Legislature(1993 - 1994)
04/06/1994 08:15 AM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
Number 075
HB 357 - Remove Liens On Mental Health Land
REPRESENTATIVE JEANNETTE JAMES, PRIME SPONSOR, stated she
filed HB 357 because at the beginning of the session, there
was no indication that the Mental Health Lands issue would
be solved and she felt it was very important that the more
than 3,000 Moms and Pops be freed from the situation they
have been stuck in for years, having the lis pendens on
their property. Subsequently, she put the bill on hold
because the Department of Natural Resources (DNR) had told
her they had a solution. Now, nearly three months later,
she is fearful that the presentation made by the department
to settle the Mental Health Lands issue may or may not be
passed. Therefore, she requested a hearing on HB 357 so it
could be passed out, moved to Finance, and join HB 201,
which is the substitute presented by the department.
REPRESENTATIVE JAMES said while HB 357 only addresses a
small portion of the Mental Health Lands litigation, there
are more than 3,000 people affected and a solution must be
found so they are not held hostage any longer. The
committee substitute for HB 201, if passed, will accomplish
the same goal as HB 357 but HB 201 has many other things in
it which may hold up its progress. She believed that HB 357
will at least address the situation with the Moms and Pops.
Number 105
REPRESENTATIVE DAVIES commented Judge Greene's statements in
the past suggest this approach will be, in her words, a
cruel hoax and would not preclude somebody on behalf of the
mental health program from going in and taking one of the
third party purchasers to court individually. He did not
see how the passage of HB 357 will prevent that
circumstance.
REPRESENTATIVE JAMES responded the court order resulted
because in trying to free the Moms and Pops, there was no
identification of those lands sold and no provision made for
payment of those lands, except that the settlement would
eventually accomplish that. She stated HB 357 is different
in that it specifically puts the state of Alaska on record
to committing money or additional land to cover the costs of
the third party lands. The original court order said that
the state would reconstitute the Mental Health Lands Trust,
except for lands which were sold, and those lands would be
compensated at fair market value. She stressed HB 357
provides that fair market value be paid to the Mental Health
Lands Trust for the Moms and Pops. Therefore, the third
party purchasers will be held harmless because the state is
promising to meet that commitment.
Number 160
JIM GOTTSTEIN, REPRESENTATIVE, ALASKA MENTAL HEALTH
ASSOCIATION, testified via teleconference and stated passing
HB 357 will not have much effect. However, he felt the bill
has ideas which can be used to solve specific problems with
the third party purchasers. He said the 1978 legislation,
which the Supreme Court declared invalid in 1985, did
contain a promise to pay for the land taken. The Supreme
Court did not even consider that promise to pay worthy of
note, since nothing was ever paid regardless that the
statute said the state intended to pay, and that statute was
declared invalid.
MR. GOTTSTEIN stated the Supreme Court has been clear that
there are two ways to resolve the Mental Health Lands Trust
litigation: 1) a settlement which both sides bring to the
court for its consideration and approval if fair; and 2)
litigate the issue under the Supreme Court's decision in
1985. Therefore, the legislature cannot just pass a bill
and fix it.
MR. GOTTSTEIN said the basic structure of HB 357 is to trade
out the private third party purchasers as a separate piece.
He noted the Mental Health Association has been proposing
that idea for some time. He added the work done over the
past two and one-half years to identify land, establish
values, etc., makes it very easy to take this specific part
of the problem and fix it this year. He felt an exchange
package can be developed and enacted. That kind of
suggestion has been made by the Mental Health Association to
the state, but the idea has not been pushed because the
Administration and the legislature have expressed a great
desire to solve that particular problem.
Number 213
MR. GOTTSTEIN stated the Administration has wanted to
develop a global settlement solution so there has been no
desire to review this particular piece of the pie. He also
felt the committee substitute for HB 201 is a step backwards
as well.
REPRESENTATIVE JAMES said under discussion is approximately
50,000 acres and over 3,000 people who are being held in a
trial type situation. She thought there will be a benefit
to the state as a whole, to the 3,000 people, and to the
Mental Health community if the third party purchasers
problem can be eliminated, so the rest of the problem can be
solved.
