Legislature(2009 - 2010)CAPITOL 17
03/16/2010 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| HB357 | |
| HB267 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 357 | TELECONFERENCED | |
| += | HB 267 | TELECONFERENCED | |
| += | HB 257 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 357-AK RAILROAD CORP. LAND SALES
CHAIR P. WILSON announced that the first order of business would
be HOUSE BILL NO. 357, "An Act relating to the sale of land
owned by the Alaska Railroad that is not needed for railroad
purposes."
1:07:01 PM
REPRESENTATIVE BILL STOLTZE, Alaska State Legislature, related
that many private businesses are frustrated with the
unpredictability of the Alaska Railroad Corporation's (ARRC)
lease terms and the corporation's unwillingness to make
investment improvements to their property. He said he thought
that the ARRC may need "a little bit of help interfacing with
the private sector on these lease holdings." Some
municipalities have expressed interest in the bill since they
embrace private sector activity. He paraphrased from his
sponsor statement, which read as follows [original punctuation
provided]:
To spur economic development throughout the state,
House Bill 357 adds a fourth clause to the existing
language governing how the Alaska Railroad Corporation
may dispose of land. House Bill 357 will enable the
railroad to sell land that is not needed for essential
railroad purposes. This bill does not ask for any
irresponsible disposal of land, as the sale must be
initiated by the board of directors on two conditions.
The first condition is that the land is not essential
to railroad operations, and the second condition is
that the sale is in the best interest of the state of
Alaska.
As support has shown, current leaseholders are very
unhappy with the inability to purchase their leased
properties from the railroad. In general real estate
dealings, private purchases are made in mutually
beneficial sales. House Bill 357 encourages these
sales after determination by the board of directors of
the railroad looks at each sale with the overall
benefit to the state of Alaska as the key driver. Not
only will the private sector benefit from this
addition to state law, the railroad will also have
increased ability to make decisions regarding their
overall real estate portfolio.
The sale and relationship of private and public lands
are vital to the economic growth of the state of
Alaska. I ask for your consideration and support of
House Bill 357 to promote Alaskan growth through the
diversification of land ownership, increasing the tax
base of the state, and encouraging responsible
development of Alaskan land.
1:10:25 PM
REPRESENTATIVE STOLTZE characterized the bill "as a permissive
bill." The committee may wish to make changes to HB 357, he
stated.
1:11:07 PM
REPRESENTATIVE PETERSEN asked whether the land would be sold and
if proceeds would go to the ARRC for further development or to
purchase equipment.
REPRESENTATIVE STOLTZE offered his intent for the proceeds to be
retained by the ARRC for its operations.
1:12:08 PM
REPRESENTATIVE JOHNSON referred to page 2, lines 1-7 and asked
whether this would require a competitive bid process or if he
could explain the process.
REPRESENTATIVE STOLTZE related his intent that the lessee who
has an investment would have the first right of refusal.
1:13:17 PM
CHAIR P. WILSON asked whether the land is state land and if that
is allowable.
REPRESENTATIVE STOLTZE responded that if any restrictions exist
the bill drafters did not flag the issue during the drafting
process. He offered that this is his best first effort.
1:14:20 PM
REPRESENTATIVE P. WILSON interpreted that she did not know
whether it is allowable to offer the first right of refusal to
leaseholders of state land. She suggested that question should
be answered by the Department of Law (DOL).
REPRESENTATIVE STOLTZE said he wished he knew the inner workings
of the ARRC. The ARRC's budget is not subject to state review.
He stated that the ARRC's executive payroll is not aligned to
the ARRC's economic growth. He also related his desire for the
ARRC to run more like a private business in instances in which
it is involved in the private sector. He remarked that the
breadth of testimony from local government and a consortium of
business and industry have endorsed this bill. However, he
maintained that he did not solicit the letters in members'
packets. He offered that these "folks were yearning for some
type of bill like this." Simply by holding this hearing the
committee has informed the public that "the private sector has
friends" in Juneau who are responsive, he stated.
