04/30/2024 01:30 PM Senate TRANSPORTATION

              HB 395-TRANSFER OF RAILROAD PROPERTY                                                                          
                                                                                                                                
2:30:20 PM                                                                                                                    
CHAIR   KAUFMAN  reconvened   the  meeting   and  announced   the                                                               
consideration  of  HOUSE  BILL  NO. 395  "An  Act  approving  the                                                               
transfer of land owned by  the Alaska Railroad Corporation to the                                                               
City of Nenana; and providing for an effective date."                                                                           
                                                                                                                                
2:30:43 PM                                                                                                                    
REPRESENTATIVE KEVIN MCCABE, District 30, Alaska State                                                                          
Legislature, Juneau, Alaska, sponsor of HB 395, paraphrased the                                                                 
sponsor statement.                                                                                                              
                                                                                                                                
[Original punctuation provided]                                                                                                 
                                                                                                                                
                         House Bill 395                                                                                         
                                                                                                                                
       An Act approving the transfer of land owned by the                                                                       
     Alaska Railroad Corporation to the City of Nenana; and                                                                     
                providing for an effective date.                                                                                
                                                                                                                                
                       SPONSOR STATEMENT                                                                                      
                                                                                                                                
     House Bill 395 aims to  facilitate the transfer of land                                                                    
     from  the Alaska  Railroad Corporation  to the  City of                                                                    
     Nenana. This  transfer is significant because  the city                                                                    
     has  been  actively  managing  this  land  since  1981,                                                                    
     investing approximately  $29 million  in infrastructure                                                                    
     over the years.                                                                                                            
                                                                                                                                
     The  location of  the land  holds strategic  importance                                                                    
     for industrial development, given  its proximity to the                                                                    
     river system,  the Alaska Railroad, the  Parks Highway,                                                                    
     and the  Nenana Airport, which collectively  serve as a                                                                    
     vital  transportation hub.  By  acquiring ownership  of                                                                    
     this  land, the  municipality aims  to leverage  it for                                                                    
     further economic growth in the region.                                                                                     
                                                                                                                                
     The goal  for the  municipality to  own the  land under                                                                    
     the infrastructure will further  economic growth in the                                                                    
     region,  and  the  city has  a  development  plan  that                                                                    
     includes  Nenana's  Municipal  Boat Launch.  This  boat                                                                    
     launch serves as  an access point for  many rivers such                                                                    
     as  the   Tanana,  Totatlanika,   Teklanika,  Tolovana,                                                                    
     Kantishna  and  the  Yukon.  The  City  of  Nenana  has                                                                    
     invested $300,000  in the  boat launch  alone and  is a                                                                    
     central  piece of  infrastructure which  is located  on                                                                    
     the railroad property that will  be conveyed under this                                                                    
     legislation.                                                                                                               
                                                                                                                                
     Overall, HB 395 seeks to  empower the City of Nenana to                                                                    
     take ownership  of the  land it  has been  managing and                                                                    
     investing in  for decades, enabling  it to  further its                                                                    
     economic    development   goals    and   utilize    key                                                                    
     infrastructure assets for the  benefit of the community                                                                    
     and the region.                                                                                                            
                                                                                                                                
2:33:15 PM                                                                                                                    
REPRESENTATIVE MCCABE said the legislature  is required by law to                                                               
initiate the  process anytime there  is a land transfer  from the                                                               
Alaska  Railroad  Corporation  (ARRC).  ARRC  and  the  purchaser                                                               
negotiate  the  price  and  pay any  costs  associated  with  the                                                               
transaction.  He said  the City  of Nenana  has more  invested in                                                               
this property than  just the boat launch. There is  a gravel pit,                                                               
storage areas  for logs and  railroad materials and  the railroad                                                               
depot, which  belongs to  Nenana, but  is on  ARRC land.  He said                                                               
they have  a number  of projects  they are  managing now  on that                                                               
land. ARRC seems amenable to the purchase of the land by Nenana.                                                                
                                                                                                                                
2:34:58 PM                                                                                                                    
JULIE MORRIS,  Staff, Representative  Kevin McCabe,  Alaska State                                                               
Legislature, Juneau, Alaska, provided  the sectional analysis for                                                               
HB 395.                                                                                                                         
                                                                                                                                
[Original punctuation provided]                                                                                                 
                                                                                                                                
                         House Bill 395                                                                                       
       An Act approving the transfer of land owned by the                                                                       
     Alaska Railroad Corporation to the City of Nenana; and                                                                     
                providing for an effective date.                                                                                
                                                                                                                                
                       Sectional Analysis                                                                                     
                                                                                                                                
     Section 1  amends the  uncodified law  of the  State of                                                                  
     Alaska  by amending  a new  section  that approves  the                                                                    
     transfer of  real property to  the City of  Nenana. The                                                                    
     Alaska  Railroad corporation  is  authorized to  convey                                                                    
     the  convey  the  interest in  the  surface  estate  of                                                                    
     approximately 188  acres of  rail land  to the  City of                                                                    
     Nenana and  provides for the legal  descriptions of the                                                                    
     property conveyed.                                                                                                         
     Section  2   provides  for  an  effective   date  under                                                                  
     AS.01.10.070(c).                                                                                                           
                                                                                                                                
