Legislature(1999 - 2000)

03/23/2000 01:55 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
HOUSE BILL NO. 344                                                                                                              
                                                                                                                                
An Act authorizing a land exchange between the                                                                                  
Department of Natural Resources and Alaska Hard Rock,                                                                           
Inc.; and providing for an effective date.                                                                                      
                                                                                                                                
Co-Chair Mulder MOVED to adopt the work draft, HB 344, 1-                                                                       
GH2071\D, Kurtz, 3/22/00, as the version of the bill before                                                                     
the Committee.  There being NO OBJECTION, it was adopted.                                                                       
                                                                                                                                
CAROL CARROLL, DIRECTOR, DIVISION OF ADMINISTRATIVE                                                                             
SERVICES, DEPARTMENT OF NATURAL RESOURCES, noted that Mr.                                                                       
Stratton, Director, Division of Parks with the Department                                                                       
was on line and she requested that he present the bill to                                                                       
the Committee.                                                                                                                  
                                                                                                                                
JOHN SHIVELY, COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES,                                                                    
explained that the bill would provide legislative approval                                                                      
of a land exchange agreement between the Department of                                                                          
Natural Resources and Alaska Hard Rock, Inc.  The purpose of                                                                    
the land exchange would be for the State to acquire private                                                                     
land located within and adjacent to Independence Mine State                                                                     
Historical Park near Hatcher Pass.  The land to be acquired                                                                     
would be developed to enhance the interpretive and                                                                              
recreational uses of the park.  The land the State is                                                                           
exchanging is also located in the Hatcher pass area and is                                                                      
presently under permit to Alaska Hard Rock, Inc.  They are                                                                      
interested in receiving title to the land.                                                                                      
                                                                                                                                
Commissioner Shively continued, State law requires                                                                              
legislative approval of land exchanges involving lands of                                                                       
unequal appraised value.  In the proposed exchange, the                                                                         
State will receive land appraised at $87 thousand dollars                                                                       
while conveying land appraised at $66,500 thousand dollars.                                                                     
Alaska Hard Rock, Inc. is agreeable to this unequal                                                                             
exchange; they would be receiving a federal tax credit for                                                                      
the difference.                                                                                                                 
                                                                                                                                
He pointed out that by adding the land to the Independence                                                                      
Mine State Historical Park, particularly the underground                                                                        
mine tunnel, would add to the tourism potential of the park.                                                                    
                                                                                                                                
JIM STRATTON, (TESTIFIED VIA TELECONFERENCE), DIRECTOR,                                                                         
DIVISION OF PARKS AND OUTDOOR RECREATION, DEPARTMENT OF                                                                         
NATURAL RESOURCES, added that the Division and Alaska Hard                                                                      
Rock, Inc., had worked cooperatively together to determine                                                                      
an appraisal.  He commented that the land they are receiving                                                                    
is service land where they currently have mining structures,                                                                    
storage buildings and other facilities, which they are using                                                                    
for underground operations.                                                                                                     
                                                                                                                                
CHARLIE BODDY, VICE PRESIDENT OF GOVERNMENTAL RELATIONS,                                                                        
UCIBELLI COAL MINE, noted that after working with the Alaska                                                                    
Railroad over the past few years, it was obvious that they                                                                      
would need legislative approval to extend the lease which                                                                       
they had prior to approval of the transfer act of the                                                                           
Railroad with the federal government.  The time of the 55-                                                                      
year lease was decreasing in which it became necessary to                                                                       
secure a 30-year mortgage.  All the lending institutions                                                                        
wanted an additional 10 years past the term of the loan.                                                                        
The Alaska Railroad does have the statutory authority to                                                                        
issue a lease for longer than 35 years, however, the caveat                                                                     
is that they would then have the right to terminate that                                                                        
lease at any point if that land is needed by the Alaska                                                                         
Railroad.  Mr. Boddy noted that if the lease were not                                                                           
extended, a 20-year mortgage would be too expensive.  He                                                                        
reminded members that it is just less than a township with                                                                      
about 500 plus acres developed which started in 1977. The                                                                       
town of Healy and Ucibelli has relocated out into the                                                                           
subdivision.  Mr. Boddy stressed that they would like to                                                                        
preserve that community.                                                                                                        
                                                                                                                                
