Legislature(1995 - 1996)

02/14/1996 08:07 AM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 SB 190 - RESIDENCY REQUIREMENT/STATE LAND AUCTION                           
 Number 044                                                                    
 JOE AMBROSE, Legislative Assistant to Senator Robin Taylor,                   
 testified on behalf of Senator Taylor, sponsor of CSSB 190 (RES)am:           
 "Senate Bill 190 was introduced to correct a situation which                  
 allowed ten percent of the state land sold at the first public                
 auction since 1991 to be purchased by non-residents.  This in a               
 state where only about one percent of the land is in private                  
 MR. AMBROSE continued, "Current law restricts the homestead program           
 to Alaska residents, but no such provision is made for the sale of            
 other land, sold at auction.  As a result, of the 204 parcels                 
 actually sold in 1995, 21 went to out-of-state bidders.  In eleven            
 cases, these nonresidents beat out otherwise qualified state                  
 MR. AMBROSE stated, "Imagine how it must feel to the resident of              
 Fairbanks who submitted a bid on state land, only to be beat out by           
 a resident of Washington state by $61.80.  Or the Wasilla couple              
 who lost their chance at owning a piece of Alaska to a Minnesota              
 woman by $442?  Or the Anchorage woman who lost out to a man from             
 Michigan by $214?                                                             
 MR. AMBROSE proceeded, "To add insult to injury, the availability             
 of state land to out-of-state residents was actually promoted on              
 the Internet by the Alaska Tourism Marketing Council.  A Council              
 spokesman said they were trying to promote the "Alaska mystique."             
 Maybe the Council thinks there is something mystical about the                
 shortage of private land in Alaska, but the average Alaska is more            
 frustrated than mystified.                                                    
 MR. AMBROSE concluded, "SB 190 would restrict participation in the            
 public auction of state land to people who have been residents of             
 the state for at least one year prior to the sale.  The bill was              
 amended to place no such restriction on the disposal of commercial,           
 industrial or agricultural land.  I don't believe we want to                  
 inhibit those who would purchase land for growth and development.             
 But the sale of recreational and residential property, like the               
 homestead program, should be restricted to folks who have already             
 made an investment by residing in this great state."                          
 Number 243                                                                    
 REPRESENTATIVE JOHN DAVIES appreciated the motivation behind SB
 190.  He said it would be frustrating to get beat out by $61.00,              
 but equally frustrating if it were another Alaskan resident that              
 won by $61.00 as well.                                                        
 REPRESENTATIVE DAVIES said that allowing outsiders to buy land in             
 Alaska is not necessarily detrimental in every instance, and he               
 alluded to a former Alaskan wanting to participate.                           
 REPRESENTATIVE DAVIES asked what the overall percentage was in this           
 particular land sale.  What was the percentage of Alaskans getting            
 in versus the percentage of people outside of Alaska?                         
 Number 378                                                                    
 MR. AMBROSE replied, right at 10 percent went outside.                        
 MR. AMBROSE pointed out that this would only restrict the sale on             
 the first go-around.  The state has gone to an auction system                 
 rather than lotteries because it is less expensive to manage and              
 the minimum bid is the assessed value.  Property that is not sold             
 in the first round becomes an over-the-counter sale to anyone who             
 wants to walk in and buy it.  So, that former Alaskan would have              
 the opportunity to walk in to the Department of Natural Resources             
 and purchase property.                                                        
 MR. AMBROSE stated that this year, since the 1991 Mental Health               
 Lands Trust dispute, is the first year that the state has had a               
 sale.  He said the bill restricts the land sale, on the first go-             
 around, to Alaska residents and if the property is not sold then it           
 becomes available to anyone who wants to buy it.                              
 Number 455                                                                    
 CO-CHAIRMAN GREEN asked if the state of Alaska financially                    
 benefitted from outside competition.                                          
 MR. AMBROSE stated that the impact is so minimal the Department of            
 Natural Resources placed a zero fiscal note on SB 190.                        
 Number 498                                                                    
 REPRESENTATIVE DON LONG asked for clarification on the one-year               
 residency requirement.                                                        
 MR. AMBROSE responded that the one-year residency requirement seems           
 to be an acceptable standard.  The sponsor would argue that the               
 state does have an interest in restricting the sales, at least on             
 the first go-around.                                                          
 Number 572                                                                    
 REPRESENTATIVE SCOTT OGAN expressed appreciation that agricultural            
 and industrial lands are excluded from the legislation.                       
