Legislature(1997 - 1998)

02/09/1998 03:38 PM House L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 324 - MUNICIPAL LIEN FOR UTILITY IMPROVEMENTS                               
Number 0595                                                                    
CHAIRMAN ROKEBERG stated the committee's next item of business was             
HB 324, "An Act relating to liens for municipal assessments for                
certain utility improvements."  He invited the bill sponsor to come            
HB 324 read:                                                                   
     * Section 1.  AS 29.10.200 is amended by adding a new                     
     paragraph to read:                                                        
          (54) AS 29.46.080(d) (limitation on assessment                       
     * Sec. 2.  AS 29.46.080(c) is amended to read:                            
          (c) Except as provided in (d) of this section,                       
          assessments [ASSESSMENTS] are liens on the property                  
          assessed and are prior and paramount to all liens                    
          except municipal tax liens.  They may be enforced                    
          as provided in AS 29.45.320 - 29.45.470 for                          
          enforcement of property tax liens.                                   
     * Sec. 3.  AS 29.46.080 is amended by adding a new                        
     subsection to read:                                                       
          (d) A municipality may not, under (c) of this                        
          section, place a lien on the property assessed for                   
          utility improvements unless the utility service is                   
          provided by a municipally owned utility or an                        
          organization, including a cooperative, that                          
          requires membership as a condition of obtaining                      
          utility service from the organization.  This                         
          subsection applies to home rule and general law                      
Number 0621                                                                    
REPRESENTATIVE SCOTT OGAN presented his sponsor statement for HB
324.  He stated, "I've introduced House Bill 324 for two basic                 
reasons.  First, I heard from a number of constituents who stated              
they did not feel they could afford the borough assessment on their            
property as a result of ENSTAR [ENSTAR Natural Gas Company] running            
a gas line they neither wanted or needed across their land.  And               
second, has to do with a private company directly benefitting from             
leverage by public government through a process of attaching liens             
to a property when the owner fail to pay assessments - fees                    
established by the borough."                                                   
Number 0664                                                                    
REPRESENTATIVE OGAN cited Section 3, and stated he thought the                 
Matanuska-Susitna (Mat-Su) Borough ordinance recording a non-                  
response to a voting notice for inclusion in a local improvement               
district (LID) as a "yea" vote was inherently wrong.  He compared              
this type of voting process to a non-response counting as a vote               
for the incumbent.  Representative Ogan noted the ordinance had                
been recently changed in the Mat-Su Borough.  He commented that                
this type of voting process was not addressed in statute, and there            
was no attempt to address it in this legislation.  He stated he was            
concerned some of his constituents would lose their homes,                     
describing one elderly lady on a fixed income who chopped firewood             
to heat her home, and who "has made enough of a ruckus that I                  
believe that she would be in dire straits if - if, and quite                   
possibly be out on the street, because she can't afford the                    
assessment.  She doesn't have any intention [of] hooking up to the             
gas.  She didn't want the gas, she didn't vote for it, yet she has             
a - a major assessment on her property that she just simply doesn't            
have the money to pay for."                                                    
Number 0815                                                                    
REPRESENTATIVE OGAN indicating addressing this issue was the bill's            
intention.  He stated he was more than willing to defer to the                 
committee and work with interested parties "to try to hold harmless            
people that, either don't want the gas, or can't afford it."  He               
commented, "I guess it can be argued that it's an improvement to               
their property.  If they hook up, it's a major improvement.  If                
it's - if it goes by their front yard, I suppose that the value of             
their property is increased somewhat by the fact that the - there              
is natural gas there.  So, I guess it just gets down to the kinder,            
gentler side of Scott Ogan wants to help out little old ladies and             
keep them from being ... thrown out of their homes because they                
can't pay - pay for the assessment."                                           
Number 0885                                                                    
REPRESENTATIVE JOHN COWDERY questioned HB 324's effect in his area,            
the Municipality of Anchorage.  He stated when an area was being               
assessed for sewer, water, whatever, and there was a vote of the               
people, the majority vote ruled.  He noted he owned a vacant lot in            
the Mat-Su Borough and has made five payments for an LID gas                   
improvement.  Representative Cowdery said he wanted to know, if HB
324 was put into law, how other neighborhood improvements, such as             
roads, et cetera, would be affected.                                           
Number 0964                                                                    
REPRESENTATIVE OGAN replied HB 324 only affected LIDs which                    
benefitted privately-owned companies.  He said it did not affect               
municipal or publicly-owned utilities where people have a say, and             
a vote, in the by-laws; it only affected private entities on whose             
behalf a public entity collected.                                              
Number 1005                                                                    
REPRESENTATIVE GENE KUBINA said he would like to have a better                 
understanding.  He commented it appeared the borough wanted the LID            
and sold bonds in order to do this, rather than doing it                       
themselves, feeling it was better to go through a private company.             
He stated it seemed like the private company here was doing a                  
service for the borough.  Representative Kubina asked the amount of            
the assessment in question.  He commented the question was valid:              
What if a borough decides not to put in water and sewer lines                  
itself?  He asked about the case of a private electric company and             
stated additional questions:  "How else do we modernize our areas              
here in Alaska if you don't allow for these things to be paid for              
by all the people ... in that area, [does] it have to be 100                   
percent?"  He questioned how the bond would be paid, wondering if              
it would be prorated back, and if the people next door would be                
charged twice as much because the others did not participate.                  
Number 1082                                                                    
REPRESENTATIVE OGAN responded that the Matanuska Electric                      
Association, for example, running a line through property on an                
easement doesn't charge unless the property owner hooks up. He                 
stated the people who hook up first are charged more, but he                   
believed the original people received some kind of a rebate as more            
people bear the load.  He noted if the borough financed the project            
itself, the borough could pick and choose those it put liens on.               
He commented he thought, however, because it ran through a private             
organization, the private financing company required everyone in               
the LID area to have a lien in order to secure the loan.  He stated            
it was problematic and he was willing to work with people with                 
ideas to make this a little more "user-friendly" for those at a                
financial disadvantage.  He asked Representative Cowdery if he                 
would be willing to share the amount of his assessment with the                
committee, noting it was public information.  Representative Ogan              
commented each LID was assessed differently depending on the cost              
of the improvements.  He stated, "We can't be deprived of our                  
property without due process of law, and I suppose that, in                    
principal, due process is met here because your voters -- your                 
neighbors voted to impoverish you, but somehow I don't think that's            
very inherently fair."                                                         
Number 1217                                                                    
BOB JENSEN, Manager of Branch Operations, ENSTAR Natural Gas                   
Company, a division of Seagull Energy Corporation, came forward to             
testify on HB 324.  He stated he had worked a little bit with                  
Representative Ogan on this, and he noted he somewhat "dropped the             
ball," and could been a little better about giving Representative              
Ogan some suggestions that might have been helpful.  Mr. Jensen                
stated he was fairly familiar with the special assessment process              
and could briefly explain it to the committee.  He said the process            
was one of the subsections of Title 29 (Municipal Government) and              
any kind of special assessment district - roads, natural gas,                  
sewer, water - could be started either by an act of the assembly or            
by petition of the local residents.  He stated the natural gas LIDs            
have, to the best of his knowledge, all been started by petition.              
He noted it's a "ground-roots" effort, people going door-to-door,              
talking to their neighbors, trying to get at least 50 percent.  He             
added 70 percent is required on the Kenai Peninsula.                           
Number 1293                                                                    
MR. JENSEN said the petition comes forward to the borough from the             
property owners in a given area with a minimum of 50 percent of the            
property owners in an area participating.  He stated, from there,              
the borough will contact ENSTAR, defining the area the borough                 
wishes to have served, and ENSTAR will design a project to provide             
service to the specified lots, submitting the cost back to the                 
borough.  Once the borough has those costs, it mails out a letter              
to each property owner in the area telling the owner the expected              
cost and amount of assessment, broken down on an annual basis.  He             
said the borough then holds public hearings on the LIDs, and the               
LIDs pass or fail based on the input in the public hearings.  Mr.              
Jensen stated Representative Ogan was right, in the Mat-Su Borough,            
historically, a non-response has been counted as a "yes" vote.                 
Realistically, he said he thinks that has been pretty close.  Mr.              
Jensen commented, according to Don Moore, retired Matanuska-Susitna            
Borough manager, protests run about 10 percent in the Mat-Su                   
Borough, which is pretty low.  Mr. Jensen said the Mat-Su Borough              
turns down LIDs when the protest level exceeds 20 percent.                     
