Legislature(1993 - 1994)

04/06/1994 08:15 AM House RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  Number 075                                                                   
                                                                               
  HB 357 - Remove Liens On Mental Health Land                                  
                                                                               
  REPRESENTATIVE JEANNETTE JAMES, PRIME SPONSOR, stated she                    
  filed HB 357 because at the beginning of the session, there                  
  was no indication that the Mental Health Lands issue would                   
  be solved and she felt it was very important that the more                   
  than 3,000 Moms and Pops be freed from the situation they                    
  have been stuck in for years, having the lis pendens on                      
  their property.  Subsequently, she put the bill on hold                      
  because the Department of Natural Resources (DNR) had told                   
  her they had a solution.  Now, nearly three months later,                    
  she is fearful that the presentation made by the department                  
  to settle the Mental Health Lands issue may or may not be                    
  passed.  Therefore, she requested a hearing on HB 357 so it                  
  could be passed out, moved to Finance, and join HB 201,                      
  which is the substitute presented by the department.                         
                                                                               
  REPRESENTATIVE JAMES said while HB 357 only addresses a                      
  small portion of the Mental Health Lands litigation, there                   
  are more than 3,000 people affected and a solution must be                   
  found so they are not held hostage any longer.  The                          
  committee substitute for HB 201, if passed, will accomplish                  
  the same goal as HB 357 but HB 201 has many other things in                  
  it which may hold up its progress.  She believed that HB 357                 
  will at least address the situation with the Moms and Pops.                  
                                                                               
  Number 105                                                                   
                                                                               
  REPRESENTATIVE DAVIES commented Judge Greene's statements in                 
  the past suggest this approach will be, in her words, a                      
  cruel hoax and would not preclude somebody on behalf of the                  
  mental health program from going in and taking one of the                    
  third party purchasers to court individually.  He did not                    
  see how the passage of HB 357 will prevent that                              
  circumstance.                                                                
                                                                               
  REPRESENTATIVE JAMES responded the court order resulted                      
  because in trying to free the Moms and Pops, there was no                    
  identification of those lands sold and no provision made for                 
  payment of those lands, except that the settlement would                     
  eventually accomplish that.  She stated HB 357 is different                  
  in that it specifically puts the state of Alaska on record                   
  to committing money or additional land to cover the costs of                 
  the third party lands.  The original court order said that                   
  the state would reconstitute the Mental Health Lands Trust,                  
  except for lands which were sold, and those lands would be                   
  compensated at fair market value.  She stressed HB 357                       
  provides that fair market value be paid to the Mental Health                 
  Lands Trust for the Moms and Pops.  Therefore, the third                     
  party purchasers will be held harmless because the state is                  
  promising to meet that commitment.                                           
                                                                               
  Number 160                                                                   
                                                                               
  JIM GOTTSTEIN, REPRESENTATIVE, ALASKA MENTAL HEALTH                          
  ASSOCIATION, testified via teleconference and stated passing                 
  HB 357 will not have much effect.  However, he felt the bill                 
  has ideas which can be used to solve specific problems with                  
  the third party purchasers.  He said the 1978 legislation,                   
  which the Supreme Court declared invalid in 1985, did                        
  contain a promise to pay for the land taken.  The Supreme                    
  Court did not even consider that promise to pay worthy of                    
  note, since nothing was ever paid regardless that the                        
  statute said the state intended to pay, and that statute was                 
  declared invalid.                                                            
                                                                               
  MR. GOTTSTEIN stated the Supreme Court has been clear that                   
  there are two ways to resolve the Mental Health Lands Trust                  
  litigation:  1) a settlement which both sides bring to the                   
  court for its consideration and approval if fair; and 2)                     
  litigate the issue under the Supreme Court's decision in                     
  1985.  Therefore, the legislature cannot just pass a bill                    
  and fix it.                                                                  
                                                                               
  MR. GOTTSTEIN said the basic structure of HB 357 is to trade                 
  out the private third party purchasers as a separate piece.                  
  He noted the Mental Health Association has been proposing                    
  that idea for some time.  He added the work done over the                    
  past two and one-half years to identify land, establish                      
  values, etc., makes it very easy to take this specific part                  
  of the problem and fix it this year.  He felt an exchange                    
  package can be developed and enacted.  That kind of                          
  suggestion has been made by the Mental Health Association to                 
  the state, but the idea has not been pushed because the                      
  Administration and the legislature have expressed a great                    
  desire to solve that particular problem.                                     
                                                                               