1:16:08 PM
REPRESENTATIVE T. WILSON asked whether this bill would include
easements crossing private property if the easement is no longer
in use by the railroad.
REPRESENTATIVE STOLTZE said he did not know but his staff would
check into it. He suggested that many complicated arrangements
with the ARRC and ownership issues exist.
1:16:41 PM
CHAIR P. WILSON asked whether the ARRC is selling land without
giving its lessees the right of first refusal.
REPRESENTATIVE STOLTZE offered that the ARRC does not have a
consistent policy on leases or sales. The ARRC has had
inconsistent policies with respect to leases, he stated. He
recalled last year, during the course of working on another
bill, that the ARRC negotiated new leases. He surmised that the
ARRC reacts more like a political organization than a business
organization. He said, "I don't know that I could say that they
have a consistent lease policy and therein lies a lot of the
problems. I don't think we would like to have our individual
businesses subject to those vagaries."
1:17:45 PM
REPRESENTATIVE MUNOZ asked for the number of leases on the
ARRC's non-essential property.
REPRESENTATIVE STOLTZE offered that currently the ARRC holds
about 350 leases. He was not certain how many of the leases
fell into the category of essential property.
CHAIR P. WILSON asked how the ARRC acquired its land.
REPRESENTATIVE STOLTZE offered that the ARRC acquired its land
in the mid-1980s as a result of the federal Alaska Railroad
Transfer Act (ARTA) of 1982 and the subsequent state act, the
Alaska Railroad Act.
1:19:07 PM
REPRESENTATIVE STOLTZE, in response to Representative Munoz,
responded that under the state's Executive Budget Act, the
legislature does not have access to ARRC budget information. He
maintained that numerous members of the public can testify to
explain their relationships and frustrations with the Alaska
Railroad Corporation.
1:21:30 PM
JIM KUBITZ, Vice President, Real Estate and Facilities, Alaska
Railroad Corporation (ARRC), stated that he has worked for the
ARRC for twelve years. He provided a little background
information. In 1985, the state purchased the railroad from the
federal government and received about 36,000 acres of land. He
described the land as about one-third right-of-way, where the
trains run, one-third rail and operations yard, one-third
"reserve land" or land that is available to lease. The ARRC is
required by law to lease its land for fair market value. He
remarked that when the state bought the railroad, the federal
government was losing money. The state wanted to give the
Alaska Railroad Corporation (ARRC) an opportunity to succeed and
live under its own profits. Thus, the land must be leased at
fair market value, noting there are a few exceptions.
1:23:23 PM
MR. KUBITZ explained that the ARRC does not always know whether
it will need land. Currently, projects to expand the yards in
Fairbanks, Anchorage, and Whittier are underway to meet customer
needs and improve the dock operations. Sometimes the ARRC must
buy out tenants to expand its operations. He said, "We do not
always have a crystal ball knowing exactly what could be defined
as essential railroad land since it does move." For example,
the Anchorage International Airport has numerous private tenants
but does not sell its land. One big issue that some tenants
have had is the requirement that they must pay property taxes on
the leased land. In 2004, the State Assessor advised the
Municipality of Anchorage that it must charge fair market value
rent for any leased land that is owned by a tax-free entity,
such as the ARRC. Thus, for the first time in that area the
lessees had to pay property tax for the land. The tenants
previously were required to pay taxes on their buildings and
improvements, but the new requirement to add taxes on leased
land upset some of the tenants.
1:25:00 PM
CHAIR P. WILSON asked for the duration of the ARRC's leases.
MR. KUBITZ answered that the leases range from 20 to 40 years.
Tenants suddenly had to pay property taxes on leased land on
which they had held long-term leases, he stated.
REPRESENTATIVE JOHNSON asked who made the determination and
asked for the statutory background.
MR. KUBITZ related that the State Assessor made the
determination. He offered to provide the legal opinion issued
by the Department of Law to the committee. Ultimately, the
state's Attorney General required the lessees to pay tax on
land.