Number 1343                                                                    
CHAIRMAN ROKEBERG asked for a clarification of 10 percent protest.             
Number 1349                                                                    
MR. JENSEN replied that protests on LIDs borough-wide in the Mat-Su            
have been somewhere just under 10 percent.                                     
Number 1358                                                                    
REPRESENTATIVE KUBINA asked if that meant they did not vote at all.            
Number 1360                                                                    
MR. JENSEN indicated that 10 percent of the total property owners              
sent back protest letters.                                                     
Number 1369                                                                    
CHAIRMAN ROKEBERG asked if that was before the election.                       
Number 1372                                                                    
MR. JENSEN replied that was using the protest mechanism.  He noted             
the Mat-Su Borough has changed its procedure, and is now using the             
Municipality of Anchorage's procedure.  He said he thinks the                  
municipality has always mailed out a ballot, and a failure to                  
respond is counted as a "no" vote.  He stated he thinks ENSTAR has             
done 2 or 3 LIDs in the Municipality of Anchorage, 3 Kenai                     
Peninsula Borough LIDs, 1 City of Soldotna LID, and probably                   
somewhere over a 100 LIDs in the Mat-Su Borough.                               
Number 1401                                                                    
CHAIRMAN ROKEBERG asked if state statute allowed the local                     
political subdivision to develop its own methodology.                          
Number 1408                                                                    
MR. JENSEN replied that was correct.  He said Title 29 specifies               
that the assembly can start an LID if it chooses, but in the Mat-Su            
Borough at least and he believed in Kenai, the assembly does not               
start LIDs, it waits for a petition to come forward from the                   
property owners.  He noted he was not as familiar with the                     
Municipality of Anchorage.                                                     
Number 1422                                                                    
REPRESENTATIVE JERRY SANDERS clarified the Municipality of                     
Anchorage counted a non-response as a "no" vote and the "Valley"               
(Matanuska-Susitna Borough) formerly counted a non-response as a               
"yes" vote.                                                                    
Number 1433                                                                    
MR. JENSEN responded that was correct.  He said the reading of                 
Title 29 says it is based on protests, and he said he thinks the               
interpretation may have been that protests had to be counted, there            
had to be protests, if Title 29 was followed strictly.  He                     
commented he was not sure where it came from, bond counsel perhaps,            
but he noted the Mat-Su Borough has recently changed their                     
procedure.  He said he thinks the change to the Municipality of                
Anchorage's procedure was made during the first or second assembly             
meeting in January.  Mr. Jensen stated ballots will be mailed, only            
positive responses counted, and a minimum of 50 percent positive               
responses will have to be received for the LID to go forward.                  
Number 1473                                                                    
MR. JENSEN stated that the LID process is a municipal process.  He             
said ENSTAR does not foreclose on anyone; it is effectively a                  
contractor, noting, "They pay us and they usually sell special                 
assessment bonds ...."  He said the previously mentioned                       
foreclosure mechanism is designed so that the municipality is able             
to collect the money to pay off its bonds and that process has                 
nothing to do with ENSTAR.  He said the company is like any other              
contractor doing a job, it gets paid when it does the job.                     
Number 1503                                                                    
CHAIRMAN ROKEBERG asked if the use of the municipal bonding                    
authority, then, was intended to allow the issuance of tax-exempt              
bonds which lowered the cost of the project to the affected                    
property owners.                                                               
Number 1518                                                                    
MR. JENSEN responded that was correct except the bonds are not tax-            
exempt because the utility does business in three "counties."  He              
stated the Internal Revenue Code does not allow a municipality to              
issue a tax-exempt bond.  He said the municipality can still get a             
much better interest rate than an individual homeowner, if the                 
homeowner were to try finance the project through the bank.                    
Number 1535                                                                    
CHAIRMAN ROKEBERG asked, "Why doesn't ENSTAR finance 'em if you're             
gonna go (indisc.) taxable bond then vis- -vis going through the               
political subdivision on a taxable bond basis?"                                
Number 1542                                                                    
MR. JENSEN responded the reason LIDs come forward is because they              
are not economically feasible projects from ENSTAR's perspective.              
He asked, "What would happen if we were to go forward and do the               
projects -- you have to pay for this somehow, and the way you pay              
for it, is you raise your rates."  He stated ENSTAR has                        
approximately 97,000 customers who do not want ENSTAR to raise its             
rates.  He said the company has somewhat taken the position the                
"cost-causer should be the cost-payer."  He said this is true of               
any project, stating ENSTAR has done approximately 120 projects in             
the Mat-Su Borough and 25 were LIDs.  He said what happens, is                 
ENSTAR determines a project is not economically feasible for ENSTAR            
to do without raising rates, something the company does not want to            
do.  He commented the Alaska Public Utilities Commission (APUC)                
would also frown if ENSTAR raised its rates, and it would be                   
difficult for the company to raise its rates.  He said he thought              
the "cost-causer, cost-payer acronym" came from the commission.                
Number 1596                                                                    
MR. JENSEN said, on any project, ENSTAR contributes approximately              
$645, about 85 feet of the project.  He stated, "For any given                 
customer who wants to hook up, we pay the first 85 feet, if the                
front of their lot's a 100 feet, then they would pay the additional            
15, or pay the cost of putting that in.  We treat that money as a              
deposit.  We pay that back, we pay back as ... -- let me get back              
into the LID perspective.  When we -- when the borough contacts us             
to put in an LID and we give them a price, ... they pay us to do               
the job, and then we refund to them, every time somebody hooks up              
to - to the system, we refund them $645.  And we do that all the               
way through, up to and including the tenth year.  At the end of the            
tenth year, if there're monies left over, we give the whole kit and            
caboodle back to the borough.  So, basically what's happening is               
the borough or any other customer ... whose property exceeds the 85            
feet, is financing the project.  And that is - is done so that we              
don't burden our existing customers."                                          
Number 1663                                                                    
CHAIRMAN ROKEBERG questioned if the 85 feet referred to 85 linear              
feet and the trunk line that came in.                                          
MR. JENSEN responded that was the main line.                                   
CHAIRMAN ROKEBERG asked if it was 85 feet for the service                      
Number 1675                                                                    
MR. JENSEN replied that the service connection was separate.                   
ENSTAR, he said, paid the first 100 feet of a service connection,              
which was somewhere between $550 and $650 dollars.  He commented,              
to keep in mind, for someone who lived a quarter mile from the                 
existing main and was the only customer interested in hooking up,              
ENSTAR would pay the first 85 feet and the customer would be                   
responsible for financing the balance.  He stated, "If you came to             
us and asked us to run gas to your home, we would contact all your             
neighbors in trying to put together a - a package with your                    
neighbors where everybody contributed a little bit and everybody               
would hook up."  He said it was a cooperative procedure from                   
ENSTAR's end; ENSTAR has its people out there trying to put                    
together a package that works for the people involved.                         
Number 1718                                                                    
REPRESENTATIVE KUBINA commented one issue was already taken care of            
in the Mat-Su Borough since the rule had been changed so that a                
non-response counted as a "no" vote, noting the Municipality of                
Anchorage already did it that way.  He referred to the "cost-causer            
pays" and stated, if his understanding was correct, that the bill              
said someone who does not hook up does not have to pay anything.               
He asked if that "would do away with these projects completely,                
unless a higher percentage said they were going to hook up ....                
What would be the effect of this?"                                             
Number 1754                                                                    
MR. JENSEN responded HB 324 would effectively stop all natural gas             
related special assessment districts.  He repeated that ENSTAR                 
doesn't place liens on people's property; the borough does, and the            
borough places liens in response to a petition of the property                 
owners.  He said placing liens was the last thing that happened;               
there was a public hearing prior to setting the assessment roll so             
that any inequities could be fixed.  He stated if the borough is               
not allowed to place a lien on the property, it would not be able              
to sell the special assessment bonds, and he commented that a                  
special assessment bond is not like a general obligation bond.  Mr.            
Jensen said a general obligation bond pledges the full faith and               
credit of the entire borough, but the special assessment bond only             
pledges the property of the people benefitted by the improvement -             
whether it be a road, natural gas, sewer and water - whatever that             
improvement might be.                                                          
Number 1801                                                                    
REPRESENTATIVE KUBINA noted ENSTAR had done more LIDs in the Mat-Su            
Borough than any place else in the state by far; yet, he said, if              
HB 324 had passed, virtually none of those would have happened.                
