Legislature(1993 - 1994)

02/01/1994 01:00 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
              HOUSE COMMUNITY AND REGIONAL AFFAIRS                             
                       STANDING COMMITTEE                                      
                        February 1, 1994                                       
                            1:00 p.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Representative Harley Olberg, Chairman                                       
  Representative Con Bunde                                                     
  Representative John Davies                                                   
  Representative Cynthia Toohey                                                
  Representative Ed Willis                                                     
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  Representative Jerry Sanders, Vice Chairman                                  
  Representative Bill Williams                                                 
                                                                               
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  *HB 397:   "An Act relating to the power to levy                             
              property taxes in second class cities                            
              and to combining a property tax and                              
              incorporation question."                                         
                                                                               
              HEARD AND HELD OVER                                              
                                                                               
  *HB 398:   "An Act relating to rights in certain                             
              tide and submerged land."                                        
                                                                               
              HEARD AND HELD OVER                                              
                                                                               
  *HB 70:    "An Act relating to state impact aid for                          
              municipalities; and providing for                                
              an effective date."                                              
                                                                               
              NOT HEARD                                                        
                                                                               
  (*First Public Hearing)                                                      
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  GARY WILLIAMS, City Manager                                                  
  City of Whittier                                                             
  P.O. Box 608                                                                 
  Whittier, AK  99693                                                          
  Phone: 422-2337                                                              
  Position Statement: Supported HB 397 & HB 398                                
                                                                               
  CHRYSTAL SMITH, Director of Member Services                                  
  Alaska Municipal League                                                      
  217 Second Street, Suite 200                                                 
  Juneau, AK  99801                                                            
  Phone: 586-1325                                                              
  Position Statement: Supported HB 397 & 398                                   
                                                                               
  BRUCE GERAGHTY, Deputy Commissioner                                          
  Department of Community and Regional Affairs                                 
  P.O. Box 112100                                                              
  Juneau, AK  99811-2100                                                       
  Phone: 465-4700                                                              
  Position Statement: Provided information to committee                        
                                                                               
  DAVE GRAY, Legislative Staff                                                 
  Representative Jerry Mackie                                                  
  Alaska State Legislature                                                     
  State Capitol                                                                
  Juneau, AK  99801-1182                                                       
  Phone: 465-4925                                                              
  Position Statement: Staff to Cosponsor of Proposed                           
                      SSHB 398                                                 
                                                                               
  TIM TROLL, City Administrator                                                
  City of Sand Point                                                           
  1600 A Street, #103                                                          
  Anchorage, AK  99501                                                         
  Phone: 274-7555                                                              
  Position Statement: Supported HB 398                                         
                                                                               
  RON SWANSON, Director                                                        
  Division of Lands                                                            
  Department of Natural Resources                                              
  3601 C Street, Suite 814                                                     
  Frontier Building                                                            
  Anchorage, AK  99510-7005                                                    
  Phone: 762-2692                                                              
  Position Statement:  Proposed amendments to HB 398                           
                                                                               
  JAMES FILIP, City Manager                                                    
  City of Skagway                                                              
  P.O. Box 415                                                                 
  Skagway, AK  99840                                                           
  Phone: 983-2297                                                              
  Position Statement:  Supported HB 398                                        
                                                                               
  CHARLES MCKEE                                                                
  1508 W. 43rd #7                                                              
  Anchorage, AK  99504                                                         
  Phone: none given                                                            
  Position Statement:  Opposed HB 398                                          
                                                                               
  JIM BARNETT, Attorney                                                        
  City of Whittier                                                             
  10500 Prospect Drive                                                         
  Anchorage, AK  99516                                                         
  Phone: 346-2755                                                              
  Position Statement: Supported HB 398 and all proposed                        
                      amendments except one                                    
                                                                               
                                                                               
  PREVIOUS ACTION                                                              
                                                                               
  BILL:  HB 397                                                                
  SHORT TITLE:  TAXING POWER OF SECOND CLASS CITIES                            
  SPONSOR(S):   REPRESENTATIVE(S) OLBERG                                       
                                                                               
  01/26/94      2153    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/26/94      2153    (H)   COMMUNITY & REGIONAL AFFAIRS,                    
                              FINANCE                                          
  02/01/94              (H)   CRA AT 01:00 PM CAPITOL 124                      
                                                                               
