Legislature(1995 - 1996)
03/23/1995 09:30 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 16
"An Act relating to the University of Alaska and
university land, authorizing the University of Alaska
to select additional state public domain land,
and defining net income from the University of
Alaska's endowment trust fund as 'university
receipts' subject to prior legislative
appropriation."
Co-chair Frank, as sponsor of SB 16, testified that this is
the University land grant bill. He stated that last year the
Senate did pass the bill on a 14-5 vote. The House had it
on schedule, but did not get to it. The purpose of the bill
is to increase the University's land grant. He cited that
in most states, land grants support universities. The
University of Alaska is a land-grant university. It was
granted land prior to statehood and never did receive the
entire amount that was entitled. The university currently
has 112,000 acres. This bill would add one million acres.
He stated that as the state oil revenues decline, greater
pressure is placed on the state's general fund. To grant
the university one million acres would allow them to develop
lands to support their programs. It is consistent both with
our constitutional requirement, that we develop our natural
resources for the benefit of the people; and our
constitutional mandate with regards to the university. He
urged getting beyond the thought that the state has to own
all the land. He supports allowing the university to
increase its activities and further support its programs
through a land grant. There are protections in the bill.
The university cannot take land that the state has already
developed or targeted for development, or from the five year
oil and gas program. In the final analysis, the
Commissioner of Natural Resources has the final say and any
appeal would be to the governor, not to the courts. There
is no opportunity for the courts to file action. It is
basically a situation where, the Dept. of Natural Resources
and the governor, ultimately would make the final decision
on which million acres are transferred. Co-chair Frank
asked for favorable consideration.
Senator Phillips spoke to Section 6. Co-chair Frank stated
that the university would like to keep lands open to public
use. The university wants to allow people to continue to
hunt, fish and recreate on their lands. Section 6 speaks to
the protection required so the University will not be held
liable for personal injuries, death or property damage which
occurs on their land. If the university is guilty of
reckless, intentional misconduct, then they would be in a
position to be held liable for those acts.
Co-chair Halford asked how much revenue the university
generates now from the 140,000 acres? Co-chair Frank
responded that the university has become increasingly active
in developing their lands. It took a long time to finally
get their land grant. The process has not gone as quickly as
they would have liked, but they are increasingly active.
Co-chair Halford invited Tom Waldo, attorney, Sierra Club
Legal Defense Fund, to join the committee. Mr. Waldo
testified that SB 16 creates conditions that can lead to the
same conflict and litigation as in the Mental Health Trust
Lands. When congress passed the Alaska Mental Health
Enabling Act, it dictated it had to be used for Mental
Health programs. In the 1970's the legislature decided that
there were other uses for the land that were in the public
interest and included: disposal to individuals for
settlement purposes; disposal to municipalities for local
government purposes, such as below-cost mineral leases to
encourage development, or setting aside areas for public
use, such as parks. Those uses violated the trust that
congress had set up. It led to 12 years of divisive, costly
litigation for the state. He stated that SB 16 will "tie
your hands" in the same way that congress "tied your hands"
with the Mental Health Enabling Act. It will prevent making
the best decisions in the future for use of these lands.
Remember that congress passed the Enabling Act in 1956 and
40 years later it is still an issue that we are struggling
with. If SB 16 passes, 40 years from now and beyond,
legislatures and the public, will still be dealing with the
implications and the loss of discretion in dealing with the
lands. For those reasons the Sierra Club encourages you not
to support SB 16.
Co-chair Halford asked Wendy Redman, Vice President,
Statewide University System, to join the committee. She
testified that she is concerned that this bill has become so
controversial. She spoke to the actual land grants for the
University of Alaska as compared to the other universities
in the other states within our nation. Land grants in other
states do provide a large portion of the support for the
state land grant universities. She stated that this
legislation has been crafted in such a way to respond to all
the considerations surrounding land grants for the
university. The crafters have worked with the
environmentalists to build in better public process, worked
with hunters and fishermen to provide continuing access,
have worked with the mining groups to provide for their
interests and concerns. The environmental community wants
the university land to be treated as public domain land.
