Legislature(2017 - 2018)BUTROVICH 205
02/09/2018 03:30 PM Senate RESOURCES
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| Audio | Topic |
|---|---|
| Start | |
| SB86 | |
| SB166 | |
| Overview: Arctic Strategic Transportation & Resources Project (astar) | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 86 | TELECONFERENCED | |
| *+ | SB 166 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SB 86-ALASKA RAILROAD CORPORATION LAND
3:30:54 PM
CHAIR GIESSEL announced consideration of SB 86, sponsored by
Senator Coghill, that authorizes the Alaska Railroad (ARRC) to
sell parcels of land without checking in with the legislature
each time. This bill was first heard on April 7, 2017, and at
that time public testimony was left open.
SENATOR COGHILL moved to adopt CSSB 86(RES), version 30-
LS0487\J, as the working document.
CHAIR GIESSEL objected for discussion purposes.
AKIS GIALOPSOS, staff to Senator Giessel and the Senate
Resources Committee, Alaska State Legislature, Juneau, Alaska,
explained the changes from SB 86, version \A to CSSB 86(RES),
version 30-LS0487\J, and said the sponsor's staff would explain
the rationale for those changes.
MR. GIALOPSOS said there are three changes. The first adds a new
section 17 sunset provision that would take effect three years
after the effective date of this bill. That in turn created new
conforming sections 2, 4, 5, 7, 9, 11, and 13. All those
sections are conforming to the preceding sections that would be
enumerated after the sunset provision would have taken effect.
3:33:04 PM
The second change further conforms to the sunset provision.
3:33:48 PM
The third change is language that introduces the first right of
refusal. Both the prior version of the bill and the proposed CS
repeal and rewrite AS 42.40.852. However, the proposed CS,
version J, adds language in section 12 on page 6, line 19,
giving existing lease holders to railroad land the right of
first refusal when the railroad plans a permanent disposal of
the land.
3:34:24 PM
RYNNIEVA MOSS, staff to Senator Coghill, sponsor of SB 86,
Alaska State Legislature, Juneau, Alaska, explained the
rationale behind the changes in CSSB 86(RES), version 30-
LS0487\J. She said the sponsor felt the right of first refusal,
on page 6, line 19, language was only fair. The three-year
sunset is to give the legislature a chance to take a relook at
how the railroad is managing and disposing its land and
investing the profits from those sales.
SENATOR COGHILL added that the timing is important as some real
estate issues are currently on the table. Knowing that private
land in Alaska is rare, the ability to get some of these lands
into private hands is a good economic development opportunity
and the railroad could do well with it.
3:35:56 PM
SENATOR WIELECHOWSKI asked her to describe how the railroad got
the land in the first place, if it is constitutional to allow a
separate entity to sell what he assumes to be state land, and
who gets the proceeds from it.
3:36:31 PM
MS. MOSS replied that the federal government transferred the
land to the state, and it remains state land even though it
belongs to a public agency. The proceeds go back to that public
agency.
3:36:52 PM
BILL O'LEARY, CEO, Alaska Railroad Corporation (ARRC),
Anchorage, Alaska, said the land was transferred from the
federal government when the state purchased the railroad and the
other assets (36,000 acres). The proceeds of land sales remain
with the ARRC. Those funds are intended for additional real
estate development.
CHAIR GIESSEL remembered a federal railroad act in the late
1800s that appropriated land to the Alaska Railroad.
SENATOR WIELECHOWSKI asked if he had a legal opinion on the
constitutionality of allowing a separate corporation to sell
land and keep the assets. He also wanted to know if there was a
map of the land descriptions.
MS. MOSS said yes, and she will make sure the committee gets the
[map and land descriptions] before Monday.
CHAIR GIESSEL asked Mr. Cook if he could respond to the
constitutionality question of the railroad selling state land.
3:39:11 PM
JON COOK, Chairman of the Board, Alaska Railroad Corporation
(ARRC), Fairbanks, Alaska, replied that he couldn't speak to the
constitutionality, but he would assume that issue was addressed
by legal staff while drafting the bill.
CHAIR GIESSEL asked if it's true that the railroad has disposed
of land in the past, because they have come to the legislature.
MR. COOK answered yes. The railroad has come before the
legislature for approval of several disposals of land to DOTPF,
other state agencies and municipalities, and Eklutna Native
Corporation. Even though the number is limited, he assumed the
issues were vetted at the time.
SENATOR COGHILL remarked that they have given corporations -
like Alaska Housing Finance Corporation (AHFC) and the
Department of Transportation and Public Facilities (DOTPF) -
rights to work within those parameters for land transfers.