  Number 213                                                                   
                                                                               
  MR. GOTTSTEIN stated the Administration has wanted to                        
  develop a global settlement solution so there has been no                    
  desire to review this particular piece of the pie.  He also                  
  felt the committee substitute for HB 201 is a step backwards                 
  as well.                                                                     
                                                                               
  REPRESENTATIVE JAMES said under discussion is approximately                  
  50,000 acres and over 3,000 people who are being held in a                   
  trial type situation.  She thought there will be a benefit                   
  to the state as a whole, to the 3,000 people, and to the                     
  Mental Health community if the third party purchasers                        
  problem can be eliminated, so the rest of the problem can be                 
  solved.                                                                      
                                                                               
  MR. GOTTSTEIN agreed.  He felt the idea of HB 357 is good.                   
  However, there cannot just be an intent to compensate, there                 
  has to be an actual compensation provision to make the bill                  
  work.  He said all of the pieces to accomplish that are in                   
  place but there is a need to determine what that                             
  compensation should be and then do it.                                       
                                                                               
  REPRESENTATIVE JAMES asked if part of HB 357 indicates that                  
  the attorney general's office will go to court to dissolve                   
  the injunction, which will involve a settlement with the                     
  third parties.                                                               
                                                                               
  MR. GOTTSTEIN responded the attorney general's office has                    
  tried to get around injunctions on other court rulings many                  
  times and has even asked the Alaska Supreme Court to                         
  dissolve the injunction or grant another release and has                     
  been unsuccessful.  He said if an actual compensation                        
  package is worked out for the third party purchasers, the                    
  lis pendens will be released with respect to those parcels                   
  and the preliminary injunction will be canceled.  He felt                    
  the key is not just an expression of intent to compensate,                   
  but there has to be an actual compensation.                                  
                                                                               
  Number 271                                                                   
                                                                               
  REPRESENTATIVE DAVIES commented in reading Judge Greene's                    
  decision, it is obvious that she is very skeptical of any                    
  promises made by the legislature to resolve this issue.  He                  
  asked if the third party purchasers are to be separated out                  
  and actually compensated by finding suitable substitute                      
  lands, will that type of deal withstand Judge Greene's                       
  scrutiny and will she agree to solving the issue in two                      
  steps.                                                                       
                                                                               
  MR. GOTTSTEIN replied he felt she would.  He stated if all                   
  of the plaintiffs side agree on this arrangement, this kind                  
  of release will fly through the court and can be                             
  accomplished very quickly.  He felt the Moms and Pops issue                  
  is the easiest part of the overall issue to fix because                      
  there is not a lot of acreage involved and the land has                      
  already been identified.                                                     
                                                                               
  Number 300                                                                   
                                                                               
  REPRESENTATIVE HUDSON asked if most of the parcels being                     
  discussed are held by municipalities.                                        
                                                                               
  REPRESENTATIVE JAMES stated many of the parcels are held by                  
  municipalities.  She said many of the Moms and Pops in her                   
  district have actually purchased the land from the state on                  
  a state subdivision, have paid for the land, and have title                  
  to it, subject to the lis pendens.  She noted there are many                 
  who are still paying to the state with the lis pendens and                   
  there are some lands which have been transferred to                          
  municipalities, subdivided, sold and are mortgaged to                        
  banking institutions.  She felt the problem needs to be                      
  solved for these people who are entirely innocent and cannot                 
  be held hostage any longer, either by the plaintiffs or the                  
  state of Alaska.                                                             
                                                                               
  Number 339                                                                   
                                                                               
  REPRESENTATIVE HUDSON clarified every parcel has had a value                 
  and in some cases, the land has already been paid for.  He                   
  assumed there has been a total value established for the                     
  entire package, a value which has been lost and needs to be                  
  made up.                                                                     
                                                                               
  MR. GOTTSTEIN said that is correct and added that most of                    
  the work, in terms of the value, has already been done.  He                  
  stated most of the work, in terms of the value of the                        
  replacement lands, has also been completed.  He felt there                   
  are no significant disagreements between the state and the                   
  Mental Health Association in regard to the value of the                      
  lands.                                                                       
                                                                               