 Number 610                                                                    
 REPRESENTATIVE DAVIES addressed Representative Long's question                
 about the one-year residency requirement asking if Mr. Ambrose'               
 answer also dealt with the equal protection concerns of the people            
 of the United States.                                                         
 MR. AMBROSE responded by reading a memorandum from Jack Chenoweth,            
 Legislative Legal Services, "I am required to transmit with the               
 bill a memo cautioning that the bill, both as it was introduced and           
 as offered in the Senate Resources Committee, MAY present                     
 constitutional questions.  Objection may be taken either under                
 privileges and immunities, Article IV, Section 2, U. S.                       
 Constitution, or with reference to the one year durational                    
 residency requirement under the equal protection clause.  It is               
 hard to say where the court will come out on this.  On the                    
 privileges and immunities questions, the U.S. Supreme Court has               
 been inclined to reject state efforts to withhold privileges for              
 nonresidents and the justification for the regulation involved                
 nonresident economic or employment opportunities and the right to             
 travel, but has been less demanding when the state has acted to               
 protect for the benefit of its residents as against nonresidents.             
 State institutions that were established and are supported                    
 primarily for the benefit of state residents.  Similarly, the                 
 validity of durational residency requirements will depend on the              
 courts trying to find whether the legislation strikes a proper                
 balance between legitimate state interests and the classification             
 it has drawn.  I cannot provide definitive advice on these points,            
 but I am sending this memo along only to note potential (indisc)."            
 Number 744                                                                    
 REPRESENTATIVE DAVIES said that part of the justification for this            
 bill is the stated possibility of land available to Alaskans.  Yet            
 you have just argued that there is a lot of land available over-              
 the-counter.  He said those are contradictory positions.                      
 MR. AMBROSE said the property that becomes available over-the-                
 counter because it was not sold at auction would indicate that it             
 is less desirable.  The more desirable pieces go first at auction.            
 Number 841                                                                    
 REPRESENTATIVE ALAN AUSTERMAN asked the residency requirement for             
 MR. AMBROSE replied that he was not certain.                                  
 Number 872                                                                    
 RON SWANSON, Deputy Director, Division of Lands, Department of                
 Natural Resources said the homestead and homesite residency                   
 requirement is one year.                                                      
 Number 880                                                                    
 REPRESENTATIVE AUSTERMAN asked if the homestead residency                     
 requirement had been tried in court.                                          
 MR. SWANSON responded that the homestead resident requirement had             
 not been challenged in court.  He said the only time a residency              
 requirement had been challenged was in the early 1970s.  The Kenai            
 Peninsula Borough restricted their land sales to only borough                 
 residents.  That was challenged in court and upheld.                          
 Number 931                                                                    
 MR. SWANSON said he would elaborate on Mr. Ambrose' testimony.  The           
 state offered 417 parcels for sale in October, 1995.  383 were                
 subdivision residency or recreational lots, 34 were agricultural.             
 205 of those were sold at the auction and 21 of those went to non             
 Alaskans.  Of those 21, nine lots were not even bid on by Alaskan             
 MR. SWANSON said of the 53 homestead parcels offered in the state             
 lottery, the department received 4,133 applications for those                 
 MR. SWANSON said starting in January 1996, the lots that were not             
 sold at the auction, 214 were put up over-the-counter. 14 of those            
 have been purchased by non Alaskans out of 122 applications.  He              
 said as of today, we still have 132 of those parcels available for            
 Number 1010                                                                   
 MR. SWANSON said a total of $4.2 million total was brought in for             
 land sales this year.                                                         
 Number 1020                                                                   
 CO-CHAIRMAN GREEN said, on those recycled tracts, does the                    
 department maintain the requirement that the appraised value is the           
 minimum bid.                                                                  
 MR. SWANSON responded that the state sells at the fair market                 
 value, the appraised value.                                                   
 Number 1038                                                                   
 REPRESENTATIVE DAVIES asked Mr. Swanson if he had any concerns                
 about the passage of SB 190.  Would it have a detrimental affect on           
 being able to sell the lands that you are offering?                           
 MR. SWANSON replied that considering the state only sold 21 of the            
 417 parcels to non Alaskans and the lots that are available over              
 the counter, he does not see a problem.  He said the 417 parcels              
 offered by the state are basically recycled lots.  Parcels that               
 were foreclosed on or people just gave up on.                                 
 Number 1125                                                                   
 REPRESENTATIVE OGAN moved that CSSB 190(RES)am move from the House            
 Resources Committee with individual recommendations and attached              
 zero fiscal note.   Hearing no objections, it was so ordered.                 

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