Number 1810                                                                    
MR. JENSEN stated that was correct.  He said if this bill had been             
in existence back in 1985, there would have been no natural gas                
special assessment districts in the Mat-Su Borough or anywhere                 
else.  He noted approximately 3,300 individual homeowners who have             
natural gas today have benefitted from this process.                           
Number 1827                                                                    
REPRESENTATIVE KUBINA asked if Mr. Jensen had a figure for the                 
number of people out of that group who had to pay, and could have              
natural gas, but don't.  He wondered if that number was very high.             
Number 1833                                                                    
MR. JENSEN stated he was not sure.  He said that for properties                
with homes, within five years approximately 97 percent of those                
people hook up.  He noted this was an average number and varied                
from LID to LID.  He stated he was not certain what the total lot              
count was; the ones who would be at risk would be the people with              
lots without homes on them.                                                    
Number 1858                                                                    
MR. JENSEN stated, personally, he did not see the difference                   
between a special assessment placed for a private utility such as              
ENSTAR, one placed for a cooperative or one placed for a                       
municipality.  He said the property was still at risk if the                   
assessment was not paid.  The Municipality of Anchorage, in                    
particular, he said, does a lot of sewer LIDs and those people who             
pay for the sewer LID have the same lien on their property, and he             
stated the benefit is similar.  Mr. Jensen mentioned solving the               
problems Representative Ogan raised, and he referred to Title 29.              
He said the special assessment portion is somewhat liberal in one              
place, saying "the borough may set the methodology that they use,              
which is why Anchorage does it different than Kenai who does it                
different than - than the Mat-Su Borough, but it's very restrictive            
in - in other areas."  Mr. Jensen said, for example, Title 29 says             
that every property which benefits from the LID must be assessed,              
and provides no exception.                                                     
Number 1914                                                                    
MR. JENSEN stated he had suggested to Representative Vic Kohring,              
but had not had an opportunity to talk in depth with Representative            
Ogan, that pehaps the answer would be to provide a senior citizen's            
exemption similar to the one in the tax portion of Title 29.  Or,              
he suggested, possibly a section could be added that allowed a                 
borough to set up some kind of a hardship committee.  Mr. Jensen               
commented that could be done with the property owners in the area,             
suggesting possibly a peer review committee to find out who has a              
hardship, then allowing those properties exemption from assessment.            
He referred to the Falk Lake to Plumley Road LID (Falk Lake to                 
Plumley Road LID 244) public hearing which he thought was the LID              
Representative Ogan was responding to.  Mr. Jensen said, at that               
public hearing, the people who testified in favor said they really             
didn't want to do anything that would harm those other people but              
they really wanted the natural gas.  He said,"The borough had no               
mechanism to - to say, okay, well how 'bout if we - we try this,               
they were pretty much stuck with the fact that, if you get a                   
benefit, and you do, your property ... values go up ..."                       
Number 1958                                                                    
MR. JENSEN stated the borough cannot do anything for a property                
owner, the borough has no relief it can give to anybody.  He said              
perhaps a better solution than taking the ability to do special                
assessment districts for natural gas away from the municipalities,             
would be to give them the tools to make the special assessment                 
districts work a little better.  He commented that the Kenai Keys              
Utility Special Assessment District (USED) has recently passed on              
the Kenai Peninsula, and he noted the term USED was used down                  
there, but it was the same thing.  He said they did that with an in            
excess of 70 percent approval rating on the petition before it ever            
got to the assembly.  Mr. Jensen commented that they were                      
responding to the flood down there a couple of years ago, which                
washed propane and oil tanks down the river and caused some                    
environmental problems.  The municipality, or the borough, wanted              
to bring in natural gas to eliminate those fuel tanks in that flood            
plain.  Mr. Jensen said if that is taken away from them, they                  
cannot respond to problems that are really municipal problems and              
need to be dealt with at that level.  He stated he thought some                
changes to give the borough a little more latitude would be very               
Number 2013                                                                    
CHAIRMAN ROKEBERG stated the committee would take testimony on HB
324 at this meeting, noting he had discussed this with the bill                
sponsor.  Chairman Rokeberg commented it was not his intention to              
move the bill at this time because the committee thinks some                   
improvements can be made, and, with its responsibility in                      
utilities, will be taking a very hard look at this legislation.  He            
noted it was clear from the previous testimony that there was need             
for legislation.  Chairman Rokeberg commented he had allowed Mr.               
Jensen "a little liberality there because of his background                    
(indisc.) explaining the systems ...."  He asked further witnesses             
to limit their testimony to approximately three minutes.                       
Number 2068                                                                    
WILL JOSEY testified via teleconference from Kenai.  He stated he              
was the originator of the Kenai Keys gas line (for the Kenai Keys              
subdivision) and had identified that need during the flood of 1995.            
He said he tried to get some emergency funding and was                         
unsuccessful, so he went through the USED process.  He said he                 
agreed with Mr. Jensen on many points.  Mr. Josey said HB 324, as              
written, would eliminate (indisc.) possible development in rural               
and unincorporated areas throughout the state, and would eliminate             
the possible improvement of environmental protection in high risk              
areas such as the Kenai River and, possibly, Kasilof River.  He                
added HB 324 would "totally eliminate the possibility of a USED, of            
improvement, of development of private property."  He suggested                
language be added, or current language deleted, and a provision                
inserted to provide payment of the assessment on sale of the                   
property benefitted in hardship cases, citing the case                         
Representative Ogan previously mentioned.                                      
Number 2130                                                                    
MR. JOSEY continued that these properties and governmental agency              
properties should be excluded in voting to establish a USED.  He               
noted in the Kenai Peninsula Borough, a non-returned vote is                   
considered a "no" vote in the establishment of a USED, as in                   
Anchorage.  He also noted the Kenai Peninsula Borough requires 70              
percent, which he said was difficult to get.  He said he'd been                
working on this project since the 1995 flood "and now we're almost             
at the stage where this spring we will get it."  He urged the                  
committee to examine HB 324 closely because he said it was so                  
detrimental to anyone trying to get a gas line into certain areas.             
Number 2187                                                                    
CHAIRMAN ROKEBERG referred to Mr. Josey's statement that passing               
this bill as currently formed would eliminate the ability to                   
provide environmental protection.  He asked Mr. Josey to explain.              
Number 2195                                                                    
MR. JOSEY replied that the Kenai Keys area is in a flood plain, and            
as Mr. Jensen said, the area needed all protection possible.  He               
added, "And the protection of the environment there, is in the case            
of floods, moving the propane, gas tanks, oil drums, et cetera."               
Number 2208                                                                    
CHAIRMAN ROKEBERG clarified, "Because of the - the substitution of             
a different type of fuel source, is what you're saying, this is a              
cleaner burning fuel, and therefore wouldn't have the environmental            
harm, particularly if there was a recurrence of that tragedy down              
on the Kenai River, is that correct?"                                          
Number 2219                                                                    
MR. JOSEY agreed and added that since the gas line would be buried,            
it would not be affected 99 percent of the time.  He said probably             
the worst it could do was break the line, and natural gas does not             
hurt the environment like "oil and so on."                                     
Number 2231                                                                    
CHAIRMAN ROKEBERG mentioned the Kenai Peninsula Borough's 70                   
percent requirement, and asked Mr. Josey if he thought the                     
legislature should address that percentage or if each borough                  
should be able to establish its own.                                           
Number 2242                                                                    
MR. JOSEY responded he believed the statute required 50 percent                
plus one.  He stated, "The boroughs -- a lot of 'em have taken this            
type of ... hardships ... and said, 'Well, okay, if the people                 
really want it, let's make sure that we have a majority,' so the               
Kenai Peninsula Borough established 70."  Mr. Josey stated he                  
thought 70 percent was too high, and recommended 60 percent,                   
possibly 66 and 2/3 percent, or something similar.                             
Number 2266                                                                    
CHAIRMAN ROKEBERG commented that the legislature normally wants to             
give local governments "as much rope as they can to hang                       
Number 2273                                                                    
MR. JOSEY responded perhaps that one was a little too long.                    
