Legislature(2015 - 2016)BUTROVICH 205
04/13/2016 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| HCR17 | |
| HB216 | |
| HB274 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 216 | TELECONFERENCED | |
| + | HB 274 | TELECONFERENCED | |
| + | HCR 17 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 274-STATE LAND; EXCHANGES; LEASE EXTENSIONS
4:17:13 PM
CHAIR GIESSEL announced consideration of HB 274 [CSHB 274(RES),
version 29-LS0234\N, was before the committee.]
REPRESENTATIVE CATHY MUÑOZ, Alaska State Legislature, Juneau,
Alaska, sponsor of HB 274 said about four or five years ago she
was contacted by a local non-profit who had been working for
many years on a potential land exchange with the State of
Alaska. The state wanted to acquire the trail land that leads
out to a state park that is on private property, and the owner
of the trail wanted a piece of nearby land to get better access
to their camp. Discussions to try to initiate and finalize this
land exchange began in early 2000.
REPRESENTATIVE MUNOZ said when she became involved she found a
number of inefficiencies in land exchange statute. Two sections
of code govern land exchanges; one is land exchanges with
municipalities, and that section of code works pretty well, and
the other is private land exchanges, which is very cumbersome
and almost impossible to finalize a successful land exchange
under.
The section of code that governs private land exchanges includes
private entities, the Mental Health Trust Authority, tribal
entities as well as the federal government. The last successful
land exchange under this section of code happened in 2006 near
Skagway where a piece of state land was exchanged for a piece of
federal land near Gustavus for the Falls Creek Hydroproject.
That took close to 20 years to finalize.
REPRESENTATIVE MUNOZ explained that the reason it takes so long
is because one needs to have exact value between the two
parcels, which is very difficult to achieve, and the fact that
the appraisal is only good for one year. So, after going through
an extensive public process, the best interest finding, three
public hearings, the surveying and the appraisal, at the end of
the one year the whole process has to start over because the
appraisal is only good for one year. Under this legislation the
best interest finding will continue, but instead of exact value,
it calls for approximate equal value. It has the same notice
provisions under AS 38.05.945 and best interest finding
provisions that are used for all oil and gas leases, timber
sales, and leasing of mineral land.
4:21:26 PM
HB 274 has language that affirms that a mineral estate can only
be executed consistent with the State Constitution or with
federal law. In particular the Statehood Act, Section (6)(i),
affirms that the state can only convey a mineral estate to the
federal government. Other language requires the exchange to go
before the legislature for review and approval if the exchange
has a value of $5 million or more.
REPRESENTATIVE MUNOZ summarized that the main changes in HB 274
are that the exchange procedures will follow AS 38.05.035(e) and
the notice provisions under AS 35.05.945. The one-year
limitation has been removed on the validity of an appraisal and
approximate equal value is used instead of exact value for the
potential exchanges.
4:22:59 PM
CHAIR GIESSEL asked for a sectional analysis.
4:23:07 PM
CRYSTAL KOENEMAN, staff to Representative Muñoz, Alaska State
Legislature, provided a sectional analysis of HB 274 as follows:
Section 1. Removes a reference in AS 38.05.030(c) to AS
38.05.090 which is repealed in sec. 13 of the bill.
Section 2. Adds two new subsections to AS 38.05.070. The first
subsection permits the Department of Natural Resources
(department) to extend certain existing land leases if it is in
the best interest of the state and necessary while the
department considers applications. The second subsection
provides that the extensions are not subject to AS 38.05.035(e)
and it requires public notice of a lease extension under the
section.
Section 3. Applies existing notice standards to state land
exchanges.
4:24:13 PM
Section 4. Clarifies that in AS 38.05 the terms "state land ''
and "land" include shoreland and tideland. It was suggested by
Legislative Legal Division as cleanup language.
Section 5. Amends AS 38.50.010 to add two new requirements: when
the director disposes of state land or an interest in state land
the disposal must be in the best interest of the state and the
director must provide notice under AS 38.05.945.