Representative J. Davies asked if consideration had been                                                                        
given to swapping some land with the Alaska Railroad.  Mr.                                                                      
Boddy responded that the Denali Borough has not finished all                                                                    
their municipal selections to date.                                                                                             
                                                                                                                                
Co-Chair Therriault noted that the town of Ucibelli and                                                                         
Healy use to be on the tracks.  The town was developed so                                                                       
that they could move the operations.  He noted that                                                                             
transferring to the federal government language has caused a                                                                    
problem for a new loan.                                                                                                         
                                                                                                                                
Mr. Boddy pointed out that the master lease was taken from                                                                      
the Railroad.  Ucibelli was looking for options to move                                                                         
employees off the mine site and the federal government                                                                          
wanted to help with the safety administration.  He                                                                              
reiterated that it is important to have the ability to                                                                          
secure each mine site. Mr. Boddy advised that at that time,                                                                     
there was a shortage of additional space for people to                                                                          
relocate.  The other businesses, which were operating in                                                                        
that area, were able to plot the subdivision.  The master                                                                       
lease allows to get only the recovering costs incurred for                                                                      
the cost of development of the subdivision.                                                                                     
                                                                                                                                
Co-Chair Mulder noted that Ucibelli was leasing land from                                                                       
the Railroad and were exchange leasing the land to these                                                                        
people that have homes there.  He asked what the families                                                                       
pay for lease costs for that land.  Mr. Boddy replied that                                                                      
in 1977, there was an original rental fee in the amount of                                                                      
$1.2 thousand dollars per acre development fee.  Those funds                                                                    
were used for the road and recovering a trunk line from the                                                                     
Valley.  The rental for years thereafter was $28.87 per acre                                                                    
per year.  That cost was spread over the entire subdivision                                                                     
as if every acre was leased.  In 1990 to present, there is a                                                                    
$2 thousand dollar development fee for a lot and the rental                                                                     
amount has increased to $100 dollars per acre per year.                                                                         
                                                                                                                                
Co-Chair Mulder interjected that these people have received                                                                     
"a good deal" on the land.  He questioned the long-term                                                                         
intention.  Mr. Boddy responded that Ucibelli was in a                                                                          
position to do the development in 1977.  However, he pointed                                                                    
out they run a coal mine and "being a landlord" is a                                                                            
function that Ucibelli would like to get rid of.                                                                                
                                                                                                                                
Co-Chair Therriault advised that the Alaska Railroad is                                                                         
interested in facilitating the swap.  Mr. Boddy agreed,                                                                         
noting that the legislation presupposes that they will be                                                                       
taking that area back.  The Denali Park is the one currently                                                                    
being utilized.                                                                                                                 
                                                                                                                                
Co-Chair Mulder questioned if it was the desire of the                                                                          
Railroad to dispose of the property.  Mr. Boddy did not                                                                         
know.                                                                                                                           
                                                                                                                                
(TAPE CHANGE, HFC 00 - 80, Side 2).                                                                                             
                                                                                                                                
Co-Chair Mulder pointed out that the Railroad could take                                                                        
advantage of all the improvements made to the land.                                                                             
Representative J. Davies pointed out that the way in which                                                                      
the legislation is structured, the Railroad would not be                                                                        
able to terminate the lease.  It would always be a lease and                                                                    
not an ownership situation.  Representative J. Davies agreed                                                                    
that a private land arrangement would be the most beneficial                                                                    
to everyone.                                                                                                                    
                                                                                                                                
Ms. Carroll advised that the fiscal note would not change                                                                       
with the committee substitute.                                                                                                  
                                                                                                                                
Co-Chair Mulder MOVED to report CS HB 344 (FIN) out of                                                                          
Committee with individual recommendations and with the                                                                          
accompanying fiscal note.  There being NO OBJECTION, it was                                                                     
so ordered.                                                                                                                     
                                                                                                                                
CS HB 344 (FIN) was reported out of Committee with a "do                                                                        
pass" recommendation and with a zero fiscal note by the                                                                         
Department of Natural Resources.                                                                                                

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