Legislature(2017 - 2018)HOUSE FINANCE 519
04/18/2017 09:45 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB25 | |
| SB88 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 25 | TELECONFERENCED | |
| += | SB 88 | TELECONFERENCED | |
| + | TELECONFERENCED |
CS FOR SENATE BILL NO. 88(RES)
"An Act authorizing a land exchange with the federal
government in which certain Alaska mental health trust
land is exchanged for certain national forest land and
relating to the costs of the exchange; and providing
for an effective date."
10:40:17 AM
AT EASE
10:40:56 AM
RECONVENED
SENATOR BERT STEDMAN, SPONSOR, He explained that the
concept had "been in the works for decades." He emphasized
that the bill was a land exchange for approximately 20
thousand acres of Forest Service land for roughly 18
thousand acres of Alaska Mental Health Trust Authority
(AMHTA) property. He reported that much of the AMHTA
parcels bordered many communities in Southeast Alaska. He
elucidated that many parcels were of high value for
standing timber, view sheds, and trails and recreation. The
conflict was how to mitigate the impact of the trust
harvesting large volumes of timber very near communities.
He noted that the land exchange process was underway and
the lands were selected. He spoke to the parcels of land in
northern Southeast Alaska. He described some of the parcels
and their locations. He mentioned a parcel of land in the
"backdrop" of Sitka near Mt. Verstovia that contained a
high volume of old growth timber but was in the direct view
shed of the community. The community's concern regarding
the view shed and recreational use lead to the parcel's
inclusion in the exchange. He highlighted that a parcel on
Mitkof Highway in Petersburg was targeted for the exchange.
The community expressed concern over impacts from
landslides.
REPRESENTATIVE DAN ORTIZ, COMPANION BILL SPONSOR, noted
that the bill had companion legislation in the House as
well as on the federal level. He understood that action had
to be taken at the state level before the federal bill
could be acted upon. He was proud to be moving the
legislation for the House and viewed the bill as a "triple"
win situation for the tourism industry, AMHTA, and the
timber industry. He mentioned a parcel near Ketchikan
located on "Deer Mountain" and explained that the land was
the primary view shed for the community and used for hiking
and other recreational opportunities. The parcel offered
benefits to the tourism industry. He indicated that the
timber industry supported the exchange due to gaining
access to federal land via the exchange. He strongly
supported the legislation.
10:50:20 AM
Senator Stedman relayed that the state had one sawmill
left, and had lost 2 pulp mills and other sawmills. The
remaining sawmill sitting on Prince of Wales Island
consumed 60 percent of the electricity on the electrical
grid. If the state lost the sawmill, the loss would have a
large negative rippling effect through the local economy.
He communicated that the large sawmill supplied the timber
or "saw logs" to the smaller sawmills. He noted the
difficulty in the "fiber supply" that created difficulty in
securing capital to modernize or upgrade sawmill facilities
if the future timber supply was unknown. He voiced that the
legislation was a "time sensitive issue." In addition, the
legislation ensured "viable timber access for the
industry." The state had been carrying the "brunt of the
burden" for lack of timber supply by the federal
government. The land exchange would afford a direction to
move very quickly on some timber sales and moved the timber
industry to more viable logging land on Prince of Wales
Island. He suggested that concentrating the timber industry
on the southern end of Southeast Alaska where the timber
quality was superior was beneficial because the
infrastructure already existed and was closer to the
sawmill. He conveyed that there was significant support for
the legislation from all of the involved entities due to
the long public process and engagement on the issue.
10:55:28 AM
Co-Chair Foster indicated that there would be a PowerPoint
presentation by the Alaska Mental Trust Authority.
Representative Pruitt appreciated the bill. He asked
whether passage of the bill helped the bill move through
Congress. Senator Stedman responded in the affirmative. He
pointed out that the bill mirrored the federal bill and
passage paved the way for the Alaskan delegation to garner
support for the bill.