She stated that she could not fix that problem. She stated
she could try to mitigate the problem by building in greater
and greater public processes. She stated that 2% of the
state land is in private ownership in Alaska. If the State
of Alaska does not feel that more land should be in private
ownership for development purposes, then the legislation
should be voted against. The universities goal is to get
more land into private ownership to development, encourage
new revenue, and develop new land which would develop
revenue. She stated that the argument last year was that it
would off-set state general funds to the university. She
stated that she would not want it to be a dollar for dollar
off set because that leaves very little incentive to try to
continue to develop the land. Ideally, over time, the goal
is to create an endowment that would support a large
portion, and free up other general funds that are currently
going to the university.
Senator Phillips asked if the total land grant is 112,000 or
140,000? Ms. Redman stated that the total land holdings of
140,000 includes some lands that were given to the
establishment of the College of Agriculture and Mines,
referred to as the Fairbanks campus lands which are managed
as part of the trust, but not part of the actual land grant.
Senator Phillips then cited a letter from Northern Alaska
Environmental Center which stated, "political opposition
could be substantial, especially as lands to be transferred
are actually identified on the ground." In the letter, he
states that they list the Alaska Miners Assoc., and the
Resource Development Council. He asked if they have a
position for or against the bill? Ms. Redman responded that
originally the Research Development Council was reluctant to
support the bill. Their feeling was that the university was
not aggressive enough in developing the lands. They were
concerned instead that the university had sold lands through
Exxon to go in preserves and were not in support of that
kind of development. Subsequently, they have been very
supportive. She believes that they do have a position.
With regards to the Miner's Assoc., last year they took a
position, though not formal, that the status quo is perfect
with the miners. They do not want any change, their
concerns are that the university will be a different kind of
landlord than the Department of Natural Resources, and they
are correct.
Co-chair Halford asked if the university sold land to the
Exxon trust? Ms. Redman responded that the university did
not sell land to the Exxon trust, but that there was a bill
in the legislature 3 years ago (HB 16) which was ultimately
vetoed. The university has a fiduciary interest and Exxon
was offering cash, not to cut trees. They offered the same
amount of money that we would have received from cutting the
trees, so our interest was not supportive of that bill. She
stated the university did not actively oppose the bill, and
the RDC was upset. Subsequently, the university has
negotiated on the timber land and are going forward this
summer with a $15 million timber cut.
Senator Phillips then spoke to the letter from the Anchorage
Fish and Game Advisory Committee of the State of Alaska,
quoting that: "annually the university gains $10 million
from current land base, and of that, $7 million comes from a
one-shot timber sale." Ms. Redman responded that over the
past few years, $7 million has come from a major timber
sale. Ms. Redman stated that the university did generate
$10 million last year, but it does go up and down every
year. The total cash in the land grant trust is at $30
million. This is an accumulation of the last 10 years. She
stated other assets include $40 million in real estate.
The total endowment is worth about $75 million. There is
also a strong inflation proofing provision in the fund so
that it is kicking off actual earnings to the university of
about $3 million. From this, the university funds the land
management office, and activities, so that the general fund
can be used for development of the land. The balance is $2
million, which comes back to the university in program
receipts as part of our budget. That's been given out
through the Dept. of Natural Resources fund, which was
established in statute by the legislature, defining that
funds be used to support natural resources programs in the
state.
Ms. Redman stated that the university is heavily timbered
and is looking for other sources of income such as
subsurface rights, gravel, and recreational leases for
lodges and hunting. The Board's position is very strong
about not selling property. Although, there has been some
property placed in subdivisions around the state and then
sold. The Board prefers to keep the land for development.
The university has offered oil exploration in the Mat-Su
area, and land has been put up for auction for private
ownerships in the Fairbanks and interior areas.
Ron Swanson, Director, Division of Land, Dept. of Natural
Resources, was asked to join the committee. He explained
that "Muni Muni" refers to a lawsuit between the University
and the State of Alaska when the State of Alaska conveyed
all the university land to the municipality of Anchorage to
fill their land entitlement. Ms. Redman interjected that in
the original land settlement with the Mental Health Lands,
university lands were commingled with state lands and were
mismanaged by the state so that many of the university's
valuable lands and property in Anchorage were given away
with the entitlements.
Co-chair Halford asked Mr. Swanson what the administration's
position is toward this bill. He stated that the
administration is opposed to this bill, though it is in
support of the university receiving more land. It is felt
that the land should come from the federal government, not
from state lands. The administration is very willing to
work with the university and go back to congress. He stated
that the current political structure there is interested in
disposing of various lands in various areas.