1:25:56 PM
REPRESENTATIVE MUNOZ asked whether the assessment is on the land
that is leased or if the assessment is on all ARRC parcels.
MR. KUBITZ related that the tenant leases are subject to
assessment, but the non-leased parcels are not assessed. He
explained that the State Assessor does have some flexibility.
He offered that a brand new 35-year lease would be assessed at
full fair market value on the property. However, if only two
years remained on the lease, the State Assessor would charge a
much reduced rate for the land portion of the lease.
1:26:44 PM
MR. KUBITZ, in response to Chair Wilson, explained that the ARRC
is tax exempt. He pointed out that advantages exist for parties
who lease land. He explained that the tax cap cannot go
increase more than 35 percent each five-year period. The ARRC
also has a floor on its leases, which means the tax rates do not
decrease. However, the ARRC is currently reviewing its leasing
policy given the economy. He commented that the ARRC does have
a public leasing policy.
1:27:48 PM
REPRESENTATIVE MUNOZ related that other leased property is not
charged property tax. She related that if the leases are
comparable to other leases whether the ARRC takes property taxes
into account when setting the rate.
MR. KUBITZ responded that only the value of property is
considered. Thus, if property is valued at $1 million, the ARRC
would charge eight percent rent on $1 million. The ARRC is also
not involved with improvements and the appraiser must appraise
the land as though it is vacant land.
1:28:37 PM
MR. KUBITZ, in response to Chair P. Wilson, related that the
ARRC hires an independent appraiser to determine the land value.
REPRESENTATIVE MUNOZ asked whether all the lease terms are set
at eight percent.
MR. KUBITZ answered that the interest rate on leases ranges from
8 percent to 10 percent, with 9 percent for waterfront and 10
percent for commercial property. The bulk of the ARRC leases
are set at 8 percent. He stated that the ARRC follows standard
procedures for setting its interest rates. In further response
to Chair P. Wilson, he responded that the ARRC has published its
leasing policies, which are sometimes adjusted. He stated that
currently, due to the downturn in the economy, the ARRC is
considering eliminating the floor, but traditionally the lease
rates have stayed flat.
1:30:08 PM
MR. KUBITZ stated that the ARRC indemnifies its tenants for
contamination since the ARRC has been around for 85 years. The
ARRC does not hold its tenants responsible for contamination
unless the tenant contaminated the property.
1:30:29 PM
MR. KUBITZ, in response to Representative Johnson, explained if
a person were to purchase ARRC property that it would depend on
the structure of the real estate agreement as to whether
indemnification would be included in the terms. He offered that
any potential buyer should perform due diligence, have the
ground tested and if a problem exists that the party should hold
discussions to determine who will be responsible. This would
all be covered in the sales contract, he stated.
1:31:03 PM
REPRESENTATIVE JOHNSON recalled several years ago a battery
company went out of business. He asked Mr. Kubitz to describe a
similar scenario with respect to the railroad.
MR. KUBITZ recalled the site mentioned is a Superfund Site under
control by the Environmental Protection Agency (EPA). He
recalled that the site usage is restricted. He further recalled
that this site was capped and a list of restrictions would apply
to the property use. He was unsure if someone would want to buy
the property, but he related that if a sale did occur,
discussions on contamination would be part of the due diligence
process.
1:32:15 PM
CHAIR P. WILSON speculated that the ARRC would do its part to
protect and inform any potential buyers.
MR. KUBITZ responded that professionals would perform tests to
determine any contamination. He said he does not want to leave
impression that all the ARRC property has environmental issues.
The ARRC is diligent about identifying any issues with its
property, but would not necessarily know about recent
environmental issues on leased land. He characterized the ARRC
as knowledgeable about its property and advised members that the
ARRC has a good file on hand for each of its properties.
1:33:26 PM
REPRESENTATIVE JOHNSON asked whether anyone has reviewed the
cost of owning versus leasing ARRC land given the new
interpretation on property taxes.
MR. KUBITZ answered that the ARRC Board has policies in place.