                                                                               
  BILL:  HB 398                                                                
  SHORT TITLE:  LAND CONVEYED TO & FROM MUNICIPALITIES                         
  SPONSOR(S):   REPRESENTATIVE(S) OLBERG                                       
                                                                               
  01/26/94      2153    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/26/94      2154    (H)   COMMUNITY & REGIONAL AFFAIRS,                    
                              RESOURCES                                        
  02/01/94              (H)   CRA AT 01:00 PM CAPITOL 124                      
                                                                               
                                                                               
  BILL:  HB  70                                                                
  SHORT TITLE:  STATE IMPACT AID FOR MUNICIPALITIES                            
  SPONSOR(S):   REPRESENTATIVE(S) MACLEAN                                      
                                                                               
  JRN-DATE     JRN-PG               ACTION                                     
  01/18/93       101    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/18/93       101    (H)   CRA, JUDICIARY, FINANCE                          
  03/25/93              (H)   CRA AT 01:00 PM CAPITOL 124                      
  04/01/93              (H)   CRA AT 01:00 PM CAPITOL 124                      
  04/06/93              (H)   CRA AT 01:00 PM CAPITOL 124                      
  04/13/93              (H)   CRA AT 01:30 PM CAPITOL 124                      
  02/01/94              (H)   CRA AT 01:00 PM CAPITOL 124                      
                                                                               
                                                                               
  ACTION NARRATIVE                                                             
                                                                               
  TAPE 94-4, SIDE A                                                            
  Number 001                                                                   
                                                                               
  CHAIRMAN HARLEY OLBERG called the meeting to order at 1:10                   
  p.m.  He noted for the record Representatives Toohey, Bunde                  
  and Davies were present and noted that a quorum was present.                 
                                                                               
  CHAIRMAN OLBERG, SPONSOR OF HB 397, then read the Sponsor                    
  Statement aloud.  (A copy of the sponsor statement is on                     
  file.)  He added, "The legislation is introduced at the                      
  request of the City of Whittier."                                            
                                                                               
  REPRESENTATIVE ED WILLIS joined the committee at 1:12.                       
  Number 120                                                                   
                                                                               
  HB 397 - TAXING POWER OF SECOND CLASS CITIES                                 
                                                                               
  GARY WILLIAMS, CITY MANAGER, CITY OF WHITTIER, testified in                  
  support of HB 397 and the sponsor substitute draft before                    
  the committee.  He stated, "There are 117 second class                       
  cities in Alaska, all of whom depend on various forms of                     
  state assistance which include municipal assistance and                      
  revenue sharing and grants to supplement revenue derived                     
  from their local tax structures.  We depend on these outside                 
  sources, not only because we've become accustomed to the                     
  revenues stream, but because small communities like Whittier                 
  have few sources from which to raise the revenues to provide                 
  the local public services that we need.  As you know,                        
  economies of scale work against small communities that have                  
  most of the same needs as their larger counterparts but have                 
  much less in taxable base.  It's an added burden for a small                 
  community to be saddled with a statutory limitation on a                     
  rate that it may establish as a levy for the provision of                    
  local services.  And this is the matter that HB 397                          
  addresses and does it very well."                                            
                                                                               
  MR. WILLIAMS continued, "...as you know the Alaska Railroad                  
  is the largest landowner in the Whittier area with some 60                   
  percent ownership of Whittier proper.  Some quick math will                  
  show that the property tax that can be raised on $8.3                        
  million in taxable property at five mill is $40,000.  For                    
  perspective, that's about half the amount necessary to                       
  employ our nurse practitioner.  The city also levies the                     
  five mill tax on personal property including boats,                          
  machinery and recreational equipment.  This raises it                        
  another $60,000, an amount equal to about one third of our                   
  public safety budget.  Given the past and proposed                           
  reductions in state assistance and a policy which places                     
  more fiscal responsibility on local government, what's                       
  missing in this picture is the transfer of authority to                      
  local governments to tax themselves in order to survive.  It                 
  just seems inappropriate to tie a knot in the shared revenue                 
  stream and yet expect second class cities to not only                        
  survive but to be actively involved in developing local                      
  economies..."                                                                
                                                                               
  Number 202                                                                   
                                                                               
  REPRESENTATIVE JOHN DAVIES asked, "...the conditions under                   
  which the city was incorporated and whether or not this                      
  limitation on property tax was in effect at the time the                     
  voters voted to incorporate.  Do you know if that's the                      
  case?"                                                                       
                                                                               