  REPRESENTATIVE GREEN said the fiscal note analysis states                    
  that although the plaintiffs will most likely challenge the                  
  elimination of the encumbrances, adoption of this bill may                   
  help advance the state's cause in the overall mental health                  
  trust litigation.  He noted there have been differences                      
  amongst the plaintiffs as well as the other side.  He                        
  wondered if the other attorneys for the plaintiffs will                      
  think HB 357 is a good step as this step may indicate an                     
  interruption of the delicate balance which is being worked                   
  out between DNR, the plaintiffs, and the Mental Health                       
  Trust.                                                                       
                                                                               
  Number 385                                                                   
                                                                               
  DAVID WALKER, ATTORNEY FOR SETTLING PLAINTIFFS, testified                    
  via teleconference and stated although he cannot speak for                   
  all of the plaintiffs or guarantee their reactions, he felt                  
  the reaction will be positive because in talking with them,                  
  they indicated support for this idea.  He said the key issue                 
  with these third party purchasers is the fact they are being                 
  used as leverage.  He stated settling this part of the issue                 
  will help.  He felt all the plaintiffs will support the idea                 
  in HB 357.  He stated there is a need to go forward with a                   
  discreet (indiscernible) package (inaudible) state lands                     
  into the trust in exchange for the private third party                       
  purchaser lands.  If that is accomplished, then the lis                      
  pendens and the injunction will be released in respect to                    
  those parcels.  He felt the court will approve this idea.                    
                                                                               
  Number 420                                                                   
                                                                               
  REPRESENTATIVE PAT CARNEY asked how HB 357 will be                           
  accomplished.  He assumed there will be a land exchange and                  
  if so, asked how that will affect HB 201.                                    
                                                                               
  MR. WALKER stated this will be a discreet package exchanging                 
  these lands for other lands and the third party purchaser                    
  portion will be eliminated from HB 201.                                      
                                                                               
  Number 437                                                                   
                                                                               
  CHAIRMAN WILLIAMS thought the courts had said they will not                  
  accept a piecemeal solution.                                                 
                                                                               
  MR. WALKER responded the court's greatest concerns about                     
  this issue were not only the concerns regarding the rights                   
  of the private third party purchasers but also a deep                        
  concern over the rights of the trust.  With HB 357, those                    
  concerns will be taken care of because it will not                           
  complicate things for the court and it will clearly be                       
  something that the parties can come forward and say the                      
  trust is not being harmed, because even though the trust is                  
  releasing lands which are claimed by private third party                     
  purchasers, they are getting other lands in exchange.  He                    
  felt the court will not insist on a full resolution of all                   
  issues at once.                                                              
                                                                               
  REPRESENTATIVE CARNEY clarified it is the Administration's                   
  position that if a definite settlement on Chapter 66 is not                  
  reached, all of that law is null and void, resulting in no                   
  Mental Health Trust authority in existence.                                  
                                                                               
  MR. WALKER said that is correct.                                             
                                                                               
  REPRESENTATIVE CARNEY asked if this land exchange is made                    
  and that falls through, how will HB 357 work.                                
                                                                               
  MR. WALKER responded if there is a failure ultimately and                    
  there is no Mental Health Trust authority, this property                     
  will be put in the Mental Health Trust Corpus.  Therefore,                   
  there still will be a trust.  There will be arguments about                  
  how that trust will be managed and what constitutes proper                   
  stewardship of it.  There will be an inclusion of this land                  
  into the body of the Corpus of that trust and in exchange                    
  for release of the claims against the private third party                    
  purchasers.                                                                  
                                                                               
  MR. GOTTSTEIN added if there is a trust, a trustee is needed                 
  although there may not be an exact trust authority.  One of                  
  the issues in the litigation is what the obligation of the                   
  state is in terms of acting like a trustee.  He said the key                 
  point is that it is possible to carve this portion out,                      
  replace these encumbered lands with unencumbered lands in                    
  the trust and then however those lands get resolved in the                   
  case will apply to these new lands.                                          
                                                                               