He offered that the ARRC performed a market analysis and that
eight percent is a standard interest rate for leased property.
1:34:37 PM
REPRESENTATIVE JOHNSON asked when the property tax
interpretation was adopted and whether the market analysis was
performed prior to when the tax policy was adopted.
MR. KUBITZ related that it occurred at about the same time. In
2004, the tax letter was received from the State Assessor. The
ARRC continually reviews the market, he stated. He maintained
his belief that the market study was done at about the same
time.
REPRESENTATIVE JOHNSON asked whether he could provide any
examples of other communities or states that charge eight
percent interest in addition to the property tax.
MR. KUBITZ related that ARRC tenants have always paid taxes on
their building. He commented that the property tax on land is
based on a decreasing rate scale. He explained that the ARRC
also requires its tenants to follow local state and federal
laws.
1:36:34 PM
CHAIR P. WILSON asked whether the Municipality of Anchorage
(MOA) was trying to find more ways to bring in revenue without
raising taxes.
MR. KUBITZ acknowledged that the MOA has been very successful.
1:37:08 PM
MR. KUBITZ, in response to Representative Johnson, reiterated
that the State Assessor wrote a letter to Municipality of
Anchorage referencing the Department of Law's legal opinion that
the MOA had to assess property.
MR. KUBITZ, in response to Chair P. Wilson, related that the
communities have the option on whether to assess taxes. He
stated that Anchorage and Fairbanks assesses taxes on ARRC
property.
1:38:13 PM
REPRESENTATIVE T. WILSON asked for the percentage of ARRC
property that is currently vacant.
MR. KUBITZ explained that the ARRC owns one parcel of
approximately 5,000 acres that does not have tenant. Thus, one
of its largest parcels is vacant. He offered his belief that
about 20 percent of ARRC property is under lease, but
approximately 80 percent of the revenue from ARRC's real estate
is derived from 600 acres in Anchorage at Ship Creek. The rest
of the leases are primarily located in Fairbanks, Talkeetna,
Seward, and Whittier.
1:39:07 PM
REPRESENTATIVE T. WILSON asked if the ARRC sold property whether
it would provide more revenue for the ARRC over time.
MR. KUBITZ related that a parcel valued at $1 million leased at
8 percent would provide $80,000 in revenue annually. If the
ARRC deposited $1 million, it may earn approximately $20,000 a
year. Thus, selling ARRC's land would represent a big decrease
in annual income for the railroad.
1:40:07 PM
MR. KUBITZ, in response to Chair P. Wilson, explained that
during the economic downturn the real estate income "tides the
ARRC over". He stated that the ARRC earns about $18 million in
leases and reinvests it. He related some investments are made
on behalf of tenants, such as water and sewer installation and
dock enhancements to create efficiencies.
1:41:34 PM
REPRESENTATIVE JOHNSON asked of the 80 percent of leases, how
many of the ARRC leases in Anchorage will expire within the next
five years.
MR. KUBITZ offered his belief that not many leases will expire.
He said that typically most lessees holding a 30-year lease will
renegotiate the lease about ten years out. He related that the
largest ARRC customer is Flint Hills in Anchorage and the second
largest customer is Lynden Transport. He stated that the ARRC
renews its leases on a continual basis.
1:42:42 PM
REPRESENTATIVE JOHNSON asked whether the lessees will renew
their leases closer to the end date of the lease in order to
avoid paying higher property taxes.
MR. KUBITZ said he was unsure. He characterized the ARRC's
customers as sophisticated customers who renew their leases when
10 to 15 years remain on the lease. He commented that most
leases are renewed.
1:43:44 PM
MR. KUBITZ explained at times ARRC may need to let tenants know
a lease will not be renewed in the event that the ARRC needs the
land for its railroad operations. He stated that the ARRC
currently holds 350 active long-term leases and 900 permits,
which are for leases under 5 years in duration.
