Legislature(1999 - 2000)
05/12/1999 01:40 PM 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
SB 7 - INCREASE LAND GRANT TO UNIV. OF ALASKA CO-CHAIR SANDERS announced that the final order of business before the committee would be CS for Senate Bill No. 7(FIN) am, "An Act relating to the University of Alaska and university land, and authorizing the University of Alaska to select additional state land." Acknowledging the shortage of time, Co-Chair Sanders said he would take as much testimony as possible in the remaining time and then recess to the call of the chair. Number 1198 MEL KROGSENG, Legislative Assistant to Senator Robin Taylor, Alaska State Legislature, noted that although CSSB 7(FIN) am is similar to previous legislation on this subject, it is a new bill. Amendments from various committees were tacked onto last year's bill, which resulted in conflicting and confusing sections. That bill, cleaned up by Legislative Legal and Research Services, is before the committee currently. MS. KROGSENG explained that CSSB 7(FIN) am provides the university with 250,000 acres of state land. The university was created as a land grant college by the federal government. It was created as an agricultural and mining school. Although promised vast amounts of land by the federal government, the university only received 111,000 acres. The remaining entitlement was extinguished at statehood when the state was given some 103 million acres of land. There are many restriction regarding which lands can and cannot be selected. She noted that the committee should have a sectional analysis of CSSB 7(FIN) am. Number 1079 MS. KROGSENG continued with highlights of the bill. She informed the committee that lands not available for selection are the following: land reserved for the public domain; land included in a five-year proposed oil and gas leasing program; leased land or land for which a lease is pending for other purposes; land subject to an oil, gas, or coal lease or coal prospecting permit; land subject to a mining claim, prospecting site, upland mining lease, or mining leasehold location; land necessary to carry out the purposes of an inter-agency land management agreement; and land subject to conveyance under a land exchange or settlement agreement. Land selected by a municipality is not an option. Furthermore, land that a commissioner may believe will be selected by a municipality can be withheld by the commissioner for three years. MS. KROGSENG noted that CSSB 7(FIN) am includes the new provision allowing the municipalities the first right of refusal. She pointed out that the following land also may not be conveyed: land subject to an oil and gas exploration license, and land which the commissioner believes may be part of an oil and gas exploration lease. Any land conveyed is subject to a possessory interest. Furthermore, the Department of Natural Resources (DNR) shall provide public notice of intent to convey the land. She informed the committee that the university shall pay all survey and transfer associated costs, except the recording of the title transfer. MS. KROGSENG pointed out some transfer conditions. Coal, ores, minerals, fissionable material, geothermal resources, and fossils transfer when the title to the land transfers. Oil and gas resources, however, only transfer for land selected after the effective date of the Act, and then only five years after the effective date. Therefore, if the state develops or sells an oil lease and gets revenue from the oil lease prior to selection by the university, the state will continue to get that money in perpetuity, even if the oil is discovered three years after the effective date of the Act. The university would only receive oil and gas revenues for oil discovered five years or later than the effective date of the Act. That was of concern in the prior legislation, Ms. Krogseng noted. The current legislation also increases the size of the acreage that the university must select to 640 acres or more, unless the commissioner believes it to be in the best interest of the state for the university to select a smaller parcel. Number 0834 MS. KROGSENG reiterated that oil and gas revenues go to the state for five years after the effective date of the Act even if the land is conveyed. "Well actually, the oil and gas continue on," she then stated. "All other revenues transfer to the university fund conveyance as title. So, if they were a mining or a grazing lease, ... that lease revenue would transfer to the university fund conveyance." She pointed out that the bill includes a provision for the Board of Regents to give up 20 percent of the revenue derived from the resource sales in the area closest to a campus, provided the local municipality provides a match. Without that match, the Board of Regents would not be required to provide that revenue to the campus. MS. KROGSENG directed the committee to page 9, lines 27-30, which attempts to address the concern regarding continued use by the public of the land to be conveyed. She noted that an issue had arisen today regarding the potential access, if the land was later sold to a third party. Land placed on the list must come before the legislature for approval similar to the Local Boundary Commission's land. The legislature has the ability to eliminate proposed land from the list or to approve the land with certain access conditions. MS. KROGSENG expressed her belief that CSSB 7(FIN) am meets the requirements of legislation introduced by U.S. Senator Murkowski, which would provide Alaska with 250,000 acres with no strings attached, as well as an additional 250,000 acres if the state matches with an additional 250,000 acres. This would go far in making the University of Alaska a truly land-based college, she said. The University of Alaska is second-to-last in