MR. GOTTSTEIN agreed. He felt the idea of HB 357 is good.
However, there cannot just be an intent to compensate, there
has to be an actual compensation provision to make the bill
work. He said all of the pieces to accomplish that are in
place but there is a need to determine what that
compensation should be and then do it.
REPRESENTATIVE JAMES asked if part of HB 357 indicates that
the attorney general's office will go to court to dissolve
the injunction, which will involve a settlement with the
third parties.
MR. GOTTSTEIN responded the attorney general's office has
tried to get around injunctions on other court rulings many
times and has even asked the Alaska Supreme Court to
dissolve the injunction or grant another release and has
been unsuccessful. He said if an actual compensation
package is worked out for the third party purchasers, the
lis pendens will be released with respect to those parcels
and the preliminary injunction will be canceled. He felt
the key is not just an expression of intent to compensate,
but there has to be an actual compensation.
Number 271
REPRESENTATIVE DAVIES commented in reading Judge Greene's
decision, it is obvious that she is very skeptical of any
promises made by the legislature to resolve this issue. He
asked if the third party purchasers are to be separated out
and actually compensated by finding suitable substitute
lands, will that type of deal withstand Judge Greene's
scrutiny and will she agree to solving the issue in two
steps.
MR. GOTTSTEIN replied he felt she would. He stated if all
of the plaintiffs side agree on this arrangement, this kind
of release will fly through the court and can be
accomplished very quickly. He felt the Moms and Pops issue
is the easiest part of the overall issue to fix because
there is not a lot of acreage involved and the land has
already been identified.
Number 300
REPRESENTATIVE HUDSON asked if most of the parcels being
discussed are held by municipalities.
REPRESENTATIVE JAMES stated many of the parcels are held by
municipalities. She said many of the Moms and Pops in her
district have actually purchased the land from the state on
a state subdivision, have paid for the land, and have title
to it, subject to the lis pendens. She noted there are many
who are still paying to the state with the lis pendens and
there are some lands which have been transferred to
municipalities, subdivided, sold and are mortgaged to
banking institutions. She felt the problem needs to be
solved for these people who are entirely innocent and cannot
be held hostage any longer, either by the plaintiffs or the
state of Alaska.
Number 339
REPRESENTATIVE HUDSON clarified every parcel has had a value
and in some cases, the land has already been paid for. He
assumed there has been a total value established for the
entire package, a value which has been lost and needs to be
made up.
MR. GOTTSTEIN said that is correct and added that most of
the work, in terms of the value, has already been done. He
stated most of the work, in terms of the value of the
replacement lands, has also been completed. He felt there
are no significant disagreements between the state and the
Mental Health Association in regard to the value of the
lands.
REPRESENTATIVE GREEN said the fiscal note analysis states
that although the plaintiffs will most likely challenge the
elimination of the encumbrances, adoption of this bill may
help advance the state's cause in the overall mental health
trust litigation. He noted there have been differences
amongst the plaintiffs as well as the other side. He
wondered if the other attorneys for the plaintiffs will
think HB 357 is a good step as this step may indicate an
interruption of the delicate balance which is being worked
out between DNR, the plaintiffs, and the Mental Health
Trust.
Number 385
DAVID WALKER, ATTORNEY FOR SETTLING PLAINTIFFS, testified
via teleconference and stated although he cannot speak for
all of the plaintiffs or guarantee their reactions, he felt
the reaction will be positive because in talking with them,
they indicated support for this idea. He said the key issue
with these third party purchasers is the fact they are being
used as leverage. He stated settling this part of the issue
will help. He felt all the plaintiffs will support the idea
in HB 357. He stated there is a need to go forward with a
discreet (indiscernible) package (inaudible) state lands
into the trust in exchange for the private third party
purchaser lands. If that is accomplished, then the lis
pendens and the injunction will be released in respect to
those parcels. He felt the court will approve this idea.
Number 420
REPRESENTATIVE PAT CARNEY asked how HB 357 will be
accomplished. He assumed there will be a land exchange and
if so, asked how that will affect HB 201.
MR. WALKER stated this will be a discreet package exchanging
these lands for other lands and the third party purchaser
portion will be eliminated from HB 201.