1:44:19 PM
REPRESENTATIVE JOHNSON asked how disposing ARRC's property would
affect the ARRC's bonding status and whether it would have a
negative effect.
MR. KUBITZ answered that selling ARRC's land probably would have
a negative effect. He commented that the ARRC produces an
annual report with audited financial information. The ARRC also
borrows funds based on lease revenue income. For example, the
ARRC recently borrowed $1 million and pledged its lease revenue
for loan repayment. He anticipated that if suddenly the ARRC's
portfolio of leases were to shrink, it could adversely affect
the interest rate. He reiterated the lease income is used for
property improvements, but sometimes the ARRC will borrow funds
to complete necessary project improvements.
1:45:36 PM
REPRESENTATIVE JOHNSON asked whether federal funding would slow
down projects.
MR. KUBITZ offered that the ARRC receives some federal railroad
funds based on a passenger transportation formula, but the
federal dollars are restricted to passenger transportation. He
stated that the ARRC could build new depot or buy a new
passenger car, but could not spend the federal funds on real
estate. He restated that the federal funding "comes with a lot
of strings."
1:46:41 PM
MR. KUBITZ stated that the ARRC's tenants have access to the
Board of Directors. The Board has the final say on leases. The
ARRC uses money to partner with tenants to improve the plant.
In 2002, the ARRC raised the ability to lease land from 35 years
to 55 years. The legislature agreed to the change. The plan
has been to ask the legislature for the ability to increase some
leases to 95-year leases for those seeking long-term leases. He
offered that land lease payments are tax deductible. Thus, many
tenants would never consider buying their land. In further
response to Representative Johnson, he stated that the appraised
value is the highest amount that the land can be assessed.
REPRESENTATIVE JOHNSON related that if a tenant had 2 years left
on a 95-year lease, he/she would pay less in property taxes.
MR. KUBITZ agreed.
1:48:46 PM
MR. KUBITZ, in response to Chair P. Wilson, explained the tenant
typically will approach the ARRC and ask to extend his/her
lease.
MR. KUBITZ related that passage of HB 357 might start a
speculation spree because the land is state-owned land. For
example a person could lease land in April, purchase it in May,
and then "flip the land." He suggested that this would not in
the ARRC's best interest. He said that he was unsure if that
type of speculation would happen.
1:50:05 PM
CHAIR P. WILSON asked whether the ARRC's land is owned by the
state.
MR. KUBITZ answered that the ARRC's land is state land, but the
land is controlled, managed, and operated by the ARRC. He also
noted that the ARRC did not receive all of its federal transfer
land as of 12 years ago. The ARRC is currently down to about 5
percent of the land remaining to be transferred.
CHAIR P. WILSON inquired as to whether the state allows first
right of refusal to its tenants on state lands that are leased.
MR. KUBITZ said he did not know. He suggested that the
legislature could pass a law if it chose to do so. He thought
it might put "a cloud over it" to have first right of refusal.
He explained that if the state leased the land and then sold it,
the public may complain that it was not aware that the state was
selling property. He thought if the state wanted to receive the
best value that the ARRC should simply sell the land. He
pointed out that the tenants are protected during sales since
the potential buyer cannot "kick" any tenants off the leased
land, but must honor the lease.
1:52:18 PM
MR. KUBITZ, in response to Representative Petersen, stated that
the 5 percent of 36,000 acres of federal transfer land has not
yet been transferred to the state. He pointed out that the ARRC
has an exclusive easement, which is one step below full fee on
the proposed transfer. He remarked it will be "nice to get all
the land" from the federal government.
1:52:53 PM
REPRESENTATIVE PETERSEN asked whether the potential land
designated for transfer is located in one location or if it is
spread out.
MR. KUBITZ offered that "a fair amount of it" is located in
Anchorage. Much of the land is located along the right-of-way
near the inlet, he stated. He related that some confusion
exists since the 1964 earthquake moved some of the land. He
characterized the land transfer process as a complicated
process, but pointed out that the ARRC is working closely with
the Bureau of Land Management (BLM) on the matter. Once the
process is finished and agreed to the agreement will be sent to
Washington D.C. for signature and the ARRC will receive the
land, he related.