Representative Pruitt asked if the land exchange areas were
located in areas away from the population and did not
interfere with the view shed or recreation and made it more
likely that the AMHTA could develop the land and further
help its beneficiaries. Senator Stedman answered in the
affirmative and noted that the exchanged land located in
the center of Prince of Wales was a highly active logging
area. He indicated that the AMHTA were acting as good
stewards of the land in participating in the exchange which
benefitted the communities but still offered the trust
marketable land to help its beneficiaries. Additionally the
exchange offered the Forest Service more recreational land.
11:00:05 AM
Vice-Chair Gara worried that with land exchanges statutory
easements to and along rivers were lost. He wanted to
ensure that any land transferred to the federal government
would be accessible through an easement. He wanted to
maintain the public's access to its own lands. Senator
Stedman expounded that Southeast Alaskans were sensitive
about access to fish streams for sport and commercial uses
and they were protected. Vice-Chair Gara wondered where he
could identify the easement protections in the bill.
Senator Stedman deferred the answer to the Department of
Natural Resources (DNR) presenter. He emphasized that the
state did not restrict waterway access. Vice-Chair Gara
wanted to confirm that his concerns were addressed.
11:03:23 AM
WYN MENEFEE, CHIEF OF OPERATIONS, DIVISION OF MINING, LAND
AND WATER, DEPARTMENT OF NATURAL RESOURCES, introduced the
PowerPoint Presentation: "SB 88 - Alaska Mental Health
Trust Land Exchange with the USFS." He turned to slide 2:
"The Alaska Mental Health Trust":
• A perpetual trust using its resources to ensure a
comprehensive integrated mental health program in
Alaska.
• Funding programs that serve Alaska's most vulnerable
populations for the past two decades.
• Providing programs for mental illnesses, developmental
disabilities, Alzheimer's disease and related
dementias, traumatic brain injuries & substance abuse
disorders.
Mr. Menefee elaborated that the trust spent approximately
$20 million annually on programs, projects, activities,
initiatives, and advocacy and helped fund state agencies,
and non-profits through grants. The funds were not state
general funds (GF) in part from its land revenue.
11:05:21 AM
Mr. Menefee scrolled to slide 3: "The Trust Land Office":
Manages the Trust owned land and resources to generate
revenue, used by the Trust to improve the lives of the
beneficiaries.
Our Mission: to protect & enhance the value of Alaska
Mental Health Trust lands.
Mr. Menefee expanded that the trust land contained multiple
asset classes that included mining and subdivisions. He
advanced to slide 4: "Trust Management Principles":
1. Maximize long-term revenue & productivity from trust
land
2. Protect corpus
3. Encourage diverse revenue-producing uses of
trust land
4. Manage trust land prudently, efficiently & with
accountability to the trust and its beneficiaries
Mr. Menefee relayed that the trust expected to gain $40 to
$60 million in revenue over the next 20 years as a result
of the exchange. He furthered that the exchange would
improve the lives of its beneficiaries. He continued to the
map on slide 5: "Land Distribution." He reviewed that the
Alaska Territorial government had to select its survey
lands from areas located next to communities. He delineated
that currently, with the populous growing there were
concerns with how the state managed the land; preserving
scenic view sheds, water sheds, safety, etc. The trust made
decisions in the best interest of its beneficiaries but
paid attention to communities' concerns. The trust viewed
the exchange as a way to solve 2 things: addressing
community concerns and increasing trust revenue.
11:08:51 AM
Mr. Menefee provided details on slide 6: "Land Exchange
Details":
18,258 acres of Trust lands adjacent to the
communities of Ketchikan, Wrangell, Petersburg, Sitka
& Juneau would be transferred to the USFS
20,580 acres of remote land on Prince of Wales Island
& Shelter Cove would be transferred to the Trust for
development and timber harvest
Equal value exchange
Phase I complete in 1 year and Phase II in 2 years
Mr. Menefee reported that the acreages were not finalized.