  REPRESENTATIVE DAVIES felt there is some question whether or                 
  not the courts will accept HB 357, but having read Judge                     
  Greene's opinions several times, he said there is a                          
  reasonable chance the court will allow HB 357 to go forward,                 
  as it only involves 10 percent of the disputed lands and                     
  will have a concrete exchange included, if amended.  He                      
  thought if a partial settlement is presented, which both                     
  sides agree to, the third party purchasers could be taken                    
  off the hook.  He suggested that Representative James bring                  
  back a committee substitute which includes a specific land                   
  exchange.                                                                    
                                                                               
  CHAIRMAN WILLIAMS stated in the interest of time, since HB
  357 has to go to the House Judiciary and Finance Committees,                 
  perhaps the bill could be amended in one of those                            
  committees.                                                                  
                                                                               
  Number 536                                                                   
                                                                               
  REPRESENTATIVE JAMES said she is willing to amend the bill                   
  in one of those committees, if the bill can be moved out of                  
  this committee.                                                              
                                                                               
  JERRY GALLAGHER, LEGISLATIVE LIAISON, DEPARTMENT OF NATURAL                  
  RESOURCES, reminded committee members that HB 201 solves the                 
  broad range of problems.  The department has no objection to                 
  HB 357 moving on, but believes the legislature's effort                      
  should be geared toward the entire problem because it is a                   
  large problem.  He said the issue of a lands list is very                    
  complicated and the department has promised the House                        
  Finance Committee they will have a list of proposed                          
  substitute lands by next Monday.  That list will be beyond                   
  what is necessary for the Moms and Pops exchange.                            
                                                                               
  REPRESENTATIVE DAVIES said Mr. Gottstein has indicated that                  
  a noncontroversial package can be put together and a                         
  settlement be reached, which is consistent with the                          
  discussions he has had with a number of people interested in                 
  the litigation.  He added that the problem with the 400,000                  
  acres that the state is proposing is there are some                          
  controversial lands included but it may be easy to get up to                 
  200,000 acres.  He felt if that is true, 50,000 acres can be                 
  found and an agreement can be reached.                                       
                                                                               
  MR. GALLAGHER stated everyone has sympathy for the Moms and                  
  Pops because they are in a very difficult situation.  He                     
  cannot answer the question of whether or not it will be easy                 
  to accomplish HB 357.  He said his concern is that taking                    
  the easy lands and allocating them to this one group, the                    
  residual issues might become that much more difficult to                     
  solve.                                                                       
                                                                               
  REPRESENTATIVE JAMES agreed that an effort needs to be made                  
  to solve the entire issue.  She said her intent in moving HB
  357 forward is to not close out an option--if the big issue                  
  is not resolved, HB 357 is an option to get through the                      
  legislature this year.  She felt the Moms and Pops have been                 
  held hostage and there has been no real intense desire on                    
  the part of the plaintiffs or the state to get the Moms and                  
  Pops out before the entire issue is resolved.  She stressed                  
  the release could have been done three years ago if the                      
  intent was really to do that.  She noted that the agreement                  
  is probably going to involve land more valuable than what                    
  the third party purchasers' land is worth but it is a price                  
  which must be paid to get these people free.  She is willing                 
  to let HB 357 sit in the House Finance Committee and push HB
  201 on, but if she sees at the last minute that HB 201 is                    
  not going to pass, she wants HB 357 to pass, to ensure these                 
  people are taken care of.                                                    
                                                                               
  Number 658                                                                   
                                                                               
  MR. WALKER emphasized the plaintiffs are in support of                       
  solving the problem and assisting in this exchange but in                    
  reading HB 357, there are many statements contained in the                   
  bill which he opposes.  He does not feel HB 357 sets the                     
  tone required to accomplish the settlement of this part of                   
  the issue.  He said the plaintiffs are continuing to work on                 
  the resolution of the entire issue.                                          
                                                                               
  REPRESENTATIVE GREEN expressed continued concern about HB
  357 jeopardizing the resolving of the entire Mental Health                   
  Lands issue.                                                                 
                                                                               
  TAPE #94-47, SIDE A                                                          
  Number 000                                                                   
                                                                               