  MR. WILLIAMS said yes.                                                       
                                                                               
  REPRESENTATIVE DAVIES continued, "I think that the idea here                 
  is fine and to do it prospective basis, I have absolutely no                 
  problem with agreeing 100 percent with the Chair of this                     
  committee that we should maximize self determination.  But I                 
  do have a problem with removing retrospectively that without                 
  a vote of the folks that voted to incorporate in the first                   
  place."                                                                      
                                                                               
  Number 225                                                                   
                                                                               
  MR. WILLIAMS responded saying, "City Councils are still                      
  subject to the will of the people and none of those folks                    
  who voted for incorporation at the time are still with us.                   
  I'm quite sure of that fact.  Additionally, if people don't                  
  like to see the mill levy that the council says is necessary                 
  in order to provide the services that they deem are                          
  appropriate and important, they can voice their opinion at                   
  public hearings when the budget comes before the people and                  
  it must.  They can also vote those councilmen out if they                    
  think the mill levy was raised inappropriately."                             
                                                                               
  REPRESENTATIVE DAVIES asked if the City of Whittier receives                 
  any revenues from the Alaska Railroad Corporation.                           
                                                                               
  MR. WILLIAMS indicated that the City of Whittier is unable                   
  to levy any taxes on the Alaska Railroad Corporation.                        
                                                                               
  Number 249                                                                   
                                                                               
  REPRESENTATIVE CYNTHIA TOOHEY asked, "Does the railroad                      
  furnish any help to the City of Whittier?"                                   
                                                                               
  MR. WILLIAMS indicated not and added, "We are in the process                 
  of forming a new relationship (with the railroad)."                          
                                                                               
  Number 271                                                                   
                                                                               
  REPRESENTATIVE CON BUNDE asked if there was any opposition                   
  to HB 397.                                                                   
                                                                               
  CHRYSTAL SMITH, DIRECTOR OF MEMBER SERVICES, ALASKA                          
  MUNICIPAL LEAGUE, indicated that AML supported HB 397 but                    
  "it was not one of the Municipal League's priorities for the                 
  year...  Our members did pass a resolution in support of                     
  this concept at the November conference and it was discussed                 
  by the members at that time and as far as I know there was                   
  no opposition to it..."                                                      
                                                                               
  CHAIRMAN OLBERG pointed out that the sponsor substitute                      
  needs to be read across the floor or adopted as a committee                  
  substitute before it can be moved out of committee.                          
                                                                               
  REPRESENTATIVE ED WILLIS asked, "What is the difference with                 
  regard to the taxing policy between a second class city and                  
  a first class city?"                                                         
                                                                               
  Number 330                                                                   
                                                                               
  CHAIRMAN OLBERG referred to the copies of the 93-94 Alaska                   
  Blue Book page 170-171 and AS 29.45.590 included in the                      
  committee's folders.  (A copy of the information provided to                 
  committee members is on file.)                                               
                                                                               
  BRUCE GERAGHTY, DEPUTY COMMISSIONER, DEPARTMENT OF COMMUNITY                 
  AND REGIONAL AFFAIRS, indicated that he was uncertain as to                  
  these specifics.                                                             
                                                                               
  MS. SMITH indicated that, "Basically, first class cities can                 
  tax up to three percent and second class cities, a half of                   
  percent on property tax."                                                    
                                                                               
  REPRESENTATIVE WILLIS continued, "And the second class city                  
  as it now stands, must have voter approval..."                               
                                                                               
  REPRESENTATIVE DAVIES asked, "Can second class cities impose                 
  sales taxes?"                                                                
                                                                               
  MS. SMITH indicated said, "As far as I know they can, yes.                   
  Many of the second class cities do have sales tax..."                        
                                                                               
  Number 361                                                                   
                                                                               
  REPRESENTATIVE DAVIES asked, "Was this limitation on                         
  property tax in place when the original legislation creating                 
  the distinctions between first class and second class cities                 
  was enacted?  How long has this been on the books?"                          
                                                                               
  MS. SMITH said she wasn't sure.                                              
                                                                               
  REPRESENTATIVE DAVIES said, "This gets to my original                        
  question...how many of them incorporated under that five                     
  mill limitation."                                                            
                                                                               
  CHAIRMAN OLBERG offered to have committee staff compile a                    
  comparison to address his concerns for the next hearing on                   
  HB 397 and brought forth HB 398.                                             
                                                                               