Number 437
CHAIRMAN WILLIAMS thought the courts had said they will not
accept a piecemeal solution.
MR. WALKER responded the court's greatest concerns about
this issue were not only the concerns regarding the rights
of the private third party purchasers but also a deep
concern over the rights of the trust. With HB 357, those
concerns will be taken care of because it will not
complicate things for the court and it will clearly be
something that the parties can come forward and say the
trust is not being harmed, because even though the trust is
releasing lands which are claimed by private third party
purchasers, they are getting other lands in exchange. He
felt the court will not insist on a full resolution of all
issues at once.
REPRESENTATIVE CARNEY clarified it is the Administration's
position that if a definite settlement on Chapter 66 is not
reached, all of that law is null and void, resulting in no
Mental Health Trust authority in existence.
MR. WALKER said that is correct.
REPRESENTATIVE CARNEY asked if this land exchange is made
and that falls through, how will HB 357 work.
MR. WALKER responded if there is a failure ultimately and
there is no Mental Health Trust authority, this property
will be put in the Mental Health Trust Corpus. Therefore,
there still will be a trust. There will be arguments about
how that trust will be managed and what constitutes proper
stewardship of it. There will be an inclusion of this land
into the body of the Corpus of that trust and in exchange
for release of the claims against the private third party
purchasers.
MR. GOTTSTEIN added if there is a trust, a trustee is needed
although there may not be an exact trust authority. One of
the issues in the litigation is what the obligation of the
state is in terms of acting like a trustee. He said the key
point is that it is possible to carve this portion out,
replace these encumbered lands with unencumbered lands in
the trust and then however those lands get resolved in the
case will apply to these new lands.
REPRESENTATIVE DAVIES felt there is some question whether or
not the courts will accept HB 357, but having read Judge
Greene's opinions several times, he said there is a
reasonable chance the court will allow HB 357 to go forward,
as it only involves 10 percent of the disputed lands and
will have a concrete exchange included, if amended. He
thought if a partial settlement is presented, which both
sides agree to, the third party purchasers could be taken
off the hook. He suggested that Representative James bring
back a committee substitute which includes a specific land
exchange.
CHAIRMAN WILLIAMS stated in the interest of time, since HB
357 has to go to the House Judiciary and Finance Committees,
perhaps the bill could be amended in one of those
committees.
Number 536
REPRESENTATIVE JAMES said she is willing to amend the bill
in one of those committees, if the bill can be moved out of
this committee.
JERRY GALLAGHER, LEGISLATIVE LIAISON, DEPARTMENT OF NATURAL
RESOURCES, reminded committee members that HB 201 solves the
broad range of problems. The department has no objection to
HB 357 moving on, but believes the legislature's effort
should be geared toward the entire problem because it is a
large problem. He said the issue of a lands list is very
complicated and the department has promised the House
Finance Committee they will have a list of proposed
substitute lands by next Monday. That list will be beyond
what is necessary for the Moms and Pops exchange.
REPRESENTATIVE DAVIES said Mr. Gottstein has indicated that
a noncontroversial package can be put together and a
settlement be reached, which is consistent with the
discussions he has had with a number of people interested in
the litigation. He added that the problem with the 400,000
acres that the state is proposing is there are some
controversial lands included but it may be easy to get up to
200,000 acres. He felt if that is true, 50,000 acres can be
found and an agreement can be reached.
MR. GALLAGHER stated everyone has sympathy for the Moms and
Pops because they are in a very difficult situation. He
cannot answer the question of whether or not it will be easy
to accomplish HB 357. He said his concern is that taking
the easy lands and allocating them to this one group, the
residual issues might become that much more difficult to
solve.
REPRESENTATIVE JAMES agreed that an effort needs to be made
to solve the entire issue. She said her intent in moving HB
357 forward is to not close out an option--if the big issue
is not resolved, HB 357 is an option to get through the
legislature this year. She felt the Moms and Pops have been
held hostage and there has been no real intense desire on
the part of the plaintiffs or the state to get the Moms and
Pops out before the entire issue is resolved. She stressed
the release could have been done three years ago if the
intent was really to do that. She noted that the agreement
is probably going to involve land more valuable than what
the third party purchasers' land is worth but it is a price
which must be paid to get these people free. She is willing
to let HB 357 sit in the House Finance Committee and push HB
201 on, but if she sees at the last minute that HB 201 is
not going to pass, she wants HB 357 to pass, to ensure these
people are taken care of.