The land exchanged was of equal value and surveys and
appraisals were required. Ultimately, the acreages will
adjust according to the equal value of appraisals. He
notified the committee that not all of the AMHTA land next
to communities was included in the exchange and was
retained for future development of subdivisions and other
types of use. He spoke of the different phases of the
exchange. The first phase included exchanges in Naukati and
Ketchikan with the remainder in phase two. The first phase
accelerated timber production and sales. He discussed the
maps on slide 7 titled: "Trust Land to be Exchanged in
Southeast Alaska" and "National Forest Service Land to be
Exchanged." He pointed to the areas on the map on the left
that depicted trust lands in red traded for forest service
land on the map on the right portrayed in green. He noted
that a packet of maps (copy on file) were included in the
member's bill packets.
11:11:34 AM
Mr. Menefee continued to slide 8: "Land Exchange Benefits":
Consolidates Trust land ownership
Replaces lands adjacent to communities with lands that
are more conducive to revenue production such as from
timber harvest
Protects timber and tourism industries
Protects jobs and economies in SE Alaska
Protects viewsheds, watersheds, and certain old growth
timber stands
Mr. Menefee conveyed that the trust was statutorily
obligated to profit off of the land. In the face of
community opposition to developing some of the adjacent
lands the equal value exchange offered the trust similarly
valuable land while protecting the communities' interests.
He emphasized that the timber industry was a "multi-layer
industry" and a vibrant timber industry had a positive
multiplier effect throughout the region that also benefited
the trust.
11:14:19 AM
Mr. Menefee advanced to slide 9: "Why Now":
Result of 10 years of planning and public input
Extensive negotiations with USFS
Addressing concerns from conservation groups and other
interests
Timber industry, a key revenue generator for the
Trust, is at risk because of low timber supply
USFS timber supplies have dwindled
Mr. Menefee reported that the discussions began 10 years
ago with "Tongass Round Table" meetings with 35 entities
participating comprised of communities, conservation
groups, United States Forest Service (USFS), etc. The round
table group defined the parameters of the exchange and the
exchange participants remained "true" to the constraints
when developing the exchange. The trust engaged in
extensive conversations with the USFS during the process.
He indicated that one of the latest replacements took place
near Sitka with the recent exchange of Katlian Bay for No
Name Bay. He remarked that the precise package in SB 88 was
contained in the federal bill. He discussed that the timber
industry was the key revenue generator for the trust. The
USFS evolved its policies on allowable harvest levels and
mandated a transition to sustainable young growth harvest;
both policies had an adverse effect on getting timber to
market. He detailed that the USFS did not anticipate
getting timber to market for five years and were the
largest timber supplier in Southeast Alaska. Other entities
were currently counted on for the timber supply; i.e., the
state's Division of Forestry, AMHTA, and the University of
Alaska. He offered that a reliable timber supply depended
upon the trust's land exchange. A disruption in the timber
supply would severely impact the industry's ability to
restart production when supply increased.
11:16:57 AM
Mr. Menefee pointed to the example on slide 10: "USFS
Forest Plan." He highlighted that the slide contained the
"Tongass National Forest Land Use Map" and the small areas
shaded in green was the only portion available for timber
supply. The remaining brown and tan areas were not
designated for development. The USFS "definitely reduced"
the available land for timber and increased recreational
uses. He mentioned the importance of the trust land acting
as a "bridge" for timber supply during the transition time
to sustainable young growth production. He restated the
devastating effects of a timber industry shutdown due to
lack of supply. He communicated the urgent need for the
legislation to get passed in the current year. He reviewed
slide 11: "Federal Legislation":
• S. 131 introduced by Senator Murkowski and Sullivan in
January 2017
• HR. 513 introduced by Representative Young in January
2017
• Language compatible with SB 88
• Directs the USFS to complete the exchange
11:19:25 AM
Mr. Menefee noted that the Alaskan delegation believed the
federal bill would pass in the early summer of 2017. He
moved to the list of the many supporters of the exchange on
slides 12 and slide 13 titled: "Thank You to Our
Supporters." He emphasized that the exchange generated
positive revenue for the trust at no cost to the state. He
reiterated all of the benefits of the exchange for all
parties. He referenced Vice-Chair Gara's question
concerning easement protection and provided clarification.