  HB 398 - LAND CONVEYED TO & FROM MUNICIPALITIES                              
                                                                               
  CHAIRMAN OLBERG, PRIME SPONSOR OF HB 398, read his sponsor                   
  statement aloud for the record.  (A copy of his sponsor                      
  statement is on file.)                                                       
                                                                               
  Number 420                                                                   
                                                                               
  DAVE GRAY, STAFF TO REPRESENTATIVE JERRY MACKIE, COSPONSOR                   
  OF PROPOSED SSHB 398, testified in support of HB 398 and the                 
  proposed sponsor substitute.  He stated, "Over the last two                  
  or three years, Representative Mackie has been trying to                     
  help out the City of Skagway on a land problem.  Basically                   
  the problem was that fifty years ago the Corps of Engineers                  
  came in and built a dike...which over the years has been                     
  filled in, subdivided, some lots sold, the streets put in                    
  and people have a deed to this land, but they don't have                     
  clear title to it because the city didn't have the land.                     
  Meanwhile we've become a state and all kinds of things have                  
  happened.  There's been a big effort between the city and                    
  the Division of Lands to see if we could correct this                        
  problem...administratively it could be problematic, so let's                 
  just do it with legislation.  That's what a good part of the                 
  sponsor substitute does.  Section one addresses this problem                 
  and it allows the Division of Lands to administrator at his                  
  discretion to quitclaim land to the municipality where                       
  there's been mistakes to correct, any mistakes such as this.                 
  It's written in a general way to affect any municipality to                  
  get around the prohibition for special interest, the Skagway                 
  land fix.  Also, you should know that section three has a                    
  sunset repealer legislation language that says this                          
  provision lasts for approximately three years, in which all                  
  these corrections can be made...  And finally, any land                      
  that's quitclaimed to a municipality will be debited against                 
  the general land grant entitlement municipalities enjoy.  In                 
  our particular case, Skagway has about 7000 acres of land                    
  that they may select..."                                                     
                                                                               
  REPRESENTATIVE DAVIES asked, "This land in Skagway was                       
  originally classified as tidelands?"                                         
                                                                               
  MR. GRAY referred to the land as "an old river bed" and                      
  said, "working with the Department of Natural Resources and                  
  their people thought that the language put in here covered                   
  every eventuality."                                                          
                                                                               
  Number 479                                                                   
                                                                               
  REPRESENTATIVE DAVIES asked, "Is this the same circumstance                  
  as the previous bill: the sponsor substitute hasn't been                     
  read across yet."                                                            
                                                                               
  CHAIRMAN OLBERG said yes.                                                    
                                                                               
  REPRESENTATIVE CON BUNDE said, "I would expect that perhaps                  
  you'd want to speak to the fiscal note."                                     
                                                                               
  CHAIRMAN OLBERG said, "DNR is saying that if we incorporate                  
  some changes that they would like in this legislation (HB
  398) that the fiscal note might change."                                     
                                                                               
  REPRESENTATIVE TOOHEY said, "Sounds like blackmail."                         
                                                                               
  Number 502                                                                   
                                                                               
  MR. WILLIAMS testified in support of HB 398 via                              
  teleconference by saying, "This is designed for economic                     
  development and again to help promote self-determination                     
  among communities."  He then gave an example of how this                     
  would help the City of Whittier saying, "If we were                          
  permitted to obtain tidelands under state statute, it would                  
  mean we could, through the process of requesting in advance.                 
  The fact that we don't have the right to do that now means                   
  that we are at the whim, I hate to say that, but it seems                    
  very much like we are not at all involved in the process or                  
  at the table when it comes to our ability to develop                         
  tidelands...  Last year at this time we had spent a great                    
  deal of time and energy in an attempt to provide a docking                   
  facility for five major day cruise operators to function out                 
  of Whittier...they asked what could we do and we said, `In                   
  the interest of economic development, we will do whatever we                 
  can to try to provide a docking facility for you, provided                   
  that you're able to pay for the cost of doing that' and they                 
  indeed were willing to do that.  I spent a great deal of                     
  time planning the dock, getting the financing together,                      
  making arrangements with the railroad to lease a portion of                  
  their land and then we found that about 4000 square feet of                  
  this large docking facility hung over onto DNR (Department                   
  of Natural Resources) tidelands.  Obviously, we had to go                    
  and get a permit, a lease, some instrument that allowed us                   
  to occupy a portion of those tidelands.  Now realize that                    
  this is a very small part of the total area...Everything was                 
  in place...and they (DNR) determined that the fastest way to                 
  deal with bringing this together was to go for a permit                      
  process.  We applied...it was only in the last moment, the                   
  month of May, that we learned from the Department of Natural                 
  Resources that they would need not only the annual fee that                  
  they charge for tidelands, but they wanted a piece of the                    
  action as well which started at 25 cents per passenger the                   
  first year and escalated in four year to a dollar.  That                     
  killed the deal.  Now I'm finding myself starting all over                   
  again...to find a piece of area that does not involve DNR                    
  tidelands.  We are effectively resigning from development on                 
  our waterfront if it involves State of Alaska property and                   
  this is not as it should be."                                                
                                                                               