Section 6. Adds three new subsections to AS 38.50.010 that
establish procedures for the exchange of state land or an
interest in state land and requires legislative review of
exchanges valued at $5 million or more.
4:25:11 PM
Section 7. Removes a requirement that the director, when
negotiating a land exchange involving more than one party,
"consider only the land and other consideration which the state
would convey and receive if the exchange were executed."
Section 8. Removes an existing limitation in AS 38.50.050 that
was deemed by the Legislative Legal Division to not add anything
and references "significant public purpose" which is not defined
in statute nor is it used anywhere else and there is no case law
referencing it. It is clean up language clarifies that any
conveyances must be authorized by the Constitution of the State
of Alaska and by applicable federal law.
Section 9. Amends AS 38.50.070 to provide that, unless waived,
the appropriate state agency will continue to administer valid
existing rights in land, or interests in land, conveyed under AS
38.50 and that revenue derived from existing rights in the land,
or an interest in land, will continue to accrue to the state
until the land is conveyed under AS 38.50 .150
4:26:42 PM
Section 10. Changes the requirement that the director hold three
public hearings concerning the exchange of land valued at more
than $5,000,000 to a requirement that the director hold at least
two public meeting, one of which must be held in person in a
municipality close to the proposed land exchange.
Section 11. Conforms AS 38.50.140 to changes made in secs. 6 and
13 (repeal of AS 38.50.020). Makes de minimus editorial changes.
Section 12. Clarifies that in AS 38.50 the terms "state land ''
and "land" include shoreland and tideland and was recommended by
Legislative Legal.
4:27:39 PM
Section 13. Repeals AS 38.50.020, 38.50.040, 38.50.080(b),
38.50.090, 38.50.100, 38.50.110, 38.50.120(b), and 38.50.130.
She said an explanation was in their packets, but she would go
over those if that was the committee's will.
4:28:06 PM
SENATOR STEDMAN asked for clarification of references to
"submerged lands below mean low tide and tidelands up to mean
high tide" and "in-shoreland."
MS. KOENEMAN said that Alpheus Bullard from Legislative Legal
was on line to clarify.
SENATOR STEDMAN asked Mr. Bullard to define "shoreland,
tideland, and submerged land."
4:28:57 PM
ALPHEUS BULLARD, Legislative Legal, Alaska State Legislature,
Juneau, Alaska, answered that shoreland and tideland don't have
a specific definition in statute. These changes are included in
this bill to make all the provisions consistent. So, instead of
calling "shore or tide," now they say "shoreland and tideland."
The normal understanding of those words is that shoreland is
along the shore and tideland is land that is touched by the
tide.
SENATOR STEDMAN said he wanted some help from DNR, because he
thought there was a clear delineation of separate property
rights whether one is in the uplands or shoreland versus a
tideland versus submerged lands.
CHAIR GIESSEL said that could be done.
REPRESENTATIVE MUNOZ interrupted that that Ms. Koenaman would
read the definition into the record.
MS. KOENEMAN read from AS 38.05.965, subsection (23):
Shoreland means land belonging to the state, which is
covered by non-tidal water that is navigable under the
laws of the United States up to ordinary high water
mark as modified by accretion, erosion or election.
4:30:58 PM
SENATOR WIELECHOWSKI asked if "when it is in the best interest
of the state" on line 5 in section 5 is an appealable decision,
and if it is subject to a lawsuit and if there are any
recommendations on how the department is supposed to define what
is in the best interest of the state.
REPRESENTATIVE MUNOZ replied that the best interest finding is
necessary and is outlined in statute. That same finding is used
on all existing land lease deals with DNR. It is an appealable
decision. That was affirmed by Wyn Menefee, Deputy Director,
Alaska Mental Health Lands Trust, Department of Natural
Resources (DNR), who was also in the audience.