He elaborated that a "disposal" of trust land did not
include a "to and along easement." The trust had to protect
the financial interest of its lands. He cited a court
ruling, "Lassen versus Arizona" [United States Supreme
Court, January 1967] that required states to pay for
statutory easements on trust lands. Therefore, the state
abided by the ruling and easements were not included by the
trust unless the easement was already in existence. He
communicated that the trust land that the state owned
allowed for public use. In addition, stipulations
maintained public road use on the lands. Certain areas were
excluded due to conservation concerns and conservation
easements were included in places like the limestone and
karst areas on Prince of Wales Island to protect the
underground fish streams. The trust was "cognizant of
protecting habitat."
Vice-Chair Gara related that the state was statutorily
mandated to maintain to and along easements when it
disposed of land. He asked where the trust exemption was
included in statute. Mr. Menefee stated that the exemption
was not included in statue. He elucidated that due to the
legalities of including easements without financial
compensation the Department of Law (DOL) advised the trust
that the to and along easements were not applicable unless
the state were to pay for the easements. Vice-Chair Gara
did not understand the compensation aspect since the trust
land was awarded by the state.
11:23:37 AM
Mr. Menefee recounted that the original trust lands were
awarded to the trust by the federal government.
Mismanagement of the lands occurred, which resulted in a
lawsuit that was settled in 1994. He reported that the
settlement specified that the land was to be used for the
beneficiaries' financial benefit. Another condition of the
settlement required that the state replaced the original
land awarded the trust. He pointed to "the enabling act,
the settlement, and HB 201 in 1994" [HB 201 Mental Health
Trust Amendments - Chapter 5 FSSLA 94 - 06/23/1994] that
directed the matter of easements. Vice-Chair Gara was
"disappointed" and stated that the statute mandated the
state maintain to and along easements when it was in the
public's interest. He felt that it was inconceivable that
periodic access to fishing streams was not in the public's
interest. He asked whether the trust maintained the to and
along easements in the land transferred to the USFS. Mr.
Menefee answered in the negative. He elaborated that only
"existing encumbrances at the date of the enactment of the
bill" were included.
Representative Grenn thanked the bill sponsors and
characterized the legislation as "inspiring." He referred
to slide 6 and remembered that the amount of acreage listed
would change based on valuations. He asked what type of
land was sought after by the trust. Mr. Menefee responded
that the lands listed on the slides were the only lands
that were included in the exchange. He delineated that the
adjustments were required within the demarcated land to
ensure the exchange was of equal value. He exemplified that
if there was more value to USFS land than trust land the
exchange "shaved off" some federal land to make the
exchange equal and visa versa. An equalization process was
delineated in both state and federal bills.
Co-Chair Foster acknowledged the presence of Senator Mia
Costello.
Representative Pruitt asked what type of tree growth was
included in the trust's land from the USFS. Mr. Menefee
responded that the land included a 50 percent to 50 percent
mix of young and old growth trees and the young growth were
in different stages of age from 25 to 50 years. He added
that some of the young growth stands were already pre-
thinned and some logging roads remained intact. The initial
harvest would be comprised of old growth and over time the
timber would transition to sustainable new growth.
Representative Pruitt deduced that the exchange created
more of a sustainable harvest opportunity in the long-term.
Mr. Menefee agreed with the statement.
11:29:42 AM
Co-Chair Seaton mentioned that a few years prior there was
legislation that lengthened the time of valuation surveys.
He wondered whether the bill passed and inquired about the
time frame of the valuations. Mr. Menefee noted that Co-
Chair Seaton was thinking of the land exchange bill that
lengthened the time of the appraisals, which previously
expired in one year. He explained that "dynamic
administrative problems" had occurred with administrative
exchanges under AS 38.50 and the one year time period. He
clarified that SB 88 was not subject to AS 38.50,
therefore, time restraints did not apply to the land
exchange.
Co-Chair Foster OPENED Public Testimony.
11:31:53 AM
LARRY EDWARDS, SELF, SITKA (via teleconference), spoke in
favor of amending SB 88. He submitted a proposed amendment
to the committee and recommended its inclusion in the bill.