2:36:07 PM                                                                                                                    
JOSH VERHAGEN, Mayor,  City of Nenana, Nenana,  Alaska, said this                                                               
is a  significant project  that will  make a  huge impact  on the                                                               
future of the community of  Nenana. He appreciated ARRC for their                                                               
communication and cooperation. He said the  goal of HB 395 is for                                                               
Nenana to acquire  land that is not used for  ARRC operations but                                                               
comprises most of the waterfront  property surrounding Nenana and                                                               
has been  developed by  the City of  Nenana and  its sub-lessees.                                                               
The City of  Nenana is currently in the midst  of a 55-year lease                                                               
with  ARRC  for  approximately  188  acres  of  land.  There  are                                                               
thirteen years  left on the  lease. He said  Neana is one  of the                                                               
few inland ports in Alaska and  has a long history of barging. He                                                               
listed items  that are  on the  property including  buildings and                                                               
businesses,  offices,  a   warehouse,  the  wastewater  treatment                                                               
facility,   gravel  processing,   storage   facility  for   barge                                                               
operations, etc. He described  the infrastructure and development                                                               
that has  already occurred, and projects  and investments planned                                                               
for  the  future.  He  said  there  is  interest  from  investors                                                               
representing  a broad  range of  business and  industry and  some                                                               
potential  investors have  hesitated because  the City  of Nenana                                                               
does not own the land. Nenana  has put about $29 million into the                                                               
port land.  He said the  lease states  that Nenana has  the first                                                               
right of refusal if the land  were to be offered for sale, though                                                               
ARRC has never done so. He  spoke about past efforts to allow the                                                               
purchase  and  transfer of  the  property  from the  railroad  to                                                               
Nenana. He appreciated the efforts to bring HB 395 forward.                                                                     
                                                                                                                                
2:41:19 PM                                                                                                                    
MR. VERHAGEN  said Nenana has  eliminated ninety-five  percent of                                                               
$10.5 million  in debt over the  past six years. Debt  to ARRC is                                                               
the only remaining  debt Nenana has. HB 395  would help eliminate                                                               
the debt.  He noted that  HB 395 is not  a request for  funds and                                                               
there is no fiscal note attached.  Nenana intends to work out the                                                               
purchase details with  ARRC. He said investors in  Nenana will be                                                               
part  of the  purchase agreement  with  ARRC. He  said Nenana  is                                                               
working  hard to  become self-sufficient  and sustainable.  These                                                               
economic  development projects  will help  provide jobs,  housing                                                               
and revenue  the community needs.  He said the land  will benefit                                                               
the community and turn the tide for Nenana's economic future.                                                                   
                                                                                                                                
2:43:46 PM                                                                                                                    
SENATOR MYERS  asked, assuming HB  395 passes during  the current                                                               
session, when the sale will be completed.                                                                                       
                                                                                                                                
2:44:17 PM                                                                                                                    
MEGHAN  CLEMENS,  Director,  External  Affairs,  Alaska  Railroad                                                               
Corporation, Anchorage,  Alaska, answered  that she  was hesitant                                                               
to put a  timeline on the sale. She noted  essential steps of the                                                               
process:                                                                                                                        
   • staff review and discussions with the purchasing entity;                                                                   
     she said this has begun with Nenana                                                                                        
   • legislative approval                                                                                                       
   • survey of the land                                                                                                         
   • appraisal of the land                                                                                                      
  • determining whether Nenana will move forward with purchase                                                                  
   • ARRC Board of Directors review for approval                                                                                
   • Multi-step fair market value purchase process                                                                              
Given these  steps, she said  a couple of  years would be  a fair                                                               
expectation. She requested input from Christy Terry.                                                                            
                                                                                                                                
2:46:03 PM                                                                                                                    
CHRISTY  TERRY, Vice  President of  Real Estate,  Alaska Railroad                                                               
Corporation, Anchorage,  Alaska, concurred with the  timeline and                                                               
the  representation  of  the  steps   required  to  complete  the                                                               
transaction.  She mentioned  that the  ARRC board  would need  to                                                               
determine that the  land is not necessary  for railroad purposes.                                                               
She said  ARRC has  worked with  Nenana to  be sure  the property                                                               
description is  very specific, and that  the sale is in  the best                                                               
interest of the state.                                                                                                          
                                                                                                                                
2:46:53 PM                                                                                                                    
REPRESENTATIVE MCCABE said one of  potential Nenana investors was                                                               
especially   inspiring   to    him.   The   investor's   business                                                               
manufactures modular homes  which can be assembled  in about five                                                               
days. He  said this  seemed like an  exciting win-win  to address                                                               
the need for housing in the  villages. He noted with the airport,                                                               
the railroad  and the  Parks highway, Nenana  seems like  a nexus                                                               
for good things.                                                                                                                
                                                                                                                                
2:48:35 PM                                                                                                                    
CHAIR KAUFMAN held HB 295 in committee.