SENATOR WIELECHOWSKI said line 8 looks like a very significant
change, but he was told it is not. It says the director has the
right to dispose of state land or interest in land and then
language is added: including the land estate, the mineral estate
or both. And when they start talking about mineral estate that
means oil and gas, which triggers a lot of strong emotions in
this committee. He asked her to explain the rationale for
including mineral estate and to reassure him they are not giving
the director the ability to give away oil and gas rights to a
private individual.
REPRESENTATIVE MUNOZ replied that an exchange of a mineral
estate can only be conveyed by the state to the federal
government and the section 8 language is consistent with
existing statute. It says "exchanges must be pursuant to the
State Constitution and applicable federal law, which is the
Statehood Act, Section (6)(i), which requires the state not to
dispose of those interests to any entity other than the federal
government." However, the state can receive a mineral estate and
having that language is helpful in clarifying that.
SENATOR WIELECHOWSKI said it looks like language on page 3,
lines 10-14, deletes: "exchanges shall be for the purpose of
consolidating state land holdings, creating land ownership, and
use patterns, which will permit more effective administration of
the state public domain, facilitating the objectives of state
programs or other public purposes." He asked the rationale for
taking that out.
REPRESENTATIVE MUNOZ replied that language is considered
superfluous. The department is focusing on just five or six
categories, when in fact there might be a broader opportunity
which is covered through the best interest finding. The state
would not enter into an exchange unless it clearly was in the
state's best interest.
4:34:35 PM
SENATOR WIELECHOWSKI asked the rationale for the repealer in
section 13.38.50.080(b) that says:
The director in implementing the provisions of this
chapter may not alienate or agree not to exercise
selection rights granted to the state in the Alaska
Statehood Act or other applicable law authorizing the
state to select land or interest in land.
MS. KOENEMAN replied that the state has already selected all of
its land under the Alaska Statehood Act, and since it has no
further ability to select land, that subsection is no longer
necessary. She added that the state hasn't necessarily received
the selections.
CHAIR GIESSEL pointed out that it is actually explained on a
page in the document, which is on BASIS.
SENATOR WIELECHOWSKI asked for the rationale for removing AS
38.50.090 language on coordinating with other state agencies.
MS. KOENEMAN replied that language was removed, because there is
now reference to AS 38.05.035(e), which includes a requirement
for state agencies to provide a summary through public comments.
The department would collect those public comments from the
other agencies and work with the other departments on their
concerns. Basically, it ties back to another version of statute.
4:37:08 PM
WYN MENEFEE, Deputy Director, Alaska Mental Health Trust Land
Office, Department of Natural Resources (DNR), Juneau, Alaska,
said he was chief of operations for the Division of Mining, Land
and Water for 12.5 years and this issue is very important to DNR
as they have had "much trouble" getting exchanges done, because
of existing language.
Many needs are coming before them, he said, everything from
consolidation of land ownership and access to business
opportunities where a lease or an easement doesn't handle the
problem, and numerous people have been turned away.
He said the department disposes of a huge amount of state
interests through AS 38.05.035(e) decisions, which are
appealable and can be taken to court. If they do something that
is not in the best interest of the state, the public surely can
challenge them. The department needs a very supportable decision
if they are going to go through with an exchange, but they
believe that can be done with this modification.
SENATOR WIELECHOWSKI asked him to provide some exchanges he
would consider doing under this language that have not been
considered before.
MR. MENEFEE answered that there have been proposed exchanges
from native corporations and private individuals for purposes
that were wholly for their purposes and weren't in the interest
of the state, at all. Those were easy to turn away. But others
offer up something that would be very beneficial to the state,
for instance creating a landownership pattern or maybe a mineral
estate offering that would be good for miners to develop, or
maybe the state has been wanting to do work on some sort of
project and hasn't been able to without the land. He has seen
exchanges proposed for conservation purposes and development
purposes, but only a few have been successful.
He explained that because of the decision process in AS
38.05.133(e) the department has to describe why it is in the
best interest of the state to do an exchange. They have to
articulate the analysis of things they have considered and what
it will do for the state that is good.
SENATOR WIELECHOWSKI asked what deference the court would give
to the best interest finding.