1:53:32 PM
REPRESENTATIVE PETERSEN recalled that 5,000 acres of ARRC land
is not leased and asked whether this is land that poses
difficulties to lease and asked whether the land should be sold.
MR. KUBITZ said he did not think there was any benefit to sell
the land not currently leased. He stated that the land does not
currently have utilities available, and the land is located "50
miles from the closest power pole." He commented that a
"section house" is located on the land and the land has a
strategic value to the ARRC. He remarked that several uses have
also been considered.
MR. KUBITZ, in response to Chair P. Wilson, answered that the
parcel does have road access. He reiterated that the ARRC's
income stream could be affected if the land was sold. He also
thought that changing any existing terms of the ARRC's real
estate contract could be problematic. He offered his best
professional advice is the ARRC does not want to start the
precedent by selling property. He stated that the ARRC income
is important and the ARRC's real estate is necessary for its
survival. He also remarked that 100 people were laid off last
year.
1:55:53 PM
MR. KUBITZ, in response to Representative T. Wilson, responded
that the ARRC does not grant easements.
REPRESENTATIVE T. WILSON asked whether the ARRC has any
mechanism to release easements it no longer needs.
MR. KUBITZ answered that any land disposal or transfer of ARRC
property must be approved by the legislature. In further
response to Representative T. Wilson, he said he was unsure if
this bill would allow the ARRC to do so. In response to Chair
Wilson, he agreed that currently the ARRC's Board of Directors
could decide to sell land. If such an instance arose, the ARRC
would ask the legislature for approval. This bill contains
special provisions, including that the person occupying the land
would have the first right of refusal on the property.
1:57:12 PM
REPRESENTATIVE T. WILSON said she thought this bill allowed the
ARRC to sell the land without legislative approval, and asked
whether the ARRC would still need legislative approval.
MR. KUBITZ agreed that this is state land and the legislature
would need to approval any sale.
1:57:24 PM
REPRESENTATIVE JOHNSON asked whether the ARRC shares any
facilities with the Alaska Marine Highway System (AMHS).
MR. KUBITZ responded that the ARRC leases land to the AMHS in
Whittier.
MR. KUBITZ, in further response to Representative Johnson,
advised that the AMHS could purchase the land it leases from the
ARC, but he did not think it would do so. He explained that the
AMHS pre-paid a long-term lease using federal funding. He
offered his belief that the current lease is a 20-30 year lease.
1:58:55 PM
HANK BARTOS, Representative, Rail Safety and Development Group
(RSDG), offered his belief that a duplication of land management
effort occurs in the state. He suggested that the land
currently not used by ARRC should be transferred to DNR since
that agency could do a better job managing the land. The DNR
could transfer any land as necessary. The Fairbanks North Star
Borough (FNSB) asked the legislature to transfer some ARRC land
not currently being used to the FNSB to improve the Fairbanks
community.
CHAIR P. WILSON asked whether the organization has specifically
asked the ARRC to transfer the land.
MR. BARTOS stated that the ARRC has been approached on numerous
occasions to move the ARRC operations south of town to relieve
traffic congestion. He characterized working with the ARRC as
working with an "800 pound gorilla."
2:01:05 PM
CHAIR P. WILSON said she misunderstood Mr. Bartos's issue.
MR. BARTOS explained that the matter is actually two separate
issues. In addition to relocating the ARRC rail yard to an
areas south of Anchorage, the FNSB would also like the ARRC to
transfer land currently used by the ice park to the FNSB. In
further response to Chair P. Wilson, he agreed that the parcel
used by the ice park is not used for ARRC operations. The land
could be donated, traded, or sold to the FNSB, he said.
CHAIR P. WILSON related that the ARRC must conduct its operation
as a business. She would not like to see the ARRC come to the
legislature and request additional operation funding.