Number 2286                                                                    
JAMES GARHART testified next via teleconference from the Matanuska-            
Susitna Borough.  He stated he was a borough landowner who has been            
threatened with foreclosure.  He stated he did not want, need, and             
was not using the services of ENSTAR.  Therefore he did not                    
consider himself a "cost-causer," but he was a "cost-payer" because            
he had to subsidize his neighbors' choice of doing business with a             
private corporation, which he stated he resented thoroughly.  He               
said he had sat in that very room several years ago, right next to             
Don Moore, and requested help from Senator Rick Halford on this                
issue. Mr. Garhart related that Senator Halford had said it was not            
a state issue, and Mr. Garhart agreed.  However, he said Mr. Moore             
maintained it was a state issue because of AS 29.46.060, assessment            
roll, which Mr. Garhart quoted, "At any time after approval of an              
improvement plan the governing body shall assess the authorized                
percentage of the cost against property in the district included in            
the plan in proportion to the benefit received."  Mr. Garhart said             
he does not see why he should have to pay for a line ENSTAR has                
buried in an easement running next to some property on the other               
side of a road, not, he indicated, in the easement contiguous to               
his property.  He stated he doesn't pay if he doesn't hook up to               
electrical lines, phone company, cable television, but ENSTAR put              
this through and he is forced to pay for it.                                   
Number 2351                                                                    
MR. GARHART stated he has been fighting this for nine years.  In               
his opinion, the key part of Title 29 is the language, "in                     
proportion to the benefit received."  He disagrees strongly with               
the belief that because there is a line there, whether someone is              
hooked up or not, whether there is a house on the property or not,             
someone benefits equally.  He noted the ballot issue had been                  
corrected.  He stated he had made several suggestions, giving the              
example of an area with 100 houses, 95 whose owners want natural               
gas; he proposed drawing boundaries around the remaining 5 lots,               
and have the 95 in favor make up the LID.  He said if the owners of            
the remaining 5 properties wanted natural gas later, or if the                 
properties were sold, they could pay extra to become included just             
like with telephones and electric lines.                                       
Number 2392                                                                    
MR. GARHART stated his opinion that the present system violated                
both the state and federal constitutions.  In regards to the                   
federal Constitution, he referred to "Article IV, protection                   
against unreasonable searches and seizures," and maintained                    
foreclosure is an unreasonable seizure.  Referring to "Article V,              
nor shall private property be taken for public use without just                
compensation," he said he has asked many times what exactly just               
compensation he would receive for being made homeless because he               
did not subsidize the cost of his neighbors' utility choice; he                
said he has never received an answer.  Referring to Article XIV of             
the Bill of Rights, he quoted in part, "Nor shall any state deprive            
any person of life, liberty or property without due process of                 
Number 2426                                                                    
MR. GARHART referred to the Constitution of the State of Alaska,               
Article I, stating the very first sentence included "we're entitled            
to the enjoyment of the rewards of our own industry," which he felt            
his property was.  He said Section 15 of Article I said, "No                   
conviction shall (indisc.) corruption of blood or forfeiture of                
estate."  Mr. Garhart commented that it was "pretty bad" if his                
property could be taken but a killer's could not.  He stated                   
Section 18 said, "Private property shall not be taken or damaged               
for public use without just compensation."  Mr. Garhart strongly               
insisted this was a state issue because the borough had flatly                 
refused to address it for at least a decade.  Referring to the                 
concept of "the majority rules," he said, "If a few suffer for the             
benefit of the majority, that's acceptable.  Well, you tell these              
same people that for the benefit of the majority, the majority has             
decided to put a halfway house in their neighborhood.  Then see how            
their tune changes, that they want you to protect the individual,              
and I guess I'm out of time since I don't get my five minutes, but             
you will be hearing from me and I strongly endorse you all to                  
support this bill.  It's absolutely necessary because of the                   
borough's abysmal failure to protect us."                                      
TAPE 98-10, SIDE B                                                             
Number 0007                                                                    
DEAN BEAULIEU testified next via teleconference from the Matanuska-            
Susitna Borough.  He stated he was a real estate broker with Best              
in the Land Realty and Insurance, and he would like to commend                 
Representative Ogan for his efforts to protect people like the                 
previous speaker and the "little old lady in the (indisc.)."  Mr.              
Beaulieu stated, however, he believed HB 324, as written, would do             
more harm than good.  He stated the biggest problem is that it does            
not allow LIDs to be used to help the thousands of people LIDs were            
designed for.  Mr. Beaulieu recommended, as a "minimum fix," to                
amend HB 324 so that a group of landowners 100 percent in favor                
would be able to have an LID.  He stated that if there were ten                
people living on the Kenai River who wanted to form an LID to put              
in rock protection for flooding, they would not be allowed even if             
a 100 percent of them wanted it, as HB 324 is written.                         
Number 0058                                                                    
MR. BEAULIEU stated he agreed with most of Mr. Josey's comments and            
his suggestion of perhaps forming "some kind of a hardship thing"              
for the previous speaker or "the little old lady that we keep                  
referring to," if it was set up so that the LID could be formed                
and perhaps the assessment was only paid off when the property was             
sold.  He said that would possibly be a "compromising fix," and the            
"maximum fix" would be not to pass HB 324 and let things continue              
as they have been.  He stated that he did not see that the LID                 
process was much different than passing a school bond, where the               
majority of the voters vote to have a bond to build more schools,              
which causes higher taxes on the "little old lady in the butte,"               
and raises her cost of living even if she doesn't have any kids.               
He said he does believe a small amount of the "majority rules"                 
should happen.                                                                 
Number 0107                                                                    
MR. BEAULIEU noted Mr. Garhart brought up a good point, perhaps the            
LID process could be allowed for those who wanted it on some kind              
of percentage basis, going by his property, and if he wanted to                
connect into later he would pay a higher cost or penalty for not               
paying in the beginning.                                                       
Number 0146                                                                    
PHIL LOCKWOOD, general contractor; President, Alaska State                     
Homebuilders Association testified next via teleconference from                
Wasilla.  He commented he was speaking partly as the President of              
the Alaska State Homebuilders Association and partly from his own              
viewpoint.  He said he had received a number of calls recently in              
regard to HB 324 and thought a lot of them were "just simply cases             
of not understanding what - what this is all about, and they're not            
real sure that they agree with the bill as it is written."  He                 
stated, "Some of the previous speakers mentioned things such as                
natural gas, sewers, erosion and so on.  Whereas, if I understand              
the bill the way it's written, that some of these projects in the              
future would be just more or less totally impossible just because              
you've eliminated the whole LID process."                                      
Number 0180                                                                    
MR. LOCKWOOD asked, also, what would happen with future development            
in some areas, noting the example of an outlying area "off the                 
beaten path."  He said it was going to be very difficult to do some            
of these things because of the tremendous amount of cash that would            
be forced up front by either the developer or the personal property            
owners in the area.  He also asked what would happen, in the case              
of the Municipality of Anchorage, if communication lines had to be             
run and something similar to a LID was required, but it could not              
be done because the municipality had sold ATU (Anchorage Telephone             
Utility d.b.a. ATU Telecommunications).                                        
Number 0206                                                                    
MR. LOCKWOOD stated he understood Fairbanks had also sold a number             
of their utilities.  He said, "So this is my concern, and I think              
all us that I've talked to in the last couple of days need to                  
understand this better and do a little more research on it to find             
out just exactly what this is going to do to all of us economically            
and in our personal lifestyles."                                               
Number 0226                                                                    
REPRESENTATIVE COWDERY mentioned the situation in the Municipality             
of Anchorage, where certain seniors were exempt from property taxes            
on their personal property if they lived there, and he asked Mr.               
Lockwood if anything like that could be worked out for seniors in              
Mr. Lockwood's area.                                                           
Number 0238                                                                    
MR. LOCKWOOD responded he would not have a problem with that.  He              
stated he thought something needed to be done because many of those            
people are on extremely fixed incomes and any increase in their                
income was "out of their control."  He said, "In other words, if               
they're on social security, it's up to the federal government as to            
whether they're going to get an increase or not.  And then if                  
somebody comes along and - and does something like this, it makes              
it real difficult for 'em.  So I think there are certain groups of             
people, such as the senior citizens, that would need some help on              
some of this.  To see the - the minority of people controlling what            
the majority of the people want."                                              
Number 0268                                                                    
REPRESENTATIVE COWDERY stated some time back in the past, the state            
underwrote those exemptions, but presently, as he understands it,              
the local government would have to do that.  He asked Mr. Lockwood             
if he thought that would be acceptable in his area.                            
Number 0285                                                                    
MR. LOCKWOOD responded, "Oh, I think so.  I think to a limited                 
degree some of that's already been done on the property taxes."                
Number 0289                                                                    
CHAIRMAN ROKEBERG asked Mr. Lockwood if he had ever developed a                
subdivision in the Mat-Su area.                                                
Number 0296                                                                    
MR. LOCKWOOD replied he did not do developments, he built the                  
buildings on the developments.                                                 
Number 0300                                                                    
CHAIRMAN ROKEBERG noted Mr. Lockwood worked with developers.                   
