Legislature(2017 - 2018)BARNES 124
05/02/2018 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| SB86 | |
| SB76 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 86 | TELECONFERENCED | |
| + | SB 76 | TELECONFERENCED | |
SB 86-ALASKA RAILROAD CORP: LAND;BONDS,FINANCE
3:17:04 PM
CHAIR KITO announced that the first order of business would be
CS FOR SENATE BILL NO. 86(FIN) am, "An Act relating to the sale
or other disposal, leasing, or encumbrance of Alaska Railroad
Corporation land; relating to the financing and bonding
authority of the Alaska Railroad Corporation; and providing for
an effective date."
3:17:33 PM
SENATOR JOHN COGHILL, Alaska State Legislature, paraphrased from
the sponsor statement [included in member packet], which reads
as follows [original punctuation provided]:
SB 86 repeals the current requirement for legislative
approval prior to an Alaska Railroad Corporation
(ARRC) land sale or land lease for more than 95 years
and enables the ARRC to react much more quickly and
efficiently to real estate opportunities and land
transactions with state entities such as DOTPF for
state road and facility projects.
SB 86 will put ARRC on an even playing field with the
Department of Transportation and Public Facilities
(DOTPF), the Department of Natural Resources (DNR),
the Alaska Mental Health Lands Trust, and the
University of Alaska.
The bill would enable ARRC to sell land on which
development would not occur with a land lease such as
real estate in residential areas that could be
subdivided for home construction. Such an incentive
could increase private land ownership, encourage
private development, and increase the local tax base.
SB 86 will allow ARRC to monetize non-performing land
assets, generate cash flow to respond to opportunities
in the real estate market, enhance the overall real
estate portfolio of ARRC, and enable ARRC to continue
to comply with the statutory mandate to remain self-
sufficient.
SB 86 has a three-year sunset provision.
3:22:02 PM
REPRESENTATIVE JOSEPHSON asked about a legal opinion stating
there is no constitutional problem with the bill except that any
funds received by the railroad have to be appropriated to the
railroad.
SENATOR COGHILL replied that the question of appropriation is
unsettled. He deferred to his staff to present the citation.
3:25:04 PM
RYNNIEVA MOSS, Staff, Senator John Coghill, Alaska State
Legislature, said there is a provision in Public Law 97468,
January 14, 1983, that states that revenues generated by the
state-owned railroad shall be retained and managed by the
railroad for railroad and related purposes. She added that
Senator Stevens had specified on the record that the provision
is in public law to eliminate the necessity to appropriate the
money to the railroad.
3:25:52 PM
REPRESENTATIVE WOOL moved to adopt the proposed committee
substitute (CS) for CSSB 86 as the working draft.
3:26:06 PM
CHAIR KITO objected for the purpose of discussion.
3:26:18 PM
CRYSTAL KOENEMAN, Staff, Representative Sam Kito, Alaska State
Legislature, paraphrased the explanation of changes, Senate Bill
86, Version U.A to Version N [included in member packet], which
reads as follows [original punctuation provided]:
Adds a new subsection to 42.40.350 that prohibits the
Alaska Railroad Corporation to exercise management
authority over lands which were unlawfully transferred
in violation of state law.
Adds a new subsection 42.40.410 that states that any
land or interest in land the Alaska Railroad
Corporation received from the U.S. Department of the
Interior that was not conclusively owned by the United
States at the time of transfer does not satisfy the
exception from legislative approval required under AS
42.40.285.
Provides for Legislative Approval of the transfer of
Real Property to Eklutna, Inc. and the Municipality of
Anchorage.
All other provision in version U.A have been removed.
CHAIR KITO explained that the transfer language is in Sections 4
and 5. He called on Representative Kopp for a brief explanation
of Sections 1, 2, and 3.
3:28:24 PM
REPRESENTATIVE CHUCK KOPP, Alaska State Legislature, said the
aim of the proposed changes is to clarify the rights of the
Alaska Railroad Corporation over the right of way and to prevent
the ARRC from exerting perceived authority to continue to
purchase private property in violation of federal and state law.
He said there is no railroad corporation property transferred
from federal or state ownership which will be affected by the
amendments. He pointed to Section 2, AS 42.40.350, and said it
uses the phrase "to not have authority over real property. The
railroad corporation is given its authority in state law. The
amendment clarifies that the authority does not include the
ability to take action on or otherwise manage property
unlawfully obtained. He added that the amendment to AS
42.40.410 uses the term "conclusively owned", which means any
individual parcel's chain of title clearly states the federal
government was the owner of the title or interest at the time,
and as stated by the ARRC, each parcel would have to be
individually examined to determine what the federal government
owned when it transferred rail properties which only included
the right, title, and interest in those properties which
belonged to the federal government. If it becomes clear that
the ARRC is only in possession of the federal interest in those
parcels of land, then the amendments would have no effect. He
referenced a letter from Congressman Don Young in which he said
there is no way that a bill quietly annexing private property
rights would have passed the Congress in 1982.