the amount of land it currently has. She mentioned a map and an overlay which the committee reviewed during the meeting. Number 0502 REPRESENTATIVE JOULE asked if CSSB 7(FIN) am discusses the types of lands the university would select. For example, would some land classifications be off-limits? MS. KROGSENG said there is a list of lands unavailable for selection, but that list is not done by classification; the commissioner provides a list of available lands. The bill does specify the lands that may not be selected. REPRESENTATIVE JOULE inquired how that selection compares with the pending selections of municipalities. MS. KROGSENG replied that the municipalities, under current law, are more restricted; the lands available for selection under this legislation are more far-reaching. She noted that she had discussed that issue with the Alaska Municipal League (AML), but it could not be addressed in this legislation due to the single-subject title rule. REPRESENTATIVE JOULE suggested that the university would be bumped ahead, in terms of the types of classifications to which they have access. MS. KROGSENG said yes; according to her understanding of the legislation, certain lands that the university could select would not be available to a municipality. Number 0294 REPRESENTATIVE JOULE asked if the AML is supportive of this legislation. MS. KROGSENG replied, "What we did in the legislation was ... if the university selects land within municipal boundaries and that municipality has a remaining entitlement, then the municipality has the first right of refusal." She did not have a letter of support from the AML, she said, but doesn't believe they oppose the legislation. Number 0222 REPRESENTATIVE BARNES requested that Ms. Krogseng provide the committee with the use of the acreage presently held by the university. MS. KROGSENG agreed to that, but noted that Ms. Redman was present and may have that information. CO-CHAIR SANDERS requested that Ms. Krogseng also provide the committee with the income stream coming from that land, at present. MS. KROGSENG agreed to that, as well. CO-CHAIR SANDERS asked if the university would pay start-up expenses from the income generated from the land or from general fund monies. MS. KROGSENG expressed her understanding that income from the land which the university currently manages is placed in the land trust. The interest from the land trust pays start-up expenses. CO-CHAIR SANDERS inquired as to the provisions regarding the state's oil rights. MS. KROGSENG explained that if oil was found within five years of the effective date of this Act, the revenue stays with the state in perpetuity. If oil is found after five years of the effective date of this Act, the revenue stream goes to the university. CO-CHAIR SANDERS said he found that to be counterproductive, if the goal is to support the university. He added, "We're going to give them some land, as long it doesn't make much money. If it makes a little money, they can have it. But if it makes very much money, we want it." MS. KROGSENG said she believes that provision was placed in the legislation some time ago. TAPE 99-34, SIDE A Number 0001 MS. KROGSENG commented that there was some concern regarding speculation and taking the state's revenue streams. She understood that there have been many compromises over the years, in attempting to develop a program and a document that works for the university as well as the state. CO-CHAIR SANDERS said he understood Ms. Krogseng to say that the university could sell the land. MS. KROGSENG said that is correct. She further explained that the university would have to go through the public process, as does the DNR. She requested that Ms. Redman come forward to answer some of these questions. Number 0196 WENDY REDMAN, Vice President, Statewide University of Alaska System, commented that she "really loved" this bill six years ago, but she "likes" this bill now. Ms. Redman said that the university, as a land grant university, has a long history and tradition of managing land. Other than the DNR, the university is the only state agency set up to manage land. She believes that the university's record illustrates the phenomenal job it has done managing its 100,000 acres. MS. REDMAN informed the committee that although the university was originally allotted 350,000 acres from the federal government, it only received 100,000 acres. At statehood, the original lands had not been surveyed and so were given up. Those lands were managed by the state and mingled with other state lands for the good of all Alaskans, which was the intent. In the first 30 years of state management, those lands generated $590,000 total. The university sued the state to have management of those lands returned to the university. By the time the university won that suit, however, the university's original lands were not available because the land had been given away. Therefore, the university received lands of similar value. MS. REDMAN pointed out that in the ten years that the university has had active management of the lands, it has generated $32 million from the 100,000 acres. She said the university is an aggressive land manager, which she acknowledged did cause some problems. For example, the university has engaged in timber cutting, which caused some difficulties. Number 0452 MS. REDMAN reported that the university believes it is in the state's interest and its own interest to generate new revenue for the state. She pointed out that when land is put into the university, it generates revenue that wouldn't otherwise be available to the state or to the university to use; that is the idea of getting these lands into development, which she believes the university can do more effectively than the state can. Ms. Redman clarified that she was not speaking negatively