MR. BARTOS pointed out that the land actually belongs to the
people of Alaska and whether the revenue is derived from land
use operations or is transferred to DNR and is managed, it is
still state land. Currently, a duplication of effort exists on
land management since DNR and the ARRC both manage state land.
CHAIR P. WILSON answered that the state is not the same category
of land.
MR. BARTOS offered if the ARRC land was transferred to one state
entity, that the process could be streamlined and more
efficient.
2:03:11 PM
DON LOWELL President, Alaska Transportation Consultants; Member,
Rail Safety and Development Group (RSDG), explained that the
Alaska Transportation Consultants is a non-profit group. He
stated that he supports the bill. Adding to Mr. Bartos's
testimony, he recommended that HB 357 be amended to transfer
land that is not essential to ARRC operations to the DNR. He
explained that the DNR is the agency responsible for all state
land. He offered his belief that the ARRC does not operate very
well, but the DNR has held the long-term responsibility to
manage state land.
2:04:57 PM
BONNIE WOLDSTAD stated that her comments are directed to the
Eielson spur line of the ARRC. She asserted that the ARRC
currently encroaches on 10-12 acres of her property. She stated
that under the 1914 Homestead Act, the United States allowed
homesteaders to reserve rights for the railroad to traverse
property. In 1946, her family applied for the property and
received a U.S. patented homestead. She said that her property
predates the railroad. Her ancestor was given 160 acres and in
1947 the railroad was built. She said that her ancestor
received the deed for the entire 160 acres. Subsequently the
state required the ARRC under ARTA, Section 1203, including
language related to valid existing claims. She further asserted
that the patented homestead deed is a valid claim. In 1969, her
family acquired the remainder of the homestead and has never
relinquished any property rights. She restated that her
property predates the railroad. Thus, her family has continued
to assert their property rights. Under Section 1208 and 1209 of
the ARTA, a provision allows the governor to declare such
property as no longer being used and allows the governor to
transfer that property to the property owner. In 2003, that
specific mechanism was repealed. Thus, property owners no
longer have the means to receive property under that provision.
She related that Section 4200-4400 also provides for a method to
vacate easements. Those ARTA provisions allow the ARRC to
vacate an easement and allow the state to acquire the easement.
Therefore, since the state has the easement it should revert
back to the owner, she stated.
2:07:50 PM
DON CALLAHAN, Public Relations Chair, Ice Alaska; Member, Rail
Safety and Development Group (RSDG), explained that since 2006
he has participated in the RSDG. He offered that an
organization, Ice Alaska, presents the best winter event in
Fairbanks for tourists and residents. Since 2006, he has been
working with the RSDG to relocate the railroad out of Fairbanks.
He characterized this as a frustrating experience since the ARRC
has continuously defeated his organization's efforts to relocate
the ARRC. He asserted that this is a safety issue since the
rail yard is physically located in Fairbanks. As Chair, Ice
Alaska, he has found the ARRC to be uncooperative. Ice Alaska
would like to trade the property to the FNSB for property the
ARRC could use for relocation. He understood Representative
Stoltze's frustration with the ARRC since he is also "thoroughly
frustrated." He recalled working for a year to obtain an
easement from the federal government when it owned the railroad.
When the state took ownership of the railroad, he expected the
ARRC to be community activists and to be supportive of the
community's interests. He suggested if the ARRC earns money on
land leases to the detriment of the community, that something is
wrong with their business plan. The ARRC should be a
transportation entity and not a land entity. He said he also
did not understand the profit issue.
2:10:52 PM
RICHARD FAULKNER, President, Steel Fabrication; President,
Alaska Railroad Leaseholders Association (ARLA), spoke in favor
of HB 357. He said that the ARRC land needs to be sold to
private enterprise. At the present time only two percent of the
state's land is in private hands. The rest of the land is
either owned by the state or federal government. In Anchorage,
treating the leased property as fee simple property is derelict,
he stated.
REPRESENTATIVE T. WILSON asked whether leaseholders are required
to make any improvements to the land.