3:32:50 PM
REPRESENTATIVE JOSEPHSON asked about page 2, line 30 of the CS.
He asked what the statute of limitations is on the determination
of ownership.
REPRESENTATIVE KOPP replied that regardless of the statute of
limitations, if an unlawful taking occurred, it cannot be
unconstitutional to attempt to right it. He said the discussion
arose more recently when the ARRC has claimed an interest. The
homesteaders were never notified and there was no question of
whether they owned the land.
REPRESENTATIVE JOSEPHSON asked whether anything could be
construed to imply that [if there was] a failure of the federal
government to afford due process for any claims in the mid-
1980s, the costs of any prospective litigation would fall on the
state or on the ARRC.
3:35:00 PM
REPRESENTATIVE KOPP answered the query highlights the most
important reason for the CS. He said the proposal gives
direction to the ARRC to ascertain what the federal interest was
at the time of the transfer. He said he sees the state liable
only if it takes no action.
REPRESENTATIVE JOSEPHSON spoke to the concern over 30,000 acres
in the Fairbanks, Alaska, area. He asked whether the concerns
overlap with the sites of the lands in question.
REPRESENTATIVE KOPP answered that he fully supports the ARRC
sale of the two land parcels. He said he does not know where
the "30,000 acres" comes from. He stated the resolution spoke
to the claims to the right-of-way that was across homestead
property. He explained the federal government has completely
divested itself of all ownership in the land and had not issued
two homestead patents but left it as one homestead with a
standard easement. The reading is that the ARRC only received
what the federal interest was, and it was on public lands.
3:39:17 PM
CHAIR KITO removed his objection.
3:39:23 PM
REPRESENTATIVE JOSEPHSON objected.
3:39:44 PM
REPRESENTATIVE SULLIVAN-LEONARD maintained her objection.
3:40:03 PM
WILLIAM O'LEARY, President & CEO, Alaska Railroad Corporation
(ARRC), said the ARRC has objections to the language in the CS.
He stated that if there were an erroneous transfer, the federal
government should bear the burden. He said the concept of
restitution from the federal government is very different from
creating a patchwork quilt of land use rights across the state.
3:43:18 PM
REPRESENTATIVE JOSEPHSON asked what part of the language in the
CS would shift the burden.
MR. O'LEARY said it is in Section 2. He deferred to legal
counsel for a better description.
3:44:18 PM
ANDY BEHREND, Chief Counsel, Alaska Railroad Corporation (ARRC),
answered the language is in Sections 2 and 3 does concern the
ARRC. He said in the event of a transfer of a federal interest
that was greater than what they owned at the time, the typical
approach would be a claim in federal court for compensation. He
said the language would take rights that were in the agreement
since 1985 for 95 percent of the right-of-way that have been in
the patent for 10 to 30 years. He said the language would tell
the railroad it can no longer claim those rights.
3:47:34 PM
REPRESENTATIVE BIRCH disclosed he previously worked closely with
Mr. O'Leary. He asked if the railroad had undertaken any
initiative to shore up any property interested in the
intervening years.
MR. BEHREND explained the first thing that happened with the
transfer occurred was that the federal government transferred
all of its interests. Afterwards, for any land that had not
been fully surveyed, surveys were completed, and the final
patents were issued. He added that the U.S. Dept. of the
Interior, Interior Board of Land Appeals (IBLA) looked at the
transfer act and determined that the Division of Land Management
(DLM) had followed that act.
3:51:26 PM
REPRESENTATIVE BIRCH asked if the railroad asserted an interest
in property if the government did not own it at the time of
transfer.
MR. BEHREND answered in the affirmative. He added that the
federal government transferred all of the interest to the ARRC
for each parcel in the right-of-way. He said that if there were
mistakes in transferring any of the land, the interest still
passed to the ARRC and was put into the patent. If that
happened, then it constitutes a taking by the federal government
which should be addressed with them.
3:54:12 PM
REPRESENTATIVE JOSEPHSON said it sounded like the ARRC enjoys a
strong presumption under federal law that in the event of an
improper transfer, the railroad is insulated from liability. He
suggested Sections 2 and 3 act to attenuate the "shield of
protection" and potentially foist [liability] on the railroad
directly.
MR. BEHREND said he thinks that is an accurate way to put it.
He said that the act contains an express guarantee that the
federal government would defend any challenge. He added the
language in the proposed bill says the railroad cannot exercise
authority over the land.
3:57:02 PM
REPRESENTATIVE WOOL asked whether the ARRC would like to see the
projects move forward.