  Number 567                                                                   
                                                                               
  REPRESENTATIVE BUNDE asked, "If the cities are picking up                    
  the property, why is there an expense to the state?"                         
                                                                               
  CHAIRMAN OLBERG said he hadn't been informed by DNR                          
  regarding the specifics of the fiscal note.                                  
                                                                               
  REPRESENTATIVE DAVIES requested to have representatives from                 
  DNR present for future meetings on SSHB 298.                                 
                                                                               
  Number 581                                                                   
                                                                               
  TIM TROLL, CITY ADMINISTRATOR, CITY OF SAND POINT, testified                 
  via teleconference in support of HB 298, saying, "We were                    
  incorporated as a first class city after the 1964 date, so                   
  we are ineligible to request tidelands from the state.  We                   
  currently do lease three tideland tracks totalling about 55                  
  acres in our harbor area.  We operate a city dock and a                      
  small boat harbor accommodating about 133 fishing vessels                    
  and also provide a transient moorage.  The City of Sand                      
  Point strongly encourages the adoption of this legislation.                  
  Although we do have tideland leases in place with the state,                 
  my observations since working with Sand Point...that we                      
  often enter into these leases and then hope that nobody ever                 
  reads them.  One of the stipulations in our current lease                    
  that gives me some concern is the requirement that says the                  
  city may use the rents received from subleasing for                          
  expenditures related to management and improvement of the                    
  tideland lease area, and it goes on to say that over 50                      
  percent of profit and excess of these expenditures must be                   
  returned to the state and the city is required to make an                    
  annual accounting.  This paragraph leaves a lot open to                      
  interpretation.  It would simply make things much easier for                 
  us in Sand Point to simply have ownership of those tidelands                 
  and be able to go ahead and improve and develop our harbor                   
  area because it is actually the vital economic center of our                 
  community.  And I would also think that from the state's                     
  perspective because...I don't know of anybody from DNR who                   
  has ever been out there to monitor the stipulations under                    
  this lease.  I would certainly think from the state's                        
  standpoint they would be happy to be relieved of any                         
  potential liability out there.  It would really be a win-win                 
  situation for all parties."                                                  
                                                                               
  Number 635                                                                   
                                                                               
  RON SWANSON, DIRECTOR, DIVISION OF LANDS, DEPARTMENT OF                      
  NATURAL RESOURCES, testified via teleconference saying, "HB
  398 we support in concept with a couple of amendments.  From                 
  what I've heard of the testimony, I partially agree with.  I                 
  do not have the legal authority to convey tidelands...to                     
  them.  Many municipalities that are waterfront                               
  related...much of their local economy is generated from                      
  activities on those tidelands.  I support the concept of                     
  being able to give those tidelands that are being used for                   
  developmental purposes to the local municipality for that                    
  purpose.  We could lease them those tidelands.  The correct                  
  (indiscernible) is to let for fair market value."                            
                                                                               
  Number 650                                                                   
                                                                               
  REPRESENTATIVE TOOHEY asked, "You said you had the ability                   
  to lease at fair market value, is that for all tidelands?"                   
                                                                               