He explained that the amendment proposed a federal buyout
versus a land exchange and provided a different kind of
beneficial resolution for all parties. He claimed that the
Alaska Forest Resources and Practices Act allowed clear cut
logging of unlimited size. He referenced the organization
called "Greater Southeast Alaska Conservation Community
(GSACC)" which had provided testimony (copy on file) that
included photographs of recent clear-cut logging of 4000
acres of trust land in the center of Revllagigedo Island.
He reported that the land exchange included an additional
nine square mile parcel adjacent to the clear cut land. In
addition, the parcels on Prince of Wales Island designated
for the trust amounted to 19 square miles in three large
blocks. He voiced that none of the previous committees that
heard SB 88 considered the impacts of logging on such a
large scale in those locations. He believed that the
legislature was "obligated" to analyze the impacts of
logging the areas. He believed that a buyout was a "far
better solution." He contended that much of the community
testimony for HB 55 was not included in SB 88 and noted
that some of residents of Prince of Wales Island were
distressed over the proposed exchange. He thanked the
committee and urged members to reconsider the bill in its
present form.
11:35:34 AM
REBECCA KNIGHT, SELF, PETERSBURG (via teleconference),
spoke in opposition of SB 88. She shared that she was a
member of a long-time fishing family. She completely
understood the needs of AMHTA beneficiaries having a
relative who was a beneficiary. She believed that the bill
was "a timber industry bill using the beneficiaries as a
prop to get timber legislation passed." She opposed the
legislation for a variety of reasons and believed the
exchange was a "travesty." She asserted that a federal
buyout of AMHTA land was a "far better alternative." She
recommended that the committee change the bill to a federal
buyout with the lands deeded to the Tongass National Forest
and the proceeds going to the trust. She noted that the
Petersburg Assembly supported the buyout option and stated
that AMHTA supported a buyout option as well. She
maintained that much of the bill's support was based on a
threat by the AMHTA to immediately log its lands if the
federal legislation was not adopted by January 15, 2017.
She believed a buyout option would help beneficiaries,
avoid impacts to Ketchikan and Petersburg landowners, and
avoid landscape impacts. She voiced that the Alaska Forest
Resources and Practices Act was antiquated and would
continue to allow clear-cutting of up to several thousand
acres on multiple parcels of exchange land. She wondered
why experienced Department of Fish and Game (DFG)
biologists were not consulted on the exchange. She listed
the benefits of a buyout versus a land exchange. She opined
that "the lands could be purchased for a few tens of
millions of dollars at a fair market value?."
Co-Chair Seaton remarked that the opposition letter that
Mr. Edwards referred to as well as Ms. Knights were
included in the member's bill packets.
11:40:20 AM
CHARLES WOOD, MITKOF HIGHWAY HOMEOWNERS ASSOCIATION,
PETERSBURG (via teleconference), spoke in support of SB 88.
He related that the association was a group of 95
homeowners that resided below the slide prone slopes of
Mitkof Highway. He reported that there had been 9
landslides on the slopes and 5 had occurred since December
2005. He believed that logging the slopes of the slide area
would further accelerate the landslide potential. The group
of residents had been living with stress because of
potential landslides and their efforts in opposition to the
trust's logging plans cost the association over $135,000.
He asked for the committee's support of SB 88 to avert
trust logging on landslide prone slopes above residential
areas.
11:41:57 AM
DENNIS WATSON, MAYOR, CITY OF CRAIG, CRAIG (via
teleconference), spoke in favor of SB 88. He relayed that
he participated in commercial salmon fisheries for 43
years. He believed that the bill would help to pave the way
for a stable revenue stream for the beneficiaries of the
Alaska Mental Health Trust. He noted the benefits of a
stable timer supply for the timber industry, the region,
and for Craig. He thanked the committee.
11:44:21 AM
OWEN GRAHAM, ALASKA FOREST ASSOCIATION, KETCHIKAN (via
teleconference), spoke in favor of SB 88. He read from a
prepared statement:
The Alaska Forest Association supports the land
exchange between the Alaska Mental Health Trust and
the US Forest Service. It is vital to our timber
industry that the State enact SB 88 this legislative
session.