Referring to the nature of the Mat-Su, buyers' desires for larger              
lots than in an urban area like Anchorage, and the relatively lower            
price of land, compared to Anchorage, Chairman Rokeberg asked if               
most of the subdivisions developed Mr. Lockwood's area were of such            
lot sizes that it made sense for the developer to have the gas                 
lines put in, or were they more rural in nature under the Mat-Su               
Borough's subdivision rules.                                                   
Number 0327                                                                    
MR. LOCKWOOD replied he could not answer that question, noting                 
there was a real estate broker present.  Mr. Lockwood referred to              
something Chairman Rokeberg had alluded to earlier, stating they               
had built a number of houses in the early 1980s in a subdivision               
near the gas line when it was put in.  He said he thought they                 
built approximately 20 houses in that subdivision and they put in              
heating systems which could easily be converted to natural gas "on             
the hopes that this would come through, and eventually they did.               
They formed an LID and put the gas in there.  Had the LID process              
gone away, that subdivision to this day would probably sitting                 
there without gas."                                                            
Number 0365                                                                    
REPRESENTATIVE OGAN stated he welcomed Mr. Lockwood's "help and                
input on possibly drafting an alternative that would -- [I] think              
there's a consensus of what the object of the bill is (indisc.) to             
help some of the people that can't pay for it."  He stated it                  
certainly was not his intention to end the LID process "as we know             
Number 0385                                                                    
MR. LOCKWOOD noted they had talked back and forth quite often, and             
he said he was sure they would come up with some suggestions.                  
Number 0405                                                                    
CHAIRMAN ROKEBERG directed the question to Mr. Beaulieu, the real              
estate broker, "Given the large area of the Mat-Su Valley, do not              
most developers up there, when they create subdivisions, either                
provide for gas, number one, or are the lots so large that it's too            
costly, or I'm sure it depends on where it's located, too, as far              
as the main trunk lines and lines -- but do most new subdivision               
developments have gas in your area, and what problems do you                   
envision because of the large lot size up there?"                              
Number 0429                                                                    
MR. BEAULIEU responded that he thought if the LID process was                  
ended, it would definitely cause a hardship for the developer to               
try to pay for the gas up front, so development costs would                    
probably be limited, or perhaps lot prices raised for the consumer.            
He said the trend currently appears to be one acre to five acre                
lots, noting as Chairman Rokeberg had mentioned, that these are                
bigger than 10,000 square foot or 20,000 square foot lots common to            
the Municipality of Anchorage or Eagle River.  Mr. Beaulieu said if            
this bill passed he thinks it would cause a great hardship, and                
make it difficult for the developers.                                          
Number 0461                                                                    
CHAIRMAN ROKEBERG asked, "Do you have any idea in terms of                     
percentage dollar numbers, like (indisc.) MLS (ph) statistics about            
whether, or is there a way that you could break out the level of               
business between, like, recreationally-owned second homes in the               
Mat-Su vis- -vis the owner-occupied primary residence, do you have             
any idea what that is up there?"                                               
Number 0479                                                                    
MR. BEAULIEU responded that they do not break them out that way.               
Number 0480                                                                    
CHAIRMAN ROKEBERG asked Mr. Beaulieu about his personal experience.            
MR. BEAULIEU replied he would say that most of their sales are                 
definitely owner-occupied.                                                     
CHAIRMAN ROKEBERG stated historically there used to be a lot of                
folks with second homes and cabins up there.  He indicated he                  
thought that still existed in the Mat-Su Borough.                              
Number 0490                                                                    
MR. BEAULIEU stated, "It does exist, but really not in the natural             
gas LID areas that we're - we're speaking of.  Those are farther               
north in the Willow-Talkeetna area."                                           
Number 0511                                                                    
MARK SOLLENBERGER, Assessment District Coordinator, Department of              
Public Works, Municipality of Anchorage, testified next via                    
teleconference, from Anchorage.  He informed the committee he has              
been working in assessment districts for approximately 30 years.               
Mr. Sollenberger stated the Municipality of Anchorage has three                
staff members dedicated to assessment districts.  He said he would             
like to address an overall issue which might cover some of the                 
items previously mentioned.                                                    
Number 0531                                                                    
MR. SOLLENBERGER stated, first of all, an assessment district, as              
Mr. Jensen explained, is basically an area of land designated by               
law to pay for the cost of a public improvement.  He said there are            
four basic items in an assessment district:  land, improvement,                
cost and law.  Law, he said, is established by local governments               
throughout the United States and in Alaska; it is not established              
by state or federal government, and special assessment district                
laws themselves are something that are the right, reserve and use              
of local governance.  He said the special assessment itself is a               
pro-rated, limited-life tax lien against a piece of property.  He              
stated, "Because the local governments are enacting it by laws                 
similar to taxes, they say that a special assessment will be paid              
until the proportion of cost of the improvement is paid off, there             
will be no more charges after that.  So it has a - a given life and            
it's ended."                                                                   
Number 0580                                                                    
MR. SOLLENBERGER stated local governments can use special                      
assessments to designate an area to pay for the improvements and               
then collect the cost for the improvements.  This is an alternative            
to the local government building the improvements and then repaying            
them by general taxes.  He said, "So you're taking these                       
improvements and you're designating the land that's involved,                  
(indisc.) benefitted; the taxpayers are not involved, it's only the            
property that's considered benefitted, who's getting the service or            
whose value is improving."  Mr. Sollenberger referred to the                   
history of special assessment districts, noting the first special              
assessment district of record was from the Earl of Essex in 1375               
[stated on tape as "William of Essex," corrected in later                      
testimony].  He said assessment districts were used in England                 
after that time; he said they came to the United States on the                 
Mayflower and have been used ever since.  He stated the use of                 
assessment districts in Alaska basically began in the Municipality             
of Anchorage in 1952 with formal assessment districts for street               
paving.  He said that was adopted from an 1898 law established in              
Seattle.  Mr. Sollenberger noted assessment districts have a great             
foundation in Western culture.                                                 
Number 0647                                                                    
MR. SOLLENBERGER stated, "Right now we are circulating a petition              
for gas lines in Eagle River," noting they have a minor assessment             
district program for gas lines.  He said it is a small project,                
$1.2 million project, and there are 270 properties involved.  He               
said, "The petition has currently passed."  Mr. Sollenberger noted             
the Municipality of Anchorage requires the property owners                     
(indisc.) represent over 50 percent of the costs, must petition and            
sign in favor of the project, and a "no" vote or a non-response                
does not count in favor of the project.  He stated, "We need an                
affirmative action and it is limited to over 50 percent.  Should               
the petition pass, we will borrow the money, pay ENSTAR out of it,             
and we will recollect the money that was basically used to finance             
it through assessment districts, and we will require everybody to              
pay an assessment."                                                            
Number 0688                                                                    
CHAIRMAN ROKEBERG asked how many homes were involved in the Eagle              
River project.                                                                 
Number 0695                                                                    
MR. SOLLENBERGER replied, "There's 270 lots involved, and of the -             
the houses -- there's 123 homes that are valued over $10,000.  I'm             
sorry, there's 108 homes.  There's - there's more vacant property              
in that particular project than there is constructed property.                 
CHAIRMAN ROKEBERG stated he had not intended to pursue this, but he            
clarified that Mr. Sollenberger had said 270 lots and 108 homes.               
MR. SOLLENBERGER stated, "There's 270 total lots and properties,               
some of 'em aren't lots, some of 'em are parcels of land.  Of that,            
there are 123 structures in excess of $10,000 in value.  Now, of               
those 133 [FROM TAPE], which is less than 50 percent that's                    
constructed on, 83 have made statements in favor, and 50 have                  
either not responded or not - or been opposed to it.  On the other             
side of the coin, owners who represent 56 vacant lots out there                
have also signed in favor of it, with 82 - owners that owned 82                
lots - opposed.  So, total on a per lot basis, over 50 percent are             
in favor.  Now, for your information the assessments are an average            
of approximately ... almost $3,500 a lot."                                     
Number 0782                                                                    
CHAIRMAN ROKEBERG asked, "So Mr. Sollenberger, this legislation                
would restrict the ability of the municipality ..."                            