MR. MENEFEE answered that there is a lot of case law on state
best interest, and the court does not replace its judgment for
the department's as long as it is not acting capriciously and
arbitrarily. They look at whether the statutes and regulations
have been followed and if a logical train of thought was used in
explaining why it is in the best interest of the state. The
courts have said they don't want to define "best interest,"
because it changes over time.
4:43:05 PM
SENATOR WIELECHOWSKI said this measure really is investing a
huge amount of power in the DNR director and commissioner, and
maybe it would be good and maybe not. The courts have very
little say about the arbitrary and capricious standard and it is
"extremely difficult" to overcome. He asked if opening up a
whole lot of land for exchanges is a big policy call.
MR. MENEFEE responded that he thinks there will be plenty of
opportunities for land exchanges. He didn't think it opens up
anything more grandiose than before other than the process is
cleaner. The department still must make sound defensible
decisions and the public can challenge their decisions. The
courts have told them numerous times when they have gone astray;
so he feels the system has a check and balance.
SENATOR WIELECHOWSKI said it doesn't appear that they are
changing any legal standards that a court would look at as
diminishing the public process.
4:45:18 PM
MR. MENEFEE agreed with that and added the only exception is
that "hearings" was changed to "meetings" in one section and it
went from three to two, the main reason being they would have to
go through the whole legislative process again on anything that
fits into that one area of the statute.
4:45:48 PM
DOUG ISAACSON, General Manager, Minto Development Corporation,
Fairbanks, Alaska, said he supported HB 274. He noted at least
three letters of support in their packets: one from his
president, Roxanne Frank, one from their parent corporation,
Seth-De-Ya-Ha Corporation, and one from Edna Riley, president of
the Board of Directors. There was also a letter of support from
Mike Kelly who is the COO of the Dinyea Corporation. They
support it, because it cleans up the process.
He appreciated Senator Wielechowski's question about it causing
a stampede, and his corporation in applying will have to prove
that it's a good idea for the state. When he contemplates doing
some development on the Steese Highway, he has his shareholders'
interest at heart, but he also has workforce development and
benefits to the local community in mind. But they aren't able to
use that as a consideration without the language in this bill.
They still have to meet high hurdles, but this will make the
process worth looking at.
4:48:16 PM
SENATOR WIELECHOWSKI said a new section is being added saying
that land or an interest in land exchange must be approximately
of equal value, and then it says the director may enter into an
exchange with a finding that the value of the property received
together with the value of other public benefit equals or
exceeds the value of the property relinquished by the state.
He surmised that some people will want to trade swamp land for
valuable state land and he wanted "some findings" on the record
about what "approximately equal value" means in terms of
protecting the citizens from that happening.
MR. MENEFEE replied the rationale behind going with "approximate
equal value" rather than "appraised fair market value only" is
that when you start taking "other considerations" into account,
the Universal Standards of Professional Appraisal Practice
(USPAP), which is used nationwide for coming up with fair market
value doesn't allow using "other considerations" in the
valuation.
For example, he said currently an exchange is happening at Point
Bridget and because of the survey an appraisal couldn't quite
get to an exact equal value. Two things could be done to resolve
the issue. It could be equalized with cash or one could say the
value is pretty close, because the state now has road access to
a state park, which it did not have before and the private land
owner could have shut down access to that park. People were
trespassing across it at all times to get to the state park, and
the question becomes is that public access valuable enough to
warrant covering the difference in value. The decision would
have to articulate that and then it would have to go before the
legislature.
SENATOR WIELECHOWSKI asked him to clarify when they have to get
legislative approval.
MR. MENEFEE replied for unequal values.
SENATOR WIELECHOWSKI asked if the value is unequal by $1, do
they still have come to the legislature for approval.
MR. MENEFEE replied because there was terminology about unequal
value in previous statute, regulations had clarified that it had
to be a small percentage.
4:52:45 PM
SENATOR WIELECHOWSKI asked how he would define "approximate
equal value."
