Legislature(2001 - 2002)

04/23/2001 01:15 PM RES

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 249-AG REVOLVING LOAN FUND PROPERTY DISPOSAL                                                                               
                                                                                                                                
CO-CHAIR MASEK  announced that the  next order of  business would                                                               
be HOUSE  BILL NO. 249, "An  Act relating to disposal  of certain                                                               
property acquired by the agricultural revolving loan fund."                                                                     
                                                                                                                                
BARBARA COTTING,  Staff to Representative Jeanette  James, Alaska                                                               
State Legislature,  pointed out that the  committee packet should                                                               
include a copy  of SLA 2000, Chapter 81, which  is last year's HB
116.  Ms. Cotting explained that  HB 249 corrects an oversight in                                                               
last year's  HB 116, which  created the Board of  Agriculture and                                                               
Conservation.   Last  Fall the  board was  selected and  has been                                                               
meeting  on a  monthly  basis  ever since.    The  board and  its                                                               
attorney from the  Department of Law were in the  second phase of                                                               
drafting  regulations authorized  by  the new  statute when  they                                                               
discovered a problem.  She  directed the committee's attention to                                                               
the bottom of  page 9 of SLA  [2000 Chapter 81].   There the last                                                               
line  says,  "Disposal  shall   be  conducted  under  regulations                                                               
approved by  the commissioner."   That language is changed  in HB
249  to  say,  "Disposal  shall be  conducted  under  regulations                                                               
adopted by  the board."   This  change would  allow the  Board of                                                       
Agriculture   and  Conservation   to   continue  functioning   in                                                               
accordance with original legislative intent.                                                                                    
                                                                                                                                
Number 2180                                                                                                                     
                                                                                                                                
REPRESENTATIVE JEANETTE JAMES, sponsor of HB 249, explained:                                                                    
                                                                                                                                
     When  we   made  the  board  be   responsible  for  the                                                                    
     agricultural revolving  loan fund  that is  under their                                                                    
     purview.  And  then when it comes to  them disposing of                                                                    
     land  that is  in there  because it's  been repossessed                                                                    
     ...  so they  have  assets in  this,  that they  should                                                                    
     determine the way  that they would dispose  of those as                                                                    
     they  are managing  the  [agricultural] revolving  loan                                                                    
     fund.                                                                                                                      
                                                                                                                                
Representative James acknowledged that  there is an argument that                                                               
the  Department  of  Agriculture, under  which  the  agricultural                                                               
revolving loan fund  (ARLF) falls, should have  some oversight by                                                               
the commissioner.  She said that  she is willing to work with the                                                               
department on that issue.                                                                                                       
                                                                                                                                
REPRESENTATIVE   JAMES  pointed   out   that   the  Director   of                                                               
Agriculture is also the hired  person for the Agricultural Board.                                                               
Representative James also pointed  out, "It's very interesting to                                                               
note that this same money that  they're supposed to be in control                                                               
over, we spend every year just to  pay for the people who work in                                                               
the Division  of Ag."   Although this has  been a sore  spot with                                                               
many  farmers, she  didn't  see any  immediate  future in  moving                                                               
beyond  that.    Therefore,  this  will only  work  if  there  is                                                               
cooperation with everyone.                                                                                                      
                                                                                                                                
Number 2032                                                                                                                     
                                                                                                                                
CAROL   CARROLL,   Director,   Division  of   Support   Services,                                                               
Department   of  Natural   Resources  (DNR),   acknowledged  that                                                               
although DNR  has not  had much  time to review  HCR 17,  she and                                                               
Representative James  have been  discussing the resolution.   Ms.                                                               
Carroll   mentioned  that   she   had  made   some  comments   to                                                               
Representative  James  regarding   the  connections  between  the                                                               
executive  branch boards  and  the  regulations, the  rule-making                                                               
body.   She agreed on  the importance  to work jointly,  which is                                                               
intended.  Therefore,  she and the department are  looking into a                                                               
way to say such so that an agreement can be reached.                                                                            
                                                                                                                                
REPRESENTATIVE  GREEN asked  if Ms.  Carroll viewed  HB 249  as a                                                               
correction for an oversight [of HB 116].                                                                                        
                                                                                                                                
MS.  CARROLL  answered  that  she  wasn't  certain  that  HB  249                                                               
corrects an oversight and thus she is present.                                                                                  
                                                                                                                                