MR. FAULKNER answered yes. However, he stated that after the
lease takes effect, people do not want to make improvements due
to the ARRC. He stated that the ARRC does not pay for water and
sewer. He related that his business sits on 8 to 10 acres in
Ship Creek area of Anchorage. He stated that he had a septic
and well system, but the ARRC ran the water line from the main
street to edge of property and sent him a bill. He
characterized the issue with the ARRC as more of an economic
development issue than any other issue. He recommended
transferring the ARRC property to private ownership so
individuals can improve the property and increase the tax base
in Anchorage and the state.
2:13:45 PM
CHAIR P. WILSON, after first determining no one else wished to
testify, closed public testimony on HB 357.
2:14:27 PM
REPRESENTATIVE PETERSEN asked whether Mr. Kubitz could answer
questions about relocating the ARRC in Fairbanks.
Mr. Kubitz answered that was not his purview.
CHAIR P. WILSON inquired as to whether the ARRC is considering
moving its operations in Fairbanks.
PAT GAMBLE, President and CEO, Alaska Railroad
Corporation,(ARRC) stated that moving the ARRC out of Fairbanks
makes a lot of sense in the abstract. Typically, towns grew up
around the tracks and many towns relocated the railroad.
However, relocation is very expensive and the ARRC has
undertaken with the RSDG and the FNSB to reconsider relocating
the railroad in phases from the main part of town and to bypass
as much of Fairbanks as it can. He stated that this process is
actually a three phase process to make this a reality. The
ARRC's efforts include North Pole and in an effort to relocate,
the ARRC has closed crossings, some of which are close to
schools, in order to improve safety. Some hazardous materials
have been hauled out of residential areas. He characterized the
goal to relocate the railroad as an excellent and worthy goal.
Phase 1 included two meetings with the RSDG. Currently, the
ARRC is working to scope Phases 2 and 3 of the project. He
anticipated the ARRC would be more aggressive on the project.
2:17:15 PM
MR. GAMBLE, in response to Chair P. Wilson, offered that quite
often "not cooperating" is another way of saying that a
disagreement exists over issues. He stated that there are
serious issues to resolve, but he felt that more progress has
recently been made. He stated that the former FNSB Mayor signed
a memorandum of agreement (MOA) that codified a process to allow
the ARRC to coordinate its approach. He assessed the progress
to resolve issues to relocate the ARRC as slow, but steady
progress since the MOA was signed.
2:18:08 PM
REPRESENTATIVE JOHNSON asked what type of hazardous waste the
ARRC would find if it relocated the railroad in Fairbanks to
south of Fairbanks He further asked if the existing rail yard
would need to be paved, if the ARRC would be able to sell the
land, and if the rail yard is a contaminated site.
MR. GAMBLE stated that the Fairbanks railroad sits on an
industrial site. He agreed that likely some kind of
contamination is present. He recalled a recent survey conducted
at the railroad yard in Ship Creek in Anchorage. He related
that the survey cost $6 million, but the ARRC did "not find a
smoking gun." He explained that the ARRC would have to do the
same thing in Fairbanks. He said he does not assume the
Fairbanks property would be considered a "real dirty site," but
that aspect would need to be dealt with before the rail yard
could be relocated. He stated that currently, the ARRC is not
aware of any problem, noting that the Fairbanks property has not
been surveyed.
[HB 357 was held over.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB257 cell phone ban sponsor stmt.pdf |
HTRA 2/16/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 257 |
| HB257 cell phone ban sectional.pdf |
HTRA 2/16/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 257 |
| hb257 cell phone ban backup.pdf |
HTRA 2/16/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 257 |
| HB357 sponsor stmt.pdf |
HTRA 3/16/2010 1:00:00 PM |
HB 357 |
| HB357 back up.pdf |
HTRA 3/16/2010 1:00:00 PM |
HB 357 |
| HB267 sponsor stmt TRA.pdf |
HTRA 3/11/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 267 |
| hb 267 backup TRA.pdf |
HTRA 3/11/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 267 |