Number 658
MR. WALKER emphasized the plaintiffs are in support of
solving the problem and assisting in this exchange but in
reading HB 357, there are many statements contained in the
bill which he opposes. He does not feel HB 357 sets the
tone required to accomplish the settlement of this part of
the issue. He said the plaintiffs are continuing to work on
the resolution of the entire issue.
REPRESENTATIVE GREEN expressed continued concern about HB
357 jeopardizing the resolving of the entire Mental Health
Lands issue.
TAPE #94-47, SIDE A
Number 000
REPRESENTATIVE HUDSON felt the final solution on HB 357 will
rest with the final committee of consideration. He said
whether or not HB 357 will be able to ride on its own merits
or whether or not it will upset the ultimate state's
negotiations on the total package is beyond this committee.
REPRESENTATIVE HUDSON made a MOTION to MOVE HB 357 with
accompanying zero fiscal notes and a letter of transmittal
indicating that the bill needs amending, out of committee
with INDIVIDUAL RECOMMENDATIONS.
REPRESENTATIVE FINKELSTEIN said the bill, as written, does
not meet the legislature's obligation to the Mental Health
Trust and felt HB 357 will be another empty promise.
Therefore, he cannot support the bill.
REPRESENTATIVE DAVIES wondered if the motion to move and the
attached recommendation for amendment could be made more
specific. He would feel more comfortable if there were some
reference in the needs amending statement which refers to
the issue of needing specific language for the land
exchange. He felt if HB 357 does not contain a land
exchange provision, it will be an empty promise and he could
not support it either. He would agree to pass HB 357 out of
committee if a recommendation be made that in the transit to
the next committee that kind of CS be brought forward.
CHAIRMAN WILLIAMS said the sponsor wants the bill to move
and will amend it.
Number 054
REPRESENTATIVE GREEN expressed concern about the zero fiscal
note analysis stating "most likely will challenge" and
"funds are available in existing mental health lands
budget." He wondered if there actually will be a zero
fiscal note.
MR. GALLAGHER responded the fiscal note in committee members
folders is from the Department of Law which he cannot speak
to. He said DNR is preparing a zero fiscal note, because
there is funding in effect currently for the Chapter 66
settlement, which includes the conveyance of land. HB 357
will not require additional funding.
REPRESENTATIVE GREEN felt if HB 357 is going to cost money,
the committee should know that.
REPRESENTATIVE HUDSON said the reason he cannot offer a
specific amendment is because he does not know what it
should be. He felt HB 357 is a fall back position which
will have to be weighed in the overall scheme of things as
it moves on to House Finance where it will join HB 201. He
stated when HB 357 gets to that point, the necessary
specific amendments will be attached or it will never pass
on the floor. He stressed he would never vote for HB 357 in
its current form.
REPRESENTATIVE DAVIES stated there needs to be a recognition
that the land exchange is a fundamental problem with the
bill as it is currently drafted.
REPRESENTATIVE JAMES said she will be happy to put down on
record that the recommendation of the committee is that
instead of a promise to exchange, the language in the bill
will actually require a land exchange.
REPRESENTATIVE HUDSON said the letter of transmittal will
state that the bill is transferred with a notation that it
requires amending in the language concerning the land
exchange provision.
CHAIRMAN WILLIAMS asked if there were any objections to the
motion. Hearing none, the MOTION PASSED.
CHAIRMAN WILLIAMS asked what the committee's wishes are in
regard to the confirmation hearings for the ten Governor's
appointees which have been referred to the committee.
REPRESENTATIVE DAVIES asked if all of the resumes could be
submitted to committee members for review before the next
committee meeting.
ANNOUNCEMENTS
CHAIRMAN WILLIAMS announced the committee will meet Friday,
April 8 at 8:15 a.m. to hear SCR 13 and SCR 16.
ADJOURNMENT
There being no further business to come before the House
Resources Committee, Chairman Williams adjourned the meeting
at 10:00 a.m.
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