SENATOR WIELECHOWSKI asked for a description of the sale process
if this measure passes.
MR. COOK replied that the railroad is required to obtain fair
market value for any land disposal either through an appraisal
or a competitive bid process.
SENATOR WIELECHOWSKI asked where that language was in statute.
MR. COOK answered that it is in AS 42.40.350(d).
3:42:56 PM
SENATOR BISHOP asked if there is a timeline for the right of
first refusal referring to language on page 6, line 19, to try
to put a deal together.
MS. MOSS replied that is in the policy and procedures for sales.
MR. COOK said that it might be in AS 42.40.352(b)(2), but that
their policy and or intent is to never sell land out from
underneath an existing leaseholder. The railroad has no desire
to sell land it is getting rents from. They are trying to grow
this endowment through monetizing lands that aren't already
earning a current return and invest that into income producing
property, which produces an 8 percent return at fair market
value. Their goal is not to get rid of revenue-producing
customers.
SENATOR WIELECHOWSKI asked when property is sold now, and has to
be approved by the legislature, if the proceeds go back to the
railroad or if that is discretionary.
MR. COOK answered that those proceeds would remain with the
railroad and be reinvested in its real estate portfolio.
SENATOR WIELECHOWSKI asked if that money has always gone to the
railroad in the past.
MR. COOK answered that in his almost 10 years on the board, he
was aware of only one transaction and in that instance the
railroad kept $1.5 million in proceeds of the sale of property
to DOTPF.
SENATOR WIELECHOWSKI asked if that is subject to legislative
appropriation and if it is legal for the railroad to receive
money directly.
MR. COOK said he assumed not. He said the railroad is not
subject to the Executive Budget Act.
3:47:25 PM
SENATOR WIELECHOWSKI asked if Legislative Legal had evaluated
that, as a recent Supreme Court case addressed the issue of
funds and appropriations and it seemed that the money now has to
be appropriated.
CHAIR GIESSEL said her intention was to adopt the committee
substitute (CS) but hold the bill until Monday. She asked Mr.
O'Leary and Mr. Cook to get those answers for the committee. She
noted that she had received a map of the railroad's lands that
would address the first question.
SENATOR WIELECHOWSKI asked if the railroad owns land outside of
the railroad corridor.
MS. MOSS answered yes; the railroad owns parcels outside of the
corridor.
SENATOR COGHILL noted that the railroad owns a dock front in
Nenana and leases it out. It has many loading fronts.
3:50:10 PM
SENATOR WIELECHOWSKI asked how much coordination occurs now with
DOTPF and what protections can be put in place for easements. He
didn't want the railroad to have the freedom to go ahead and
sell land that could possibly create problems for the gas
pipeline or other easements the state might want to retain.
MS. MOSS said the railroad currently works very closely with the
DOTPF and has a half dozen land exchanges between the two for
realignment of the highway and the railroad.
SENATOR WIELECHOWSKI remarked that they work together now,
because they have to get legislative approval for land sales.
But if SB 86 passes, they won't need to do that, and he was
interested in putting protections in place for sales that might
impact state property.
SENATOR VON IMHOF added that there seems to be a risk/reward
evaluation of all components that go into a sale. She used a
housing development on the Chena Pump Road, for an example. She
would be hesitant to say hold off on the housing development for
a few years just in case there is an AKLNG project. That kind of
evaluation is fair. But, at the same time if the housing market
is hot, it's only three years, so let's let them try to get
money for their operations and whatever else they need: a
risk/reward evaluation.
MS. MOSS said she believed the legislature already passed a
statute that set out the right-of-way for that gasline.
CHAIR GIESSEL said that is true.
3:53:18 PM
SENATOR WIELECHOWSKI said he worries a little bit about giving
the railroad free rein, because it's a very valuable corridor.
He wanted to make sure this was being done in coordination with
local communities and the state, and a lot of that is taken away
in SB 86.
CHAIR GIESSEL said she appreciated the question and believed
that is part of the philosophy behind the three-year sunset.
They also gave a lot of leeway to a gas project and now they are
somewhat restrained in their ability to interact with that
project. She asked the railroad to come back on Monday with some
concrete legal discussions about the questions Senator
Wielechowski had asked.
SENATOR WIELECHOWSKI clarified that the railroad couldn't sell
the entire railroad to some private corporation, for example,
just land.
MS. MOSS said that was correct.
CHAIR GIESSEL, finding no further questions, removed her
objection and announced that CSSB 86(RES), version 30-LS0487\J
was adopted. She held the bill in committee.