about the DNR, which has done a great job with oil and gas because it has the resources and staff to do it. However, outside of oil and gas, the DNR has not had the staff to get land out into the private sector. MS. REDMAN informed the committee that she would provide copies of the recent land management report that lists all of the university's properties and the activity, pending and ongoing, on those properties, as well as the financial statements from the land grant trust fund. [Before the end of the meeting, members received copies of a lengthy document titled, "Statewide Office of Land Management Annual Report," dated February 1999.] She echoed Ms. Krogseng's comment that this legislation encompasses many compromises. MS. REDMAN addressed Co-Chair Sanders' question regarding oil and gas. Under CSSB 7(FIN) am, it would be very difficult to determine how to obtain any oil and gas lands. There has been some support from the oil and gas industry for some joint projects; for those, it is easier for that industry to be involved with the university, rather than the state. There has been some opposition to this from various groups, however, such as the environmental community, hunters and fishermen, who are concerned with limited access to the lands acquired by the university. This legislation attempts to address that concern with language indicating the continuance of the customary utilization and access to the land, to the maximum extent the university could. Also, prior to transfer of land into third-party hands, such entry would be allowed on university land. Beyond that, however, the university cannot make any commitments regarding use. MS. REDMAN emphasized that she would prefer a bill with specific acres designated. In conclusion, she pointed out that this legislation will not solve any financial problems for the university. Land development takes much time, and potential income is in the future. Therefore, no immediate or short-term financial problems of the university would be solved. Number 0829 REPRESENTATIVE BARNES inquired as to the location of the university's land that was logged. MS. REDMAN replied that the logging is occurring in the Yakataga region, Cape Suckling. Furthermore, the university had land in Southeast Alaska, in the Ketchikan region, that was logged. She also recalled some land on Afognak Island that is part of the original settlement with the state. REPRESENTATIVE BARNES asked about Ms. Redman's statement that if the university developed lands, it would be well into the future before the university could derive any income from it. MS. REDMAN reiterated that land development is a long-term process; therefore, it will not solve financial problems next year or the following year. Money generated from land development is placed into the natural resources trust fund, which was established by the legislature. The university only utilizes the earnings of the fund, minus inflation-proofing, in order that an income stream is generated. Ms. Redman informed the committee that the operating budget is $160 million a year. REPRESENTATIVE BARNES emphasized that state land cannot be disposed of to anyone for a quick solution. MS. REDMAN clarified, regarding a previous question from Representative Joule, that the state cannot transfer any public domain land to the university. This is because the university is not public domain land. Therefore, any lands already legislatively designated as park land cannot be transferred to the university. CO-CHAIR SANDERS, in the interest of time, asked that testifiers limit testimony to three minutes. Number 1137 KEVIN TRITT testified via teleconference from Anchorage, voicing opposition to SB 7 as it currently stands. He has followed the university land grant as legislation, and as a student, he said, for a few years. Some practices implemented by the university as land managers, particularly in the Cape Yakataga region, have caused him to oppose this bill. The university wasn't put into the best of situations with Cape Yakataga, as they were given the timber rights only, he noted. This bill doesn't adequately appease his concerns that the university may select further timber lands. He agrees with Wendy Redman that it would be better to have a bill which specifies the exact lands to be given to the university. MR. TRITT mentioned that a number of Southeast Alaska communities have opposed the university's land grant because of its practices at Cape Yakataga. He offered a copy of a documentary film prepared by university students from the Environmental Education Club, who felt that the university's procedures at Cape Yakataga aren't sound ecological management practices and don't represent the type of university that they wish to attend. Number 1304 CO-CHAIR SANDERS accepted Mr. Tritt's offer of the tape, asking him to send it through the Anchorage LIO. Number 1344 JOHN EASTON, Bristol Bay Coastal Resource Service Area (Bristol Bay CRSA), testified via teleconference from Dillingham, specifying that he was speaking on behalf of their elected board, which represents 11 communities. They oppose SB 7. Although strong supporters of the university system, they believe indiscriminately giving public land to the university in a period of declining revenues is not the answer. Rather, a more reliable way to fund the university is needed, now and in the future. MR. EASTON informed the committee that the majority of land within his coastal district is owned by the state and managed by the DNR. Two major adopted land use plans are in effect: the Bristol Bay Area Plan and the Nushagak/Mulchatna Rivers Recreational Management Plan. These plans, representing years of hard work, provide an outline for resource developers on state land and allow the coastal district involvement in the public planning