  REPRESENTATIVE HUDSON felt the final solution on HB 357 will                 
  rest with the final committee of consideration.  He said                     
  whether or not HB 357 will be able to ride on its own merits                 
  or whether or not it will upset the ultimate state's                         
  negotiations on the total package is beyond this committee.                  
                                                                               
  REPRESENTATIVE HUDSON made a MOTION to MOVE HB 357 with                      
  accompanying zero fiscal notes and a letter of transmittal                   
  indicating that the bill needs amending, out of committee                    
  with INDIVIDUAL RECOMMENDATIONS.                                             
                                                                               
  REPRESENTATIVE FINKELSTEIN said the bill, as written, does                   
  not meet the legislature's obligation to the Mental Health                   
  Trust and felt HB 357 will be another empty promise.                         
  Therefore, he cannot support the bill.                                       
                                                                               
  REPRESENTATIVE DAVIES wondered if the motion to move and the                 
  attached recommendation for amendment could be made more                     
  specific.  He would feel more comfortable if there were some                 
  reference in the needs amending statement which refers to                    
  the issue of needing specific language for the land                          
  exchange.  He felt if HB 357 does not contain a land                         
  exchange provision, it will be an empty promise and he could                 
  not support it either.  He would agree to pass HB 357 out of                 
  committee if a recommendation be made that in the transit to                 
  the next committee that kind of CS be brought forward.                       
                                                                               
  CHAIRMAN WILLIAMS said the sponsor wants the bill to move                    
  and will amend it.                                                           
                                                                               
  Number 054                                                                   
                                                                               
  REPRESENTATIVE GREEN expressed concern about the zero fiscal                 
  note analysis stating "most likely will challenge" and                       
  "funds are available in existing mental health lands                         
  budget."  He wondered if there actually will be a zero                       
  fiscal note.                                                                 
                                                                               
  MR. GALLAGHER responded the fiscal note in committee members                 
  folders is from the Department of Law which he cannot speak                  
  to.  He said DNR is preparing a zero fiscal note, because                    
  there is funding in effect currently for the Chapter 66                      
  settlement, which includes the conveyance of land.  HB 357                   
  will not require additional funding.                                         
                                                                               
  REPRESENTATIVE GREEN felt if HB 357 is going to cost money,                  
  the committee should know that.                                              
                                                                               
  REPRESENTATIVE HUDSON said the reason he cannot offer a                      
  specific amendment is because he does not know what it                       
  should be.  He felt HB 357 is a fall back position which                     
  will have to be weighed in the overall scheme of things as                   
  it moves on to House Finance where it will join HB 201.  He                  
  stated when HB 357 gets to that point, the necessary                         
  specific amendments will be attached or it will never pass                   
  on the floor.  He stressed he would never vote for HB 357 in                 
  its current form.                                                            
                                                                               
  REPRESENTATIVE DAVIES stated there needs to be a recognition                 
  that the land exchange is a fundamental problem with the                     
  bill as it is currently drafted.                                             
                                                                               
  REPRESENTATIVE JAMES said she will be happy to put down on                   
  record that the recommendation of the committee is that                      
  instead of a promise to exchange, the language in the bill                   
  will actually require a land exchange.                                       
                                                                               
  REPRESENTATIVE HUDSON said the letter of transmittal will                    
  state that the bill is transferred with a notation that it                   
  requires amending in the language concerning the land                        
  exchange provision.                                                          
                                                                               
  CHAIRMAN WILLIAMS asked if there were any objections to the                  
  motion.  Hearing none, the MOTION PASSED.                                    
                                                                               
  CHAIRMAN WILLIAMS asked what the committee's wishes are in                   
  regard to the confirmation hearings for the ten Governor's                   
  appointees which have been referred to the committee.                        
                                                                               
  REPRESENTATIVE DAVIES asked if all of the resumes could be                   
  submitted to committee members for review before the next                    
  committee meeting.                                                           
                                                                               
  ANNOUNCEMENTS                                                                
                                                                               
  CHAIRMAN WILLIAMS announced the committee will meet Friday,                  
  April 8 at 8:15 a.m. to hear SCR 13 and SCR 16.                              
                                                                               
  ADJOURNMENT                                                                  
                                                                               
  There being no further business to come before the House                     
  Resources Committee, Chairman Williams adjourned the meeting                 
  at 10:00 a.m.                                                                

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