  MR. SWANSON replied yes, and proposed the following                          
  amendments: "We are required by a long standing law to                       
  manage according to the Public Trust Doctrine.  It is a                      
  constantly changing piece of law, it has been expanded in                    
  recent years to include more activities than people thought                  
  of a hundred years ago.  The Public Trust Doctrine requires                  
  us to make sure that the land beneath water bodies are                       
  available for public use.  That doesn't mean that we can't                   
  create some private rights in those, but even when the                       
  private rights are created, they are subject to the Public                   
  Trust Doctrine.  In order to avoid a problem down the road,                  
  I would suggest an amendment that says any conveyance made                   
  under this particular Act is subject to the Public Trust                     
  Doctrine and if the Public Trust Doctrine has been broken,                   
  violated or whatever, title reverts back to the state.  It                   
  would make it much easier for us and make it very clear to                   
  the municipalities of what responsibility they have.  In the                 
  same line, if a municipality dissolves, normally (uplands                    
  would) come back to the state, that may have been conveyed                   
  to them.  We would like to see the same requirement made for                 
  tidelands upon the dissolving of a municipality.  Third, we                  
  would like to see any conveyance remain limited to the                       
  existing proposed public or development project.  We have no                 
  problem with that.  I do have a problem conveying a bunch of                 
  nonused tidelands.  It would also be very, very expensive to                 
  survey and to manage and to convey.  That is why the fiscal                  
  note in front of you right now is fairly high.  It takes                     
  quite a bit of manpower to do what we expect them to do.                     
  But if we pare down to development projects (indiscernible)                  
  we can drop that fiscal note substantially.  Last, we'd like                 
  to see an amendment stating that tide and submerged lands                    
  cannot be used to increase a municipal's land entitlement                    
  under AS 29.65.  We also feel that any conveyances made                      
  under this particular piece of legislation could be charged                  
  against a municipality's land entitlement.  If a                             
  municipality doesn't have land entitlements, that will not                   
  prevent us from conveying it to them.  But for a lot of                      
  municipalities...they have a land entitlement, but what they                 
  really want are tidelands, not necessarily the uplands.  I                   
  feel an obligation to fulfill those entitlements with land                   
  that could be best used by the municipality."                                
                                                                               
  Number 696                                                                   
                                                                               
  JAMES FILIP, CITY MANAGER, CITY OF SKAGWAY, testified via                    
  teleconference saying, "Our involvement is a little bit                      
  different than the other cities because ours involves some                   
  area that was letted and the dikes were constructed and the                  
  dried out land added to the land banks to the municipality                   
  without benefit of having title transfer from the state.  So                 
  we don't fall under the characteristics of a tidelands                       
  situation as I see it, but more or less on the idea of                       
  securing correct title to land that has already been in the                  
  possession of private landholders for quite some time."                      
                                                                               
  TAPE 94-4, SIDE B                                                            
  Number 000                                                                   
                                                                               
  CHAIRMAN OLBERG asked if HB 398 would enable DNR to convey                   
  the "formerly submerged lands" to Skagway.                                   
                                                                               
  MR. SWANSON replied, "That is correct.  We were made aware                   
  of the Skagway problem last summer and tried to                              
  administratively find a way to solve the problem.  It seems                  
  clear that we need a legislative solution and the solution                   
  that is here is one that we recommend strongly."                             
                                                                               
  CHARLES MCKEE, testified against HB 398 and the proposed                     
  sponsor substitute for reasons unspecified and referred to a                 
  brief he had written.  He indicated he would send his brief                  
  to the committee.                                                            
                                                                               
