04/15/2010 09:00 AM Senate FINANCE

CS FOR HOUSE BILL NO. 357(FIN)                                                                                                
                                                                                                                                
     "An Act relating to the sale of land owned by the                                                                          
     Alaska Railroad that is not necessary for railroad                                                                         
     purposes."                                                                                                                 
                                                                                                                                
REPRESENTATIVE  BILL STOLTZ,  SPONSOR, explained  the reason                                                                    
behind  needing   the  legislation.  The  bill   allows  the                                                                    
railroad  to  sell  property  to  current  leaseholders.  He                                                                    
referred to  written testimony in  the members'  packets. He                                                                    
stressed that  since the  bill was  brought forth  there has                                                                    
been more openness on the  railroad's part toward selling of                                                                    
land. The railroad president has  indicated a willingness to                                                                    
do business.  The lease holding  proceeds would  be replaced                                                                    
the earnings of any land that may be sold.                                                                                      
                                                                                                                                
10:38:05 AM                                                                                                                   
                                                                                                                                
Representative Stoltz spoke of  respect for the railroad. He                                                                    
suggested that  the state needs  a better  relationship with                                                                    
the  railroad. He  concluded that  this  legislation is  one                                                                    
small piece of that effort.                                                                                                     
                                                                                                                                
10:40:01 AM                                                                                                                   
                                                                                                                                
Senator   Thomas  brought   up  the   definition  of   "non-                                                                    
essential", noting  that about 50 percent  of the railroad's                                                                    
income is  from leased property.  He spoke of issues  in his                                                                    
district regarding  the release  of property.  He questioned                                                                    
various examples  of what might be  considered non-essential                                                                    
applications.                                                                                                                   
                                                                                                                                
Representative  Stoltz   did  not   have  a   definition  of                                                                    
essential. He said  the relationship is based  on good faith                                                                    
and  trust. He  suggested that  the bill  opens the  door to                                                                    
economic development. He did not  want to imply that the 350                                                                    
lease  holders  should  expect   their  leases  turned  into                                                                    
available  property. Instead,  the legislation  should allow                                                                    
the business  communities and small  communities to  have an                                                                    
opportunity to engage in a discussion of lease sales.                                                                           
                                                                                                                                
10:43:10 AM                                                                                                                   
                                                                                                                                
Co-Chair Hoffman  asked if this  bill requires  the railroad                                                                    
to follow  the Executive  Budget Act.  Representative Stoltz                                                                    
thought that the issue was worthy of future discussion.                                                                         
                                                                                                                                
Senator  Olson  asked  if  the sponsor  was  opposed  to  an                                                                    
amendment  that  would  include the  Executive  Budget  Act.                                                                    
Representative Stoltz thought debate on issues was good.                                                                        
                                                                                                                                
Co-Chair Stedman  commented on the negative  process of high                                                                    
jacking  bills by  one committee  over  the other.  Co-Chair                                                                    
Stoltze added that he respects the committee process.                                                                           
                                                                                                                                
10:45:13 AM                                                                                                                   
                                                                                                                                
Senator  Olson inquired  about lack  of good  faith in  past                                                                    
disagreements  with  the   railroad.  Representative  Stoltz                                                                    
replied that the bill does not address that concern.                                                                            
                                                                                                                                
Senator Olson asked  if the sales mentioned in  the bill are                                                                    
those that were in  previous disputes. Representative Stoltz                                                                    
stated  that the  bill is  advisory and  does not  intend to                                                                    
involve on-going disputes.                                                                                                      
                                                                                                                                
10:47:03 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman   noted  a  zero  fiscal   note  from  the                                                                    
Department of Commerce,  Community, and Economic Development                                                                    
and a Letter of Intent.                                                                                                         
                                                                                                                                
JOHN   BINKLEY,  CHAIRMAN,   ALASKA  RAILROAD   CORPORATION,                                                                    
explained  that  the lease  of  lands  carries the  railroad                                                                    
through the  low financial points.  He recalled  the history                                                                    
of when  the state purchased  the railroad from  the federal                                                                    
government in 1985,  the legislature chose to  keep the real                                                                    
estate holdings,  about 35,000 acres, to  provide income for                                                                    
the people  of Alaska. He  stressed that the  legislation is                                                                    
for the people who own  the railroad. He emphasized that the                                                                    
bill allows the railroad to  sell land to leaseholders after                                                                    
bringing it  before the legislature. He  thanked the sponsor                                                                    
for the legislation because it  has spotlighted an aspect of                                                                    
the railroad, the leaseholders.                                                                                                 
                                                                                                                                
10:51:00 AM                                                                                                                   
                                                                                                                                
Co-Chair  Stedman asked  if Mr.  Binkley supports  the bill.                                                                    
Mr.  Binkley reported  being neutral  on the  bill. Co-Chair                                                                    
Stedman  requested that  Mr.  Binkley  submit any  suggested                                                                    
changes to his office.                                                                                                          
                                                                                                                                
MARK   STEARNS,   ALASKA   WOOD  MOLDING,   ANCHORAGE   (via                                                                    
teleconference), testified  in support of the  bill. He said                                                                    
he was a  leaseholder and he thought the  railroad should be                                                                    
able to  spend the  proceeds of the  land sales.  He thought                                                                    
the legislation would benefit both  the leaseholders and the                                                                    
railroad.                                                                                                                       
                                                                                                                                
10:53:31 AM                                                                                                                   
                                                                                                                                
PETER  MACSEY, STEEL  FAB,  ANCHORAGE (via  teleconference),                                                                    
related the tax  structure on his property,  lease held land                                                                    
for sixty  years. He pointed  out that he pays  property tax                                                                    
for  his leased  land, as  if he  owned it.  He listed  four                                                                    
bills, HB  171, HB 173,  SB 142,  and SB 165  that authorize                                                                    
transfer of  railroad land.  He observed  that when  it's in                                                                    
public  interest, it's  no big  deal; when  it's in  private                                                                    
interest, it's a big deal.                                                                                                      
                                                                                                                                
Co-Chair  Stedman  stated  that  a lot  of  the  communities                                                                    
around  the  state charge  property  tax  for land  that  is                                                                    
leased.                                                                                                                         
                                                                                                                                
MEAD  TREADWELL,   ANCHORAGE  (via  teleconference),   as  a                                                                    
leaseholder,  thanked the  sponsor for  the legislation.  He                                                                    
thought his  property was non-essential to  the railroad and                                                                    
he  expressed  appreciation for  a  process  to buy  it.  He                                                                    
agreed  with  Mr.  Binkley that  real  estate  revenues  are                                                                    
important to the railroad.                                                                                                      
                                                                                                                                
10:57:14 AM                                                                                                                   
                                                                                                                                
TOM  FAVERO,  FAIRBANKS  (via teleconference),  spoke  as  a                                                                    
leaseholder in support of the bill.                                                                                             
                                                                                                                                
JOHN REEVES, FAIRBANKS (via  teleconference), spoke in favor                                                                    
of  the   legislation  so  that   he  could  own   and  make                                                                    
improvements to his property.                                                                                                   
                                                                                                                                
HB  357  was  heard  and   HELD  in  Committee  for  further                                                                    
consideration.