Legislature(2017 - 2018)HOUSE FINANCE 519
04/18/2017 09:45 AM FINANCE
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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.
|SB 88 - Opposition Document 4.18.2017.pdf||
HFIN 4/18/2017 9:45:00 AM