Senator Phillips reiterated, in 1915 congress gave a land
grant of 250,000 acres, in 1956 came the Mental Health
Lands. Ms. Redman stated that the Mental Health Lands
really had nothing to do with university land grants. At
the time of statehood, The Statehood Act extinguished the
land grant which had been given to the university at that
time. The supporters of the extinguishment, at the time of
statehood, said, "that because the state was clearly
receiving more land from the federal government than
imagined, that the state could keep the obligation to the
university." That never happened. Ms. Redman stated that
the president of the university, and she, were in Washington
D.C. and met with the state's delegation on the issue of
federal land. The university felt it would enhance its
ability to get state land if it could come back with a
federal package, such as, 5 federal acres for every one
state acre. Senators Stevens and Young felt the timing was
not appropriate, and for the federal government to be giving
more land to the State of Alaska was not going to be a very
popular notion.
Discussion was had among the committee on the 1 million
acres. Senators Phillips and Sharp indicated they could
support 250,000 acres. Senator Zharoff could support
500,000 acres.
Senator Sharp asked about the applicability of this bill
with safeguards to prevent a delay in the utilization of
lands from time of nomination to actual time of transfer.
Ms. Redman noted that on page 5, line 16, the preference was
to close entry for the university's protection during that
period of time. Senator Sharp stated that experience has
shown that the period of time has become extended, and in
effect there would be no opportunity to use the land by
private enterprise during the time of nomination and actual
time of transfer.
Mr. Swanson stated that when a selection is made from the
federal government it also segregates the land so that the
federal government cannot create something that we do not
want. Within ANILCA we did create a provision that the
state will allow the federal government to do something with
our permission only. This could be written into this bill
as well.
Mr. Swanson urged conveyance from the federal government to
the state. It would be desirable, if in the developing
process, there would be a requirement of the developer to
develop the land so that the state would not be burdened at
a later time. Ms. Redman stated that conveyance has been
provided by parameter surveys to accommodate that cost
factor. It is the intent of the university to have the
developer handle the full cost of surveying. Co-chair
Halford asked about conveyance for eloquent parks. Do they
require surveying? Mr. Swanson stated that in a
municipality they would, but not in an unorganized borough.
Senator Sharp stated he would prefer a "not withstanding (d)
above" clause added just below item (d) on page 5. He
suggested stating it in such a way as to allow the filings
and utilization subject to university concurrence. Co-chair
Halford suggested not closing it, that it remain open and
when the university selects it, whatever the benefit of that
use and entry is, it transfers to the university. So it
wouldn't close to mineral entry under state leasing laws,
but the state leasing laws would be to the benefit of the
university versus the benefit of the state.
Co-chair Frank proposed a conceptual amendment drafted to go
with the bill. Co-chair Halford asked if there was any
objection to amending the transition section that deals with
closure to entry. Once the university makes the selection it
is essentially the beneficial owner, that other activities
are not stopped. Mr. Swanson helped out by saying that the
language in ANILCA could be extracted and inserted into the
bill saying, "the university concurs and they get 90% of the
revenue". Administrative costs would be handled with the
other 10%. Co-chair Halford asked if the university would
grant the concurrences routinely? Ms. Redman stated that
the university's interest is in getting land into
development as quickly as possible, so the interests are
concurrent. The university is looking to get interest from
the land that is not closed, then there is not a problem.
Co-chair Halford asked if there was any objection to Co-
chair Frank's amendment? With no objection, the draft
amendment was ADOPTED and will be made into a CS and
brought before the committee at the next meeting. He stated
that the assumption is to use the ANILA language. Mr.
Swanson stated that it was in section 906K just for the
record.
Senator Sharp asked if the present CS contained the ability
of local municipalities to tax improvements on university
land that is not being used for educational purposes. He
stated the property should not be tax exempt property if it
producing income. Ms. Redman stated that it was so stated
in the bill.
Co-chair Halford MOVED to delete 1,000,000 and insert
250,000 on page 4 line 13. Co-chair called for a show of
hands and the motion FAILED. SB 16 will be recognized at the
next meeting.
ADJOURNMENT
The meeting was adjourned at approximately 11:00 a.m.
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