The Alaska Forest Association (AFA) is a non-profit
business association that was formed in 957 to
represent the interests of the timber industry in
Alaska. The AFA currently manages a pension program, a
group health insurance program, a scholarship program
for the timber industry and sponsors the Sustainable
Forestry Initiative program for Alaska.
The Forest Service manages more than 90% of the
commercial timberland in Southeast Alaska and that
federal agency has failed to provide sufficient timber
to keep our manufacturing facilities operating. We
have lost two pulp mills, several large sawmill over
the last 20+ years, and we have only a single mid-size
sawmill remaining. Now that last sawmill is at risk of
closure because the Forest Service has mismanaged its
timber sale program again and has provided a timber
sale schedule that indicates there will be very little
federal timber available to our last sawmill until at
least 2020. The State Division of Forestry has
continued to supply timber for our industry, but the
State manages only 2% of the commercial timberland in
the region. The State alone cannot supply our last
surviving sawmill.
If the Alaska Mental Health Trust exchange is
completed this legislative session, our last midsize
sawmill should be able to utilize timber from that
exchange to keep the mill operating until 2020 when
the Forest Service projects it will again be able to
supply timber.
This value-for-value exchange has a lot of support
within the region because in addition to helping
preserve our remaining timber manufacturing jobs, the
exchange will enable the Alaska Mental Health Trust to
avoid harvesting land adjacent to Ketchikan and
Petersburg that the local communities want preserved.
11:46:38 AM
DAVID LANDIS, MAYOR, KETCHIKAN GATEWAY BOROUGH, KETCHIKAN
(via teleconference), spoke in support of SB 88. He noted
his familiarity with the local issues. He relayed that the
people of the community of Ketchikan had repeatedly
supported a land exchange. He listed the many benefits of
the land exchange. He offered that the land exchange
benefited the timber industry, the residents of the
Ketchikan Gateway Borough, and the AMHTA beneficiaries. He
noted the protection of Deer Mountain.
11:49:29 AM
MARY NANUWAK, SELF, BETHEL (via teleconference), spoke in
opposition of SB 88. She thought that the lands had been
ruined but the parties were proceeding with the land
exchange regardless. She opined that the trust and DNR
claimed that they "protected everything" when they do not
engage in protections. She believed that the state only
acted in the interest of the beneficiaries when they had
"something to gain." She disagreed with a notion that rural
people were not informed and warned that rural residents
were aware of many things happening in the state. She
requested that the state refrain from "undoing everything,"
which was a waste of money and time.
11:52:42 AM
Co-Chair Foster CLOSED Public Testimony.
Representative Pruitt suggested moving the bill. He thought
any amendments would "totally and dynamically change the
goal of the bill." He characterized a vote on moving the
bill as an "up or down" vote. He opined that the federal
purchase option took a win for the timber industry out of
the bill.
Co-Chair Foster asked whether members had any proposed
amendments.
11:54:09 AM
AT EASE
11:56:11 AM
RECONVENED
Vice-Chair Gara stated his "surprise" that the trust did
not maintain to and along easements on its land. He
questioned the legal authority and asked for an "objective"
follow-up answer from Mr. Menefee. Mr. Menefee confirmed
that his office and DOL would provide a follow up answer.
Vice-Chair Gara reviewed the zero fiscal note from the
Department of Natural Resources FN 1 (DNR).
Representative Pruitt MOVED to REPORT CSHB 88(FIN) out of
committee with individual recommendations and the
accompanying fiscal note.
There being NO OBJECTION, CSHB 88(FIN) was REPORTED out of
committee with a "do pass" recommendation and with one
previously published zero fiscal note: FN1 (DNR)
Co-Chair Foster reviewed the agenda for the afternoon
meeting.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 88 - Opposition Document 4.18.2017.pdf |
HFIN 4/18/2017 9:45:00 AM |
SB 88 |