by the deadline set by the commissioner. The commissioner may reject 26 a proposal that does not meet the requirements of this section or for which the 27 commissioner makes a written determination that the proposal is not in the best 28 interests of the state. The commissioner's decision to reject a proposal is subject to 29 appeal or a petition for reconsideration under AS 44.37.011. 30 (h) If the commissioner determines that only one suitable proposal for a 31 specific area of land exists, the commissioner may issue a lease to that person as 01 provided in this section as long as the proposal is in the best interests of the state. If 02 the commissioner determines that there are two or more suitable proposals for the 03 same or overlapping land, the commissioner shall hold a public auction or sealed bid, 04 limited to those persons who submitted proposals for the same or overlapping land, 05 and award the lease to the highest bidder as long as the proposal of the highest bidder 06 is in the best interests of the state. 07 (i) The commissioner shall set, using a method of compensation set out in 08 AS 38.05.073(m), an annual fee for a commercial land lease under this section to 09 ensure that the state receives, for the term of the lease, a fair return for the use of the 10 land granted by the lease. 11 (j) A lease must be for a term of not more than five years. A lease in good 12 standing may be renewed for one additional five-year period. The original lessee may 13 not assign the lease during the term of the lease or any renewal without the approval of 14 the director. 15 (k) The commissioner may terminate a commercial land lease under this 16 section before the expiration of the lease for a breach of the terms of the lease, 17 including a failure to use the land in a manner required by the lease. Upon expiration 18 of the term of a lease or the termination of the lease before expiration, improvements 19 to or personal property on the land subject to the lease shall be managed in the manner 20 required by AS 38.05.090. 21 (l) At any time during the term of the lease, a lessee in good standing may 22 submit an application to the department to purchase all or a portion of the land leased 23 under this section for its fair market value at the time of purchase. A lessee is eligible 24 to purchase the land if the lessee 25 (1) has completed the development requirements of the land leased 26 consistent with the proposal submitted under (g) of this section and as provided by the 27 terms of the lease; 28 (2) has appraised and surveyed the site in a manner acceptable to the 29 department, at the lessee's expense; and 30 (3) pays an application fee as provided by regulation. 31 (m) An eligible lessee under (l) of this section may apply the amount of the 01 lease payments made under the lease to the purchase price of the land. Other amounts 02 paid, including fees, penalties, survey costs, and appraisal costs, may not be applied to 03 the purchase price of the land. 04 (n) If an application to purchase land under (l) of this section is denied, the 05 lessee may continue to hold the lease according to the terms of the lease and may 06 reapply to purchase the land. A subsequent application to purchase the land must 07 address the reasons the previous application was denied. 08 (o) The commissioner shall adopt regulations under AS 44.62 (Administrative 09 Procedure Act) to implement this section. Regulations adopted under this subsection 10 must, at a minimum, address 11 (1) the application procedures for a commercial land lease or sale 12 under this section; 13 (2) the auction or sealed bid process to be used, if necessary, under (h) 14 of this section; 15 (3) the terms and conditions that may be included in a commercial land 16 lease under this section; 17 (4) the method for resolving competitive bidding disputes and issues; 18 (5) the procedure for requesting proposals; 19 (6) the criteria for assessing proposals; and 20 (7) any administrative fees. 21  * Sec. 14. AS 38.05.321(a) is amended to read: 22 (a) The department shall include in a document that conveys state land 23 classified as agricultural land 24 (1) a perpetual covenant for the benefit of all Alaska residents and 25 running with the land that restricts or limits the use of the land for agricultural 26 purposes, including,  27 (A) for parcels larger than 20 acres,  28 (i) the production, storage, and sale of plants and  29 animals for commercial or personal use;  30 (ii) the construction of housing for landowners and  31 farm laborers, improvements for animals, or improvements that  01 are reasonably required for or related to agricultural use;  02 (iii) the use of gravel reasonably required or related  03 to agricultural production on the parcel; and  04 (iv) removal and disposition of timber for the  05 purpose of bringing agricultural land into use; or  06 (B) for parcels of 20 acres or less,  07 (i) uses authorized under (A) of this paragraph;  08 (ii) uses related to vertically integrated agricultural  09 processing and production;  10 (iii) uses related to commercial support services for  11 the agricultural industry; and  12 (iv) other agriculture-related purposes approved by  13 the department; and 14 (2) one of the following, as appropriate: 15 (A) a perpetual covenant for the benefit of all Alaska residents 16 and running with the land permitting the owner of land that had been obtained 17 under homestead entry to subdivide and convey the land in parcels of not less 18 than 20 [40] acres each; [OR] 19 (B) a perpetual covenant for the benefit of all Alaska residents 20 and running with the land permitting the owner of land that had been obtained 21 by purchase to subdivide and convey not more than eight [FOUR] parcels of 22 the land of not less than 20 [40] acres each, subject to the restriction that a 23 subdivided parcel may not be further subdivided; or  24 (C) a perpetual covenant for the benefit of all Alaska  25 residents and running with the land permitting the owner of land to  26 convey the land in parcels of 20 acres or less if the land was originally  27 conveyed by the department in a parcel of 20 acres or less and subject to  28 the restriction that a subdivided parcel may not be further subdivided. 29  * Sec. 15. AS 38.05.321(d) is amended to read: 30 (d) For state land classified as agricultural land that is conveyed under (a) of 31 this section, 01 (1) the commissioner may require the landowner to cooperate with the 02 appropriate soil and water conservation district under AS 41.10 in the development 03 and implementation of soil conservation plans as authorized by AS 41.10.110(6); 04 (2) as a condition of the conveyance, the commissioner may not 05 require preparation and implementation of a schedule of planned agricultural 06 development or a farm development plan specified in a land purchase contract unless 07 the commissioner permits modification of a plan in cases of economic hardship or 08 other extenuating circumstances; 09 (3) the commissioner may not 10 (A) limit the right of the landowner to use the land and 11 improvements for purposes that are [INCIDENTAL TO AND] not inconsistent 12 with and do not limit the primary use of the land for agricultural purposes as  13 described in (a)(1) of this section; 14 (B) except as provided by (i) of this section, limit the right of a 15 landowner to construct housing for the landowner and farm laborers, to 16 construct improvements for animals, or to construct improvements that are 17 reasonably required for or related to agricultural use on the original parcel and 18 on additional subdivided parcels, not to exceed the limits and restrictions set by 19 (a)(2) of this section; and 20 (C) limit the right of the landowner to subdivide and convey 21 the land if the resulting parcels are not in violation of the limits and restrictions 22 set out in (a)(2) of this section. 23  * Sec. 16. AS 38.05.965 is amended by adding a new paragraph to read: 24 (29) "public auction" means a public oral outcry auction or a public 25 online auction. 26  * Sec. 17. AS 38.05.321(j) is repealed. 27  * Sec. 18. This Act takes effect immediately under AS 01.10.070(c).