Legislature(2001 - 2002)
02/04/2002 03:15 PM House L&C
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 298-LEGISLATIVE APPROVAL OF RAILROAD LEASES CHAIR MURKOWSKI announced that the next order of business would be HOUSE BILL NO. 298, "An Act relating to legislative approval of certain land leases by the Alaska Railroad Corporation." [Before the committee was CSHB 298(TRA).] Number 0298 CHAIR MURKOWSKI, sponsor, explained that she'd introduced HB 298 after working in conjunction with the Alaska Railroad Corporation (ARRC), in order to simply allow for extension of the railroad leases in certain terminal areas across the state. Currently, statutes limit the leases to 35 years. Financing for any project is usually for a longer term, however. Therefore, HB 298 would expand the lease date from 35 years to 55 years, in keeping with the current leasing policies of the University of Alaska and the Department of Natural Resources. She informed the committee that there has been concern that ARRC hasn't be able to obtain adequate financing for projects in the Anchorage area because of the current limitation in statute. Therefore, ARRC has requested this legislation. She asked that Ms. Lindskoog discuss the bill further. Number 0789 WENDY LINDSKOOG, Alaska Railroad Corporation, explained that this legislation would help make some of ARRC's land more viable for commercial and residential development. She noted that a couple of years ago [ARRC] came to the legislature with an amendment to a bill that dealt with the problem of short leases in relation to financing home mortgages in a subdivision in the Healy area. Rather than address this problem in a piecemeal fashion, [ARRC] had requested flexibility to offer a longer lease term, 55 years, in the areas with the most demand for such. Number 0692 REPRESENTATIVE ROKEBERG noted that he and Ms. Lindskoog had had a conversation regarding extending the lease to 55 years on all lands, including the reserve lands. He asked if ARRC would be amenable to that. MS. LINDSKOOG answered that the foregoing would have been ARRC's first choice. However, the request was [limited] to the reserve lands, where there is the largest demand for this type of lease length. Certainly, if ARRC could obtain the ability to lease any of its land, [it would like to do so]. REPRESENTATIVE ROKEBERG said there may be some restrictions on operating lands within the rights-of-way, but that could be taken care of internally, he thought. He added, "And only those lands that might come up that aren't within the so-called terminal reserves, ... I think they may well. Why make it any different?" MS. LINDSKOOG remarked that it would be great if ARRC could have the ability to have a 55-year lease on all lands. She clarified that on right-of-way lands, ARRC typically doesn't issue leases; rather, it issues permits. Those [permits] are often for utilities that go through ARRC's right-of-way, and those can be only for an 18-year period, per the Federal Transfer Act. In further response to Representative Rokeberg, Ms. Lindskoog confirmed that other lands could potentially qualify for a long- term lease. CHAIR MURKOWSKI pointed out that even if the lease terms were extended to 55 years, it is still up to the board how long it wants to make each lease. This [legislation] merely sets the maximum term. MS. LINDSKOOG concurred. She explained that ARRC's board of directors has to approve all long-term leases, and there is a public comment period, the time of which is dependent upon the type of lease. Therefore, there is a lot of opportunity for the public to comment on how the land should be used. Number 0448 KAREN MORRISSEY, Alaska Railroad Corporation, Department of Community & Economic Development, testified via teleconference. She echoed earlier comments that the length of ARRC's lease term is precluding a lot of developments, and that operators need the longer term to obtain financing. REPRESENTATIVE ROKEBERG commented that in his 30 years as a real estate broker in Anchorage, he thought it was extraordinarily difficult to determine valuations on improvements when there was a ground lease with a limited term. He said the valuations would tend to be extraordinarily depreciated or that they wouldn't get true value for the improvements to the land, depending on the diversionary interest. MS. MORRISSEY agreed, but pointed out that in recent times, tenants are tending to sell their improvements. She explained that often [tenants] request a longer term, which is taken to the board. The board approves that longer term, subject to the sale of the improvements. Therefore, the new tenant can invest in that improvement and obtain financing to acquire that improvement. Still, it is limited to 35 years. Number 0317 REPRESENTATIVE ROKEBERG related his understanding, then, that this would have to be taken up as an issue 20 years before [ARRC] would otherwise do so. MS. MORRISSEY agreed, adding that typically the tenant needs 10 years beyond the term of the financing. Therefore, [HB 298] will make it easier for tenants to either sell improvements or invest in what they have [with a] longer term. Number 0265 REPRESENTATIVE ROKEBERG offered an amendment to CSHB 298(TRA), as follows: Delete the text on page 1, lines 13-14, through the word "paragraph" on page 2, lines 1-4. On page 2, line 4, delete "35" and insert "55". MS. LINDSKOOG indicated the only difference [between this and a bill in Senate] is that the Senate bill deleted the language "certain terminal reserves" in the title. CHAIR MURKOWSKI said the title of HB 298 would conform [to the changes]. Number 0131 REPRESENTATIVE ROKEBERG amended his conceptual amendment to include a conforming title. CHAIR MURKOWSKI informed the committee that as the sponsor, she wouldn't object to Representative Rokeberg's amendment [as amended]. She announced that there being no objection, the amendment [as amended] was adopted. Number 0108 REPRESENTATIVE ROKEBERG moved to report CSHB 298(TRA), as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 298(L&C) was moved out of the House Labor and Commerce Standing Committee.
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