MR. O'LEARY said the projects are both very good.
3:57:33 PM
REPRESENTATIVE STUTES asked if the property would be sold
outright or partner with whatever development takes place.
MR. O'LEARY explained the sales would be outright and there
would be a land trade with Eklutna [Inc.].
REPRESENTATIVE STUTES asked if there is an anticipated project
that would be funded through the proceeds.
MR. O'LEARY said funds from land sales are used for other real
estate activities such as improving access and water and sewer
improvements, and not for rail operations.
REPRESENTATIVE STUTES said it sounds like the ARRC will become a
real estate holding company.
MR. O'LEARY said the ARRC is still an operating entity. He said
the decision was a wise one and real estate activities provide a
significant buffer for other operations.
4:00:23 PM
REPRESENTATIVE JOSEPHSON asked whether the railroad would rather
have the bill with or without the language in question.
MR. O'LEARY answered the ARRC would like to see the legislation
move forward.
4:01:20 PM
REPRESENTATIVE JOSEPHSON removed his objection.
REPRESENTATIVE SULLIVAN-LEONARD maintained her objection.
4:01:32 PM
A roll call vote was taken. Representatives Knopp, Stutes,
Wool, Birch, and Kito voted in favor of adopting the proposed
committee substitute (CS) for CSSB 86 as the working draft.
Representatives Sullivan-Leonard and Josephson voted against it.
Therefore, Version N was adopted as the working draft by a vote
of 5-2.
4:02:14 PM
CHAIR KITO opened public testimony on SB 86.
4:02:27 PM
CURTIS MCQUEEN, CEO, Eklutna Inc., testified in support of SB
86. He gave the background of his corporation. He stated the
Alaska railroad goes through Eklutna lands. He said they have a
longstanding relationship with the railroad. He said the Eklutna
corporation represents the traditional village of Anchorage. He
stated they recognize how crucial the railroad is to the economy
of the area. He stated the Eklutna corporation owns a lot of
property in the area and it appreciates the ARRC's support. He
stated Eklutna, Inc. owns property that would be made contiguous
through the proposal. He said it is thought appropriate to have
a "trial run" of three years to give the ARRC an opportunity to
try.
4:05:56 PM
FRED ROSENBERG said he is a property owner who has property near
the railroad. He said it appears the ARRC has been supporting
the idea of going to court. He said he does not see it as a
court issue. He said under Alaska Railroad Transfer Act (ARTA),
the ARRC has a federal interest in the right-of-way. He
referred to the letter from Congressman Young. He stated
federal interest does not include private rights. He stated it
was a specious argument to suggest that the government has any
right to do so. If the government did not own it, it cannot
transfer it.
4:08:42 PM
JODI TAYLOR, Church of Jesus Christ of Latter-Day Saints, stated
the church has owned property in Willow, Alaska, for many years.
She said the issue has cut them off from the other part of their
property. She stated adoption of the proposed language is a
win-win.
4:09:52 PM
CHAIR KITO held over SB 86.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB86 ARRC Land Sale Resolutions.pdf |
HL&C 5/2/2018 3:15:00 PM |
SB 86 |
| SB86 ARRC Land Sale Properties Proposal 17APR18 - FINAL.PDF |
HL&C 5/2/2018 3:15:00 PM |
SB 86 |
| SB86 Letters of Support 4.23.18.pdf |
HL&C 5/2/2018 3:15:00 PM |
SB 86 |
| SB86 Version U-A.PDF |
HL&C 5/2/2018 3:15:00 PM |
SB 86 |
| SB86 Fiscal Note DCCED ARRC 2.2.18.pdf |
HL&C 5/2/2018 3:15:00 PM |
SB 86 |
| SB76 Sectional Analysis Ver. C 4.30.2018.pdf |
HL&C 5/2/2018 3:15:00 PM |
SB 76 |
| SB76 Fiscal Note 3 - DCCED-AMCO 4.30.2018.pdf |
HL&C 5/2/2018 3:15:00 PM |
SB 76 |
| SB76 Ver. C 4.30.2018.pdf |
HL&C 5/2/2018 3:15:00 PM |
SB 76 |
| SB76 Explanation of Changes Ver. N to Ver. C 4.30.2018.pdf |
HL&C 5/2/2018 3:15:00 PM |
SB 76 |
| SB76 Fiscal Note 2 - DHSS-PS 4.30.2018.pdf |
HL&C 5/2/2018 3:15:00 PM |
SB 76 |
| SB86 Version N.pdf |
HL&C 5/2/2018 3:15:00 PM |
SB 86 |
| SB86 Explanation of Changes Version U.A to N 05.02.18.pdf |
HL&C 5/2/2018 3:15:00 PM |
SB 86 |