process. However, SB 7 doesn't account for future uses of these lands, and it will eliminate guidelines for how the university manages these lands. Mr. Easton cautioned that there are highly valued public resources at risk here. He asked the committee to not support this bill but to reevaluate other options to fund the university. Number 1465 RUSSELL NELSON, Land Manager, Choggiung Limited (village corporation), testified via teleconference from Dillingham. He expressed strong concerns about SB 7 and potential land selection in the Nushagak/Mulchatna drainage. Choggiung Limited is a major land owner along the Nushagak River; their lands, surrounded by state lands, are managed under the guidelines of the Nushagak/Mulchatna Recreation Management Plan. This bill creates the potential for developing lands in the Nushagak/Mulchatna area, removing those lands from the public planning process. CO-CHAIR SANDERS called upon Jane Angvik, Director, Division of Land, DNR, who reserved her comments for a later time. Number 1550 TOM ARMOUR, Manager, City and Borough of Yakutat, testified via teleconference, specifying that he was speaking as a professional municipal manager, not reiterating the assembly's position. He indicated the City and Borough of Yakutat supports the concept of first rights for, and protection of, a priority for municipal lands selections. This first right of refusal, as it is now, is much appreciated, and he believes this bill version is far better than what they've dealt with in the past. MR. ARMOUR recommended a simple amendment stating that "municipal land selections shall receive first priority in selections, adjudications and/or conflicts." Second, on page 8, lines 27 and 28, he suggested adding that the university wouldn't be able to proceed with selections under this bill until January 1, 2000. This simple protective device recognizes the proliferation of borough annexations and creations either underway or being considered, in view of other declining state assistance. Finally, Mr. Armour reiterated a suggestion of March 4 that some portion of the income stream to the nearest university branch instead go to the nearest municipal government. Noting that many selections take place in areas lacking university branches, he said these selections remove local revenue generation possibilities. He believes that would also benefit newly forming local governments. Mr. Armour concluded by commending the current version. Number 1780 ROSS COEN came forward on his own behalf, informing members that he'd just graduated from the University of Alaska Fairbanks. He spoke in opposition to SB 7; although the university requires adequate funding, he believes this is little more than a short-sighted land giveaway. He reported that a now-retired philosophy professor at the university, Dr. Walter Benish (ph), still teaches classes on a volunteer basis because otherwise the philosophy department would fold. Revenue from SB 7 won't come in for at least ten years, and Dr. Benish cannot teach on a volunteer basis until money starts coming in. This bill doesn't solve the university's funding problems, he concluded, imploring the committee to instead fund the university through the regular appropriations process. Number 1865 CHOW TAYLOR, Alaska Municipal League (AML), came forward, specifying that the AML doesn't oppose the bill but has some concerns. She expressed appreciation for inclusion of the first right of refusal but also voiced concern that it only applies to the VUU [vacant, unappropriated, unreserved] lands that municipalities are entitled to select under Title 29. The AML doesn't believes that other lands which the university would be eligible to take under Title 14 would be subject to objections by the municipalities, which aren't able to select those lands. Many municipalities are trying to complete their land conveyances, and the state currently owes municipalities more than 600,000 acres. MS. TAYLOR restated that under current law, municipalities are only entitled to select vacant, unappropriated, unreserved lands. If some of those selections are denied by the state, they would have the opportunity to ask the state to reclassify some of those lands, so that they might select them at a later date. If the university, in the meantime, can come in and select lands other than VUU lands, those would be taken out of consideration for municipalities. MS. TAYLOR informed the committee of some suggestions by the AML: 1) that the university not be allowed to select lands within municipalities until their land selections are completed, or 2) that the university be limited to selecting VUU lands within municipal boundaries, or 3) that municipalities be allowed to select all classifications of lands within their boundaries, as would be the university. CO-CHAIR SANDERS requested that Ms. Taylor provide those suggestions in writing, to which she agreed. Number 1992 MS. KROGSENG emphasized that first, Senator Taylor doesn't believe this is an immediate solution for the university's financial woes. However, if they don't start working on a long-range fiscal plan for the university, they will be in the same situation in five, ten, fifteen or twenty years. This bill isn't trying to address the immediate financial needs of the university. Second, regarding municipal entitlements, it is her understanding that 90-some percent of the lands due to municipalities have already been selected, although they have yet to be conveyed. Once selected, lands are totally off the table. Number 2065 CO-CHAIR SANDERS recessed the House Resources Standing Committee meeting at 3:47 p.m., to the call of the chair. [A new meeting was subsequently called for May 7, 1999, at which time CSSB 7(FIN) am was heard again.]
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