MR. SOLLENBERGER responded, "The legislation would null and void               
this, and I don't know where it is along the line that if it's                 
adopted after the project goes to where it would null and void --              
if we're gonna encumber (indisc.) the property in the municipality             
at one point $2 million, and find out we can't collect for it, we'd            
be concerned."                                                                 
Number 0803                                                                    
CHAIRMAN ROKEBERG asked Mr. Sollenberger, "Did you hear the                    
testimony of Mr. Jensen where he was talking about the - the ..."              
MR. SOLLENBERGER said he had.                                                  
CHAIRMAN ROKEBERG continued, "And is that consistent with what you             
do in Anchorage as far as the ..."                                             
MR. SOLLENBERGER said the Municipality of Anchorage was a little               
more restrictive in its petition procedures, noting the                        
municipality's petition procedures and assessment districts were               
quite a large part of its infrastructure development.  He said at              
this point gas lines are the only privately-owned utility the                  
municipality operates with, stating it is a minor program.  He                 
stated the municipality is contemplating other private utilities in            
relationship to assessment districts.                                          
Number 0830                                                                    
CHAIRMAN ROKEBERG asked what other types of utilities.                         
Number 0833                                                                    
MR. SOLLENBERGER responded that the question, again, is what                   
happens to telecommunications when the municipality starts going to            
its more remote areas.  He said, "The other thing is we have a                 
program in which we can retire our overhead communications and                 
power lines into underground, which there will be cost to those --             
which is right now cable, and if there's any future telephone                  
that's gonna ... come up, we'd have to pay them and we'd do it                 
under assessment district process."                                            
Number 0875                                                                    
CHAIRMAN ROKEBERG noted Mr. Garhart's earlier reference to AS                  
29.46.060, which Chairman Rokeberg quoted, "The government body                
shall assess the authorized percentage of the cost against the                 
property in the district included in the plan in - in proportion to            
the benefit received."  He noted Mr. Garhart's emphasis on "in                 
proportion to the benefit received" and asked Mr. Sollenberger if              
he knew of any case law on "that type of language."  Chairman                  
Rokeberg asked if there had ever been one in Alaska or was that                
typical language in "assessment statutory construction" in the                 
United States.                                                                 
Number 0918                                                                    
MR. SOLLENBERGER responded that was pretty typical language.  He               
stated, "Authorized cost, it gives the - the local government the              
option to share in the cost or to share in no cost.  So, (indisc.)             
they deem is the authorized cost of a public improvement, they can             
have the balance taken out of local taxes; hopefully, they could               
receive money from the state under state grants and assess the rest            
....  But if they're constrained all the costs involved rather than            
use general taxes, that becomes the authorized cost.                           
Number 0934                                                                    
CHAIRMAN ROKEBERG asked about the idea of benefits received, "Just             
because you own property in ..."                                               
Number 0938                                                                    
MR. SOLLENBERGER responded that the benefit (indisc.) under the                
utility concept is:  "If you're served or if your land can be                  
served, you're benefitted.  If you're under a road or a park or                
things like that, it becomes a public question as to what area is              
particularly benefitted."  He said it becomes the right of the                 
local government to make that determination.  He gave the example              
of a lot owner with three same-size lots, two vacant and one with              
a house.  The lots are all the same size, the gas runs down the                
front, and the house and one of the vacant lots are for the gas.               
Mr. Sollenberger said it would be very difficult to justify whether            
the center is not equally benefitted.                                          
Number 0976                                                                    
REPRESENTATIVE OGAN said it seems someone who is hooked up receives            
more benefit and he asked if the local government had the latitude             
to assess in accordance with the way the statute was written.                  
Number 1000                                                                    
MR. SOLLENBERGER said he assumed it was however the local                      
government wanted to handle it.                                                
Number 1006                                                                    
CHAIRMAN ROKEBERG questioned that the Municipality of Anchorage has            
assessed the "non-user but approximate property owner ... the                  
property owner in proximity to the line."                                      
Number 1012                                                                    
MR. SOLLENBERGER replied that if it is capable to serve a property             
owner with water, sanitary sewer, (indisc.) power, even if the                 
property is vacant and they do not serve, the property owner is                
still benefitted.                                                              
Number 1023                                                                    
CHAIRMAN ROKEBERG confirmed that applied to all types of assessment            
districts, not just private utility LIDs.                                      
Number 1028                                                                    
MR. SOLLENBERGER agreed, stating this is more common to utility                
districts.  He said he would say that the local government could,              
at its option, defer any assessment until the owner actually uses              
it, however that becomes a taxpayers' expense and the Municipality             
of Anchorage has been declining to place that burden on the                    
taxpayers.  He said it is possible for other governments to have               
the taxpayers "front" that money.                                              
Number 1051                                                                    
CHAIRMAN ROKEBERG asked again if Mr. Sollenberger knew if there was            
any case law on the benefit received issue.                                    
Number 1056                                                                    
MR. SOLLENBERGER replied there was and gave the committee the name             
of the municipality's expert on assessment laws, William Greene                
(Assistant Municipal Attorney, Municipality of Anchorage), phone               
number:  (907) 343-4545.  Mr. Sollenberger said there have been                
challenges during his history concerning the application of water              
and sewer, and he said there have been some activities where it was            
overturned by the Alaska Public Utilities Commission.  However, he             
said, it was in relationship to doing assessment districts in the              
Municipality of Anchorage, which does not have the authority of                
other local governments in Alaska.  Mr. Sollenberger stated, "Bob              
Jensen did mention the practice how the Mat-Su Borough can go                  
forward and initiate a district and not move unless they have over             
50 percent of the protest.  The Anchorage charter, when it was                 
adopted by the public for the municipality, wrote out the ability              
for Anchorage to adopt any assessment district unless owners that              
(indisc.) would pay over 50 percent of the cost approved the                   
petition, so there is -- we (indisc.) have to have an affirmative              
petition in Anchorage in order to approve the - in order to form an            
assessment district."                                                          
Number 1123                                                                    
REPRESENTATIVE COWDERY asked if situations had occurred during Mr.             
Sollenberger's long tenure, where people absolutely could not                  
afford the assessment because of limited income or similar                     
circumstances and what the alternative was in Anchorage.  He asked             
if people appealed assessments through the assembly, or how it was             
addressed, if it was addressed.                                                
Number 1148                                                                    
MR. SOLLENBERGER stated, in his experience, the assembly has tried             
to extend the payments "to as long as a reasonable period of time."            
He said there used to be a practice in which the state of Alaska,              
under the senior citizens' programs, would assist and pay for                  
assessments similar to paying property taxes for senior citizens.              
He commented that the state has ceased doing that and, once again,             
the municipality has not picked up a practice of increasing its                
general taxes.                                                                 
Number 1182                                                                    
CHAIRMAN ROKEBERG asked how the boundaries of a service area or LID            
were determined.                                                               
Number 1189                                                                    
MR. SOLLENBERGER responded it is important to understand an LID,               
under the definitions of local improvement district, covers 15 to              
20 different types of assessment districts.  He said, in the gas               
line assessment district or GID, the boundary is all the property              
that can be served.  The lot is identified and the whole lot is                
considered benefitted property.  In the cases of water and sewer               
lines, the land within 150 feet adjacent to the water and sewer                
line that can be served is considered benefitted, and he said  that            
is usually all of the lot in urban areas.                                      
Number 1226                                                                    
CHAIRMAN ROKEBERG commented that there had to be a defining                    
boundary in any kind of a district.                                            
Number 1234                                                                    
MR. SOLLENBERGER replied that the assessment district itself is                
land improvement cost in raw and the land is that which the local              
government considers benefitted for the improvement.  He stated in             
the testimony he has heard from both Kenai and the Mat-Su Borough,             
there is a small difference in interpretation of which is                      
benefitted, however that is the municipality's or the local                    
government's right.  He said, in the Municipality of Anchorage, the            
municipality designates by law on the special assessment ordinance             
which lots are benefitted.  He said, "If you want draw (indisc.)               
piece of paper, then you just draw the line around the boundary of             
the land."                                                                     
Number 1275                                                                    
CHAIRMAN ROKEBERG stated HB 324 only says the municipal government             
can't put a lien on property.  He asked if that was the "death                 
knell" of a special assessment district.                                       
Number 1290                                                                    
MR. SOLLENBERGER responded that was one of the reasons the                     
municipality used an ordinance, or a law, in order to form a                   
special assessment district; it creates a (indisc.) tax lien that              
must be collected and that the municipality has the right to                   
foreclose on.  Mr. Sollenberger stated, "Now, we either go to the              
public for other types of public improvements, get general                     
obligation bonds which would promise to be repaid by the benefitted            
owners.  In the case of assessment districts we go and we sell                 
assessment bonds with the understanding that the municipality will             
repay the bond from the benefitted owners."  He said if the                    
municipality does not have the right to collect, because an                    
individual does not want to pay, then it cannot guarantee the bond             
or the note.                                                                   
Number 1330                                                                    
CHAIRMAN ROKEBERG referred to the bonds and Mr. Jensen's comment               
that the Mat-Su Borough has gone on a taxable bond basis.                      