  Number 078                                                                   
                                                                               
  JIM BARNETT, ATTORNEY, CITY OF WHITTIER, responded to Mr.                    
  Swanson's proposed amendments via teleconference.  He said,                  
  "In large measure the City of Whittier would agree with his                  
  suggested amendments and I believe we could probably resolve                 
  much of his concerns.  ...he had five proposed changes.  The                 
  first being that the conveyance would be subject to the                      
  Public Trust Doctrine.  I believe that that's the law                        
  whether or not it's actually stated or not.  In fact, in the                 
  legislation as it exists today, there is an obligation to                    
  prevent unreasonable interference with navigation, which I                   
  think is one of the principle concerns that Mr. Swanson had.                 
  So I don't think we have any concern with that...as a                        
  concept.  The issue of whether a municipality dissolves and                  
  the land returns to the state, I think that goes without                     
  saying.  We would agree with that.  The notion of limiting                   
  the tideland conveyance to the existing or proposed                          
  development project, in Whittier's case, that's appropriate.                 
  Whittier has an extensive coastline in western Prince                        
  William Sound...  So I don't think we have any concern with                  
  that.  I believe Ron's next comment was that this went to                    
  the fiscal note, having been a Deputy Commissioner of DNR                    
  for many years back in the 80's, I'm aware of the fiscal                     
  problems the department has always experienced in making                     
  municipal land conveyance.  Since the last time the oil                      
  prices went down, DNR has not been in a position to make                     
  those conveyances without the municipalities producing the                   
  money to hire the employees to do the work and to do the                     
  surveying.  In fact, Whittier itself has just conveyed $6500                 
  to Mr. Swanson to do some final adjudication of the lands in                 
  Shotgun Cove so that those can be conveyed to the city.  So                  
  I think we recognize the budgetary constraints that the                      
  department operates under, and would agree that the process                  
  that most municipalities recognize when they deal with these                 
  conveyances.  That is if we want the land, we'd have to help                 
  the department adjudicate and survey it.  The only concern I                 
  have to Mr. Swanson's proposal is that whatever title is                     
  conveyed would be charged against the municipal land                         
  entitlement.  Particularly because we are now limiting it to                 
  development projects.  Probably in the case of Whittier, the                 
  tidelands we'd be talking about that are related to                          
  development projects would be fifty acres, maybe a hundred.                  
  Not a significant quantity of land, but the City of Whittier                 
  right now is trying very desperately to develop it's                         
  economic future and, of course, the discussing that we                       
  really didn't get into too far about the railroad is very                    
  applicable in the situation of Whittier.  The legislature                    
  ten years ago promised the City of Whittier 600 acres,                       
  upland acres, all of it leading out to Shotgun Cove.  To the                 
  extent that we'd have to give some of it back, it would take                 
  away from our ability to either build a road or develop                      
  successfully.  We would like to have these tidelands in                      
  addition to the 600 acre entitlement..."                                     
                                                                               
  CHAIRMAN OLBERG said, "I suspect the subtraction from the                    
  municipal land entitlement is tied to Skagway where we're                    
  actually talking about land.  And maybe in the process of                    
  drafting one of the future committee substitutes...we will                   
  be able to satisfy the Skagway problem and the other problem                 
  as well.                                                                     
                                                                               
  REPRESENTATIVE DAVIES asked if the 600 acres was all                         
  Whittier was entitled to.                                                    
                                                                               
  MR. BARNETT confirmed this and gave some historical                          
  perspective.                                                                 
                                                                               
  MR. GERAGHTY said, "There are provisions already existing in                 
  state statute, specifically AS 44.47.150 (f) which                           
  stipulates that land that was owned by a municipality on the                 
  date of its dissolution and received by the municipality                     
  under the state under a municipal land grant entitlement                     
  program is transferred to the Commissioner of Natural                        
  Resources.  So there is a provision already in law to deal                   
  with dissolution.  Further, we think that DNR's suggestion                   
  that a provision be put in the bill to protect public rights                 
  in the event of a conveyance so that the public trust is                     
  there and retained...that's an excellent idea.  ...Now I                     
  think we're getting into where...further discussions with                    
  Mr. Swanson may clarify this because part of his response                    
  did so in my mind, where he was talking about the aspect of                  
  the conveyed tideland or submerged lands being charged                       
  against the municipal entitlement... because we have                         
  situations where some cities don't qualify for entitlement                   
  under AS 39.65 and the only thing they have available to                     
  them is the tidelands and submerged lands for conveyance.                    
  So, I'm not quite sure how that works with his programs.                     
  The other aspect is where the entitlement to the city, like                  
  in the case of Whittier, where it is restricted, that the                    
  conveyance of tidelands working against the overall                          
  entitlement is going to have detrimental effects.  So I                      
  think a little bit of time, we should be able to work out                    
  that..."                                                                     
                                                                               
  Number 291                                                                   
                                                                               
  REPRESENTATIVE DAVIES asked, "Ron, in your proposed                          
  amendment that says, `If conveyance does occur...public                      
  rights must be protected through divisionary interest                        
  retained by the state, if the public trust is breached,' is                  
  that meant to be fairly broad, I mean more broad than just                   
  simply the case of a municipality dissolving itself.                         
  Perhaps I read of this also including the case where                         
  subsequent release interest are given to a private                           
  developer, and in that case the public trust was breached,                   
  then there would be a hammer to get that to protect the                      
  public interest.  Is that also included in your intent                       
  here?"                                                                       
                                                                               
  MR. SWANSON replied, "That is correct."                                      
                                                                               
  Number 320                                                                   
                                                                               
  CHAIRMAN OLBERG suggested HB 398 and its current draft of                    
  the sponsor substitute be discussed at a later date and                      
  adjourned the meeting at 2:20 p.m.                                           
                                                                               

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