MR. MENEFEE replied that regulations go through a public process
and they think that would be a good way to further define
"approximate equal value" if this measure passes. In his view
the intent is to always try to reach equal value, but in
thinking of "other considerations" it's hard to get to that
exact equal value. In the case of Point Bridget, because of the
way the subdivision went, it threw off the appraisal, making the
values a little off. So, in that case they would have to go
through another cycle of trying to do another subdivision plat
to make it equal. Maybe one could get close enough with $1000 to
$5000; it's hard to say, because if you are dealing with a small
parcel an unequal value is going to be a big deal, but for a
larger parcel that unequal value is a little bit more.
SENATOR WIELECHOWSKI said hypothetically someone has a piece of
swamp land that is worth $50,000 and it happens to be access to
a river where people want to go and fish - the Kenai River - and
they want to swap that for a half-million dollar parcel. The
director says that piece is only worth $100,000, but it has a
$400,000 approximately value to the public, because of the
access. So, they deem it to be of approximately equal value. The
court gives them broad deference in their decision. As he reads
it that wouldn't have to come before the legislature. Is that
correct?
4:55:15 PM
MR. MENEFEE replied that his hypothetical would come before the
legislature, because he would consider that an unequal value
land exchange. Approximate equal value gives them that
flexibility for when the exchange can't be made exact and that
is the flexibility they are looking for.
SENATOR WIELECHOWSKI countered that the statute they are passing
gives the director the ability to say approximate equal value,
but also the ability to include the value of other public
benefits in that consideration. So, could he not say we think
the value of access to this river is worth $450,000?
MR. MENEFEE replied for the department to feel secure with that,
they would have to be ready to go to court and uphold it. They
would have to say why they think the other benefit of that
access is worth that much in monetary terms. That could be in
lost opportunities where the department can say it knows it will
have to later buy that access for this much or they will lose
this opportunity that will make the state this many millions of
dollars. He would work to state the value in terms of money.
4:57:20 PM
SENATOR WIELECHOWSKI said he appreciated the dialogue and sees
where he is trying to get, but he is naturally suspicious about
a bad deal escaping legislative oversight.
MS. KOENEMAN closed by thanking the committee for considering
the bill.
SENATOR COGHILL moved to report CSHB 274(RES), version N, from
committee with individual recommendations and attached zero
fiscal note. There were no objections and it was so ordered.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB274 Sponsor Statement Ver. N.pdf |
SRES 4/13/2016 3:30:00 PM |
HB 274 |
| HB274 Legislation Ver. N.PDF |
SRES 4/13/2016 3:30:00 PM |
HB 274 |
| HB 274 Explanation of Changes Version N.pdf |
SRES 4/13/2016 3:30:00 PM |
HB 274 |
| HB 274 Sectional Analysis Version N.pdf |
SRES 4/13/2016 3:30:00 PM |
HB 274 |
| HB274 Fiscal Note-DNR.PDF |
SRES 4/13/2016 3:30:00 PM |
HB 274 |
| HB274 Supporting Documents-Letters of Support-Dinyea 041216.pdf |
SRES 4/13/2016 3:30:00 PM |
HB 274 |
| HB274 Supporting Documents-Letters of Support-Minto 020316.pdf |
SRES 4/13/2016 3:30:00 PM |
HB 274 |
| HB274 Supporting Documents-Letters of Support-Seth-De-Ya-Ah 020316.pdf |
SRES 4/13/2016 3:30:00 PM |
HB 274 |
| HB274 Supporting Documents-Repealer Explanation.pdf |
SRES 4/13/2016 3:30:00 PM |
HB 274 |
| CSHB216(RES)-Amendment in SRES-Coghill-4-13-2016.PDF |
SRES 4/13/2016 3:30:00 PM |
HB 216 |
| HB274-Updated Fiscal Note-DNR-4-13-2016.pdf |
SRES 4/13/2016 3:30:00 PM |
HB 274 |
| CSHB216-Updated Fiscal Note-DNR-4-13-2016.pdf |
SRES 4/13/2016 3:30:00 PM |
HB 216 |