Legislature(1995 - 1996)
02/14/1996 08:07 AM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 ownership. 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 residents. 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 homesteaders. 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 residents. MR. SWANSON said of the 53 homestead parcels offered in the state lottery, the department received 4,133 applications for those parcels. 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 sale. 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.