Legislature(1999 - 2000)
03/23/2000 01:55 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 344
An Act authorizing a land exchange between the
Department of Natural Resources and Alaska Hard Rock,
Inc.; and providing for an effective date.
Co-Chair Mulder MOVED to adopt the work draft, HB 344, 1-
GH2071\D, Kurtz, 3/22/00, as the version of the bill before
the Committee. There being NO OBJECTION, it was adopted.
CAROL CARROLL, DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF NATURAL RESOURCES, noted that Mr.
Stratton, Director, Division of Parks with the Department
was on line and she requested that he present the bill to
the Committee.
JOHN SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES,
explained that the bill would provide legislative approval
of a land exchange agreement between the Department of
Natural Resources and Alaska Hard Rock, Inc. The purpose of
the land exchange would be for the State to acquire private
land located within and adjacent to Independence Mine State
Historical Park near Hatcher Pass. The land to be acquired
would be developed to enhance the interpretive and
recreational uses of the park. The land the State is
exchanging is also located in the Hatcher pass area and is
presently under permit to Alaska Hard Rock, Inc. They are
interested in receiving title to the land.
Commissioner Shively continued, State law requires
legislative approval of land exchanges involving lands of
unequal appraised value. In the proposed exchange, the
State will receive land appraised at $87 thousand dollars
while conveying land appraised at $66,500 thousand dollars.
Alaska Hard Rock, Inc. is agreeable to this unequal
exchange; they would be receiving a federal tax credit for
the difference.
He pointed out that by adding the land to the Independence
Mine State Historical Park, particularly the underground
mine tunnel, would add to the tourism potential of the park.
JIM STRATTON, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,
DIVISION OF PARKS AND OUTDOOR RECREATION, DEPARTMENT OF
NATURAL RESOURCES, added that the Division and Alaska Hard
Rock, Inc., had worked cooperatively together to determine
an appraisal. He commented that the land they are receiving
is service land where they currently have mining structures,
storage buildings and other facilities, which they are using
for underground operations.
CHARLIE BODDY, VICE PRESIDENT OF GOVERNMENTAL RELATIONS,
UCIBELLI COAL MINE, noted that after working with the Alaska
Railroad over the past few years, it was obvious that they
would need legislative approval to extend the lease which
they had prior to approval of the transfer act of the
Railroad with the federal government. The time of the 55-
year lease was decreasing in which it became necessary to
secure a 30-year mortgage. All the lending institutions
wanted an additional 10 years past the term of the loan.
The Alaska Railroad does have the statutory authority to
issue a lease for longer than 35 years, however, the caveat
is that they would then have the right to terminate that
lease at any point if that land is needed by the Alaska
Railroad. Mr. Boddy noted that if the lease were not
extended, a 20-year mortgage would be too expensive. He
reminded members that it is just less than a township with
about 500 plus acres developed which started in 1977. The
town of Healy and Ucibelli has relocated out into the
subdivision. Mr. Boddy stressed that they would like to
preserve that community.
Representative J. Davies asked if consideration had been
given to swapping some land with the Alaska Railroad. Mr.
Boddy responded that the Denali Borough has not finished all
their municipal selections to date.
Co-Chair Therriault noted that the town of Ucibelli and
Healy use to be on the tracks. The town was developed so
that they could move the operations. He noted that
transferring to the federal government language has caused a
problem for a new loan.
Mr. Boddy pointed out that the master lease was taken from
the Railroad. Ucibelli was looking for options to move
employees off the mine site and the federal government
wanted to help with the safety administration. He
reiterated that it is important to have the ability to
secure each mine site. Mr. Boddy advised that at that time,
there was a shortage of additional space for people to
relocate. The other businesses, which were operating in
that area, were able to plot the subdivision. The master
lease allows to get only the recovering costs incurred for
the cost of development of the subdivision.
Co-Chair Mulder noted that Ucibelli was leasing land from
the Railroad and were exchange leasing the land to these
people that have homes there. He asked what the families
pay for lease costs for that land. Mr. Boddy replied that
in 1977, there was an original rental fee in the amount of
$1.2 thousand dollars per acre development fee. Those funds
were used for the road and recovering a trunk line from the
Valley. The rental for years thereafter was $28.87 per acre
per year. That cost was spread over the entire subdivision
as if every acre was leased. In 1990 to present, there is a
$2 thousand dollar development fee for a lot and the rental
amount has increased to $100 dollars per acre per year.
Co-Chair Mulder interjected that these people have received
"a good deal" on the land. He questioned the long-term
intention. Mr. Boddy responded that Ucibelli was in a
position to do the development in 1977. However, he pointed
out they run a coal mine and "being a landlord" is a
function that Ucibelli would like to get rid of.
Co-Chair Therriault advised that the Alaska Railroad is
interested in facilitating the swap. Mr. Boddy agreed,
noting that the legislation presupposes that they will be
taking that area back. The Denali Park is the one currently
being utilized.
Co-Chair Mulder questioned if it was the desire of the
Railroad to dispose of the property. Mr. Boddy did not
know.
(TAPE CHANGE, HFC 00 - 80, Side 2).
Co-Chair Mulder pointed out that the Railroad could take
advantage of all the improvements made to the land.
Representative J. Davies pointed out that the way in which
the legislation is structured, the Railroad would not be
able to terminate the lease. It would always be a lease and
not an ownership situation. Representative J. Davies agreed
that a private land arrangement would be the most beneficial
to everyone.
Ms. Carroll advised that the fiscal note would not change
with the committee substitute.
Co-Chair Mulder MOVED to report CS HB 344 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 344 (FIN) was reported out of Committee with a "do
pass" recommendation and with a zero fiscal note by the
Department of Natural Resources.
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