Number 1339                                                                    
MR. SOLLENBERGER responded that is "the nature of the beast for gas            
lines, and also for our revenue bonds for water and sewer --                   
they're taxable."                                                              
Number 1375                                                                    
REPRESENTATIVE COWDERY clarified that it had happened "that the                
assembly has deferred the taxes downstream but never forgiven, is              
that right?"                                                                   
Number 1387                                                                    
MR. SOLLENBERGER answered in the affirmative, stating, "But that               
was over 15 to 20 years ago and they were assessments to repay                 
general obligation bonds, which they just held in status, as far as            
utility-type bonds for water, sewer, and in this case, gas line,               
they have not."                                                                
Number 1408                                                                    
REPRESENTATIVE COWDERY asked what had happened during the downturn             
in the late 1980s.                                                             
Number 1416                                                                    
MR. SOLLENBERGER responded that the municipality had collected a               
lot of property through assessment and tax lien foreclosures.  He              
noted, in the cases of property abandoned by owners during the                 
downturn with assessments against it, the bank would pay the                   
assessments so the municipality would not foreclose against the                
Number 1437                                                                    
CHAIRMAN ROKEBERG commented that that is on improved properties                
usually, when there is a mortgage.  He asked, in the initial set-up            
of gas improvement districts or any type of assessment district, if            
the Municipality of Anchorage, or to Mr. Sollenberger's knowledge,             
anywhere else, have a hardship provision.  Chairman Rokeberg noted             
Mr. Sollenberger had mentioned extending the pay-off period, but he            
was asking about waivers or delays.                                            
Number 1469                                                                    
MR. SOLLENBERGER replied that, for all local governments under the             
assessment district procedure, the board of appeals is the                     
governing body of the local government involved, and it has the                
right to make adjustments and charge those adjustments to the                  
taxpayers.  He said that is an inherent right of the local                     
government (indisc.) the assessment district, and the answer was               
yes, they have done that.                                                      
Number 1495                                                                    
CHAIRMAN ROKEBERG said that, based on the particular request for               
hardship exemption, waiver, et cetera, the case law in the statutes            
would allow for that type of hardship.                                         
Number 1511                                                                    
MR. SOLLENBERGER stated, "The municipal assembly, and all of 'em               
involved, can make that option, but there is nothing to require                
Number 1521                                                                    
REPRESENTATIVE OGAN asked what would happen if the bill was amended            
to say a lien on a property could not be attached unless the                   
assessed property was hooked up or somehow receiving benefits from             
the utility.                                                                   
Number 1536                                                                    
MR. SOLLENBERGER responded the municipality couldn't put forth the             
assessment district under a basis like that.  He said the                      
municipality has to be able to guarantee to the banks that it is               
going to repay their loan.  He added, "From our standpoint in                  
Anchorage, we also have to assure the administration that the                  
taxpayers aren't gonna have to do it, and that's the case of the               
GID.  Now, the other thing, too, is (indisc.) I think it's the                 
folks from Mat Valley [Matanuska-Susitna Borough] have noticed, is             
that these assessment districts that have gone to the Mat Valley,              
they have fallen out if the local government doesn't feel that                 
what's being presented is reasonable.  They have the right to                  
reject it, there is no guarantee for the owners.  And we're                    
probably gonna have a very lively public hearing over the Eagle                
River one, too, so it - it is just a right of local government and             
any restriction on that is basically somewhat of a 'refringement'              
of what we can do."                                                            
Number 1601                                                                    
REPRESENTATIVE OGAN corrected, "It's not a right, it's - it's a                
privilege that the state grants the local government to do this,"              
apologizing for the correction.  He commented on previous testimony            
stating 97 percent of the people hooked up to the utility                      
eventually and he asked, "Isn't 97 percent a pretty good risk for              
a bank that 97 percent of the - the people in the LID would be able            
to have liens and - and then if - you wouldn't have a lien on the              
property until somebody hooked up?  As a banker, if I was an                   
investment banker, I would think 97 percent ..."                               
Number 1647                                                                    
MR. SOLLENBERGER replied, "Under those circumstances we wouldn't be            
able to sell bonds."                                                           
CHAIRMAN ROKEBERG added, "There'd be no surety of pay-off 'cause               
you wouldn't know when you'd collect."                                         
Number 1650                                                                    
MR. SOLLENBERGER stated that was correct.                                      
Number 1670                                                                    
TIM ROGERS, Legislative Program Coordinator, Municipal Manager's               
Office, Municipality of Anchorage, testified next via                          
teleconference from Anchorage.  He stated the Municipality of                  
Anchorage believes the gas improvement districts are a very                    
important vehicle for developing some of the municipality's areas              
that currently aren't being developed.  He said that if HB 324 goes            
forward, the municipality would appreciate being exempted out of               
it.  In his second comment, Mr. Rogers referred to Chairman                    
Rokeberg's inquiry about case law on the benefit received from                 
LIDs.  He stated he would be happy to have the municipality's legal            
department look into that and transmit the results in the next day             
or two.                                                                        
Number 1713                                                                    
CHAIRMAN ROKEBERG asked if the "MOA" (Municipality of Anchorage)               
wished to be exempted from HB 324 because it considered itself to              
be a non-rural, more urban area.                                               
Number 1724                                                                    
MR. ROGERS replied, "Because we feel that it's a - a very important            
development tool, and, quite frankly, we don't see that there's a              
major problem that needs legislative correction."                              
Number 1740                                                                    
CHAIRMAN ROKEBERG suggested that was because of the nature of land             
development in the municipality and the subdivision requirements               
there.  He stated the municipality does not have too much of a                 
"scattered development type thing."  Chairman Rokeberg added that              
the committee accepted Mr. Rogers' offer providing legal                       
background.  Chairman Rokeberg asked Mr. Jensen to provide a "wrap-            
up" from Mr. Jensen's perspective.                                             
Number 1791                                                                    
MR. JENSEN stated he did not have much in the way of "wrap-up."  He            
said he perceived the problem to be one that possibly some steps               
should be taken to fix and the municipalities given some remedies.             
He said he was not suggesting that the assessments for those                   
experiencing hardships or senior citizens be paid for out of tax               
dollars; he was suggesting that perhaps language could be crafted              
which would allow those costs to be spread back to the other                   
participants in the LIDs when true hardships exist.  He said he has            
little expertise in this area, not being an attorney and not                   
knowing "land law," but he said he sees that as a potential remedy,            
particularly for the problems in the Mat-Su Valley.                            
Number 1836                                                                    
CHAIRMAN ROKEBERG commented that clearly there have been instances             
in the Mat-Su Valley where this process has raised obvious                     
problems, stating, "There's a problem, then we need to find a                  
solution to remedy the problem."  Chairman Rokeberg stated, in                 
addition to senior citizens and people with hardships, he thinks               
there are other people in the Mat-Su area are who might need                   
further consideration.  He commented on the nature of land                     
development in the Mat-Su Borough, noting a lot of the land in that            
area was developed for recreational sites and uses.  He indicated              
people might want to maintain those (indisc.) sites and uses, but              
find themselves being urbanized by the installation of various                 
utilities, including ENSTAR's gas lines, in areas they want to keep            
more rural.  Chairman Rokeberg said that maybe they were trying to             
hold on to an old idea of what having a second home, cabin, or                 
something, was.  He stated he was not exactly sure what the answer             
Number 1917                                                                    
MR. JENSEN responded he did not know the answer either.  He did                
know as the natural gas LIDs came forward, they came forward on a              
petition requiring signatures by property owners owning 50 percent             
of the property by value.  He said it starts at the "grassroots"               
(indisc.) and there is at least 50 percent of the group interested             
in going forward with the LID.  Mr. Jensen noted that,                         
historically, it has been up to the local government to determine              
the required percentage, commenting on Kenai's 70 percent and the              
Mat-Su Borough's 51 percent.  He said he was hesitant to speak too             
much because he didn't want to speak for the Mat-Su Borough                    
government, saying he's contractor, so to speak, ENSTAR.  He said              
it would probably be worthwhile to consult with Michael Gatti, the             
borough attorney, or Desi Mayo, the acting borough manager.  Mr.               
Jensen told the committee he did not know why the borough did not              
have a representative present to speak to the borough's interest,              
but he was certainly not qualified to do so.                                   
Number 1996                                                                    
REPRESENTATIVE OGAN stated he stood ready and willing to work with             
interested parties in achieving the goal here.  He recited from a              
favorite song by Rick Scaggs (ph), "A rich man writes the book of              
laws that a poor man must defend.  The highest laws are written on             
the hearts of honest men," and said his heart told him that the                
highest value should be for the private property owner.  He stated             
that was a more compelling interest to him than a government's                 
interest in something, commenting, "When we have a government that             
is potentially violating ... a person's ability to fufill those -              
those dreams of owning a house or owning property and those kinds              
of things because maybe they aren't able to keep up with the                   
circumstance around them -- I think we need to accomodate those                
whenever we can.  And so, with that ... high, lofty goal stated I'd            
like to -- you know, I appreciate you holding this bill over, ...              
it needs some more work it's obvious, and again my intention is not            
to eliminate the LID process, but make it a little more user                   
Number 2090                                                                    
CHAIRMAN ROKEBERG referred a question to Mr. Jensen, "Don't you                
think that the size of the LIDs can be stacked to include just                 
enough people who probably do not want the LID, but make it big                
enough to defray the cost of the LID?  Is there a way to adjust                
that or is there ...?"                                                         
Number 2129                                                                    
MR. JENSEN responded that is really under the control of the                   
borough.  He gave as an example, the contentious Falk Lake to                  
Plumley Road LID.  He said it was his understanding that LID                   
started out as two separate projects which were combined by the                
borough.  Mr. Jensen stated he doesn't know why the two projects               
were put together, although he said it might have been done at the             
request of the people involved.  Mr. Jensen said, once again, he               
thinks the borough has been responsive to the petitioners over the             
years, noting sometimes that works well and sometimes not.  He                 
stated that he thinks, had those two projects been separated, the              
people in the Plumley Road area would have had a greater voice from            
a protest perspective, and the people in Falk Lake, who were                   
predominately in favor, would have been able to go forward without             
a lot of the problems involved.  Mr. Jensen noted he attends the               
assembly meetings whenever there's an LID on the agenda to answer              
questions, and to tell people what is going on and how ENSTAR                  
operates.  He noted he thought the evening the Falk Lake to Plumley            
Road LID was up for public hearing, there were three other LIDs up             
for hearing as well.  He said representatives of those LIDs, which             
were small, stood up and commented, "Gee, yeah, you shouldn't do               
anything that would harm those people, but by the way, everybody in            
my LID wants it, please pass it."  He said these were smaller LIDs             
and he thinks sometimes size "gets away" and he doesn't know how to            
legislatively determine what the size should be.                               
Number 2240                                                                    
CHAIRMAN ROKEBERG referred to his previous question to Mr.                     
Sollenberger about the way boundaries are set for LIDs.  Chairman              
Rokeberg said that seems to be one of the problems here.                       
Number 2250                                                                    
MR. JENSEN explained the boundaries are set mainly by the people               
doing the petition.  He said often, the person who starts the                  
petition is person on the far end of what would be the project.                
Mr. Jensen said, "And he works backwards getting signatures back               
towards where the - the natural gas pipe lien currently is, and                
what happens that's how the boundary gets set -- it's the guy down             
here who started the petition is the tail end of the - the project             
and the boundaries are running up here and down these side streets             
'cause these people signed on it.  And I think the borough makes an            
effort to provide service or have service provided to all of the               
signers of the petitiions when they can."                                      
Number 2303                                                                    
CHAIRMAN ROKEBERG asked Mr. Jensen if the legislature decided to               
raise the requirements to something like 60 plus 1 percent, if he              
thought ENSTAR could live with something like that.                            
Number 2327                                                                    
MR. JENSEN replied he thought ENSTAR could live with almost                    
anything the legislature decided to do; he said his big concern is             
that the legislation somewhat singled ENSTAR out.                              
Number 2340                                                                    
CHAIRMAN ROKEBERG commented that testimony showed these situations             
were not limited to GIDs, particularly with the changes generated              
by the telecommunications Act of 1996, and the committee was very              
concerned about all utility issues.  Chairman Rokeberg stated,                 
"We're not picking on you, you guys have generated the publicity,              
Number 2375                                                                    
MR. JENSEN replied he understood.  He repeated his statement that              
he thought ENSTAR would live with whatever the legislature                     
determined to be proper, and he said, as he told Representative                
Ogan, he was not there to tell them what to do, he was there to                
provide some input and possibly offer some workable suggestions.               
He said ENSTAR takes its ability to serve the public very                      
seriously, and he thinks the LID process is a tool, from the                   
municipal perspective, and it has worked as a tool for ENSTAR to               
get service out to people who want that service.  He said ENSTAR               
would hate to see it go away, but ultimately the debate should be              
between the legislature and the local governments, and the                     
procedures should work for those local governments and their                   
citizens.  He said that if ENSTAR can participate, it would                    
certainly like to continue.                                                    
Number 2451                                                                    
REPRESENTATIVE COWDERY asked if it would be worth pursuing the                 
concept that ENSTAR would possibly pick up or defer some of the                
costs in hardship cases "downstream."                                          
Number 2478                                                                    
MR. JENSEN replied, "No, not really, sir.  The - the problem you               
run into is when - when we pick up the costs those costs ..."                  
[TESTIMONY INTERRUPTED BY TAPE CHANGE]                                         
TAPE 98-11, SIDE A                                                             
Number 0001                                                                    
MR. JENSEN continued, "... are pretty low, and at the same time go             
out and provide service to those people.  And, generally speaking,             
my recommendation to a potential customer, whether it be LID or                
non-LID, is to evaluate the cost of the project, the cost of any               
conversion work we'll have to do in their home, and determine if               
they can pay it back in energy savings over the next five or six               
years.  If they can do that, it's probably a worthwhile project.               
If it takes longer than that, then they should probably reconsider             
the project in its entirety, and perhaps continue using fuel oil or            
propane or whatever they're on now."                                           
Number 0056                                                                    
CHAIRMAN ROKEBERG stated the problem, more so in the rural areas,              
is that people are going to have multiple lot ownerships that they             
may have taken up as personal investments, or they may have                    
subdivided land, or they may have a larger parcel, and "when you're            
talking about 85 linear feet, ... you're talking about                         
substantially more that they're going to be liable for."                       
Number 0097                                                                    
CHAIRMAN ROKEBERG stated the testimony has clearly indicated there             
are some problems which need to be addressed (indisc.) statewide.              
He said, "I think the testimony today also has given us the clue of            
which direction we can go.  ... Number one, we need -- we could                
look at the hardship situation and the senior situations, but I                
would caution everybody that I recognize and - this committee would            
recognize - that when you go into these situations ... there's a               
financial cost and there's a bonding situation where you want to be            
bondable to make the project go -- so you have to be careful about,            
you know, allowing multiple hardship situations.  I think you need             
to address that issue and how you do that could be a little                    
Number 0163                                                                    
CHAIRMAN ROKEBERG noted, "However, I think the boundaries, and                 
setting the boundaries in these types of things might be, also, a              
way -- something that needs to be looked at, and even raising that             
percentage up, perhaps, a little more.  It seems to me that that's             
one of the problems here, there's too large an area that you - you             
throw the net out and get too many people in it, and then that's               
where you run into the problems, because I think that the hardship             
ability exists, as the testimony of Mr. Sollenberger pointed out,              
at the local level -- but whatever standards there have to be                  
pretty, pretty high to be able to qualify for that because                     
(indisc.) we can only do that initially because you wouldn't be                
able to finance the project unless you identify that cost, spread              
it back to the other people that signed up for it and then - and               
then collected it.  Either particularly on the sale of the property            
or whatever, the further disposition of that property, then that -             
that lien ... would become activated, then perhaps or something.               
Like a sleeping lien - I don't know if there is such a thing.  ...             
Those are the kind of things I think that could be worked on and               
this committee looks forward ... to seeing the bill that maybe                 
touches on those without completely destroying everything else.                
And as long as you're at it, you might as well exempt the                      
Municipality of Anchorage."  Chairman Rokeberg previously indicated            
HB 324 would be held for further consideration.                                

Document Name Date/Time Subjects