Number 1949                                                                                                                     
                                                                                                                                
DEREK  MORRIS,  Hay  Farmer,  testified  via  teleconference  and                                                               
mentioned that he wants to  purchase a parcel at Point MacKenzie.                                                               
Mr. Morris announced  that he is in support of  HB 249.  However,                                                               
he expressed concern with the language  on page 1 that says, "The                                                               
regulations must  ensure that the  property is disposed of  so as                                                               
to  maximize  the   return  to  the  state".     He  related  his                                                               
understanding that possibly there  are some request for proposals                                                               
(RFPs) for property for which  the appraisals being used are four                                                               
years  old.   Therefore, it  seems that  if the  state sells  the                                                               
property based on  those appraisals, the state  won't receive its                                                               
proper return on  their parcels.  He said that  the ARLF needs to                                                               
have those funds in order  to have other agricultural activities.                                                               
Mr. Morris concluded by reiterating  that he supports HB 249, but                                                               
he wants to  ensure that the board obtains the  maximum return to                                                               
the state.                                                                                                                      
                                                                                                                                
GARY  STROMBERG testified  via teleconference.   He  informed the                                                               
committee that  he has been  a farmer  at Point MacKenzie  for 18                                                               
years.  Mr.  Stromberg expressed concern with  the recent actions                                                               
with the RFP  in which there have been attempts  to designate who                                                               
receives properties  with values  that are different  than market                                                               
value.   Whatever rules are  established must conform  with state                                                               
law and  thus maximize the  return to  the state.   Mr. Stromberg                                                               
noted that  he sent  a letter  to Representative  James regarding                                                               
the problems there have been  with the [Division] of Agriculture.                                                               
He felt  that some  rules have  to be  developed so  that farmers                                                               
aren't turned  against each other  or it  would be better  not to                                                               
have a [Division] of Agriculture.                                                                                               
                                                                                                                                
Number 1760                                                                                                                     
                                                                                                                                
HARVEY  BASKIN  testified  via teleconference  and  informed  the                                                               
committee  that  he is  one  of  the  original farmers  at  Point                                                               
MacKenzie.  Although  he is a member of the  Board of Agriculture                                                               
and Conservation, he  is speaking as a farmer.   Mr. Baskin noted                                                               
his support of HB 249 because  it clarifies the intent of HB 116.                                                               
He related  his understanding that  the Board of  Agriculture and                                                               
Conservation was appointed to manage,  monitor, and have input on                                                               
all disposals  of agricultural  land.  However,  if part  of that                                                               
authority lies in another state  office, then it is difficult for                                                               
a buyer or board member to answer  to two bosses.  He inquired as                                                               
to  which set  of  regulations  would one  abide  by when  making                                                               
decisions.   Therefore, he stated  that the authority  to dispose                                                               
of  state  land with  a  maximum  value  is  one of  the  primary                                                               
responsibilities of the  board and the people  who help supervise                                                               
the management of  the land.  Mr. Baskin related  his belief that                                                               
outcry bidding is probably the fairest process.                                                                                 
                                                                                                                                
Number 1619                                                                                                                     
                                                                                                                                
ROBERT  FRANKLIN, President,  Alaska Farm  Bureau, testified  via                                                               
teleconference in  support of HB  249.  The  original legislative                                                               
intent was for  the board to control the  entire fund, everything                                                               
that is included under the  definition of property.  Mr. Franklin                                                               
expressed concern  with maximizing the  return to the state.   In                                                               
that regard, he  agreed with Mr. Baskin that  outcry bidding does                                                               
establish the  value of  it.  However,  the Point  MacKenzie land                                                               
will probably be in a [price]  range that exceeds [what one would                                                               
pay for] agricultural purposes.                                                                                                 
                                                                                                                                
Number 1498                                                                                                                     
                                                                                                                                
RACHEL  HECKER  testified  via   teleconference  and  noted  that                                                               
although she is the Mat-Su  representative for the Alaska Farmers                                                               
Union, today she is speaking as  the newest dairy farmer at Point                                                               
MacKenzie.   Ms. Hecker expressed  concern with the  lease tracts                                                               
that were  "given over"  without due  process, that  is [farmers]                                                               
weren't allowed to  bid on them.  Since those  weren't put out to                                                               
competitive  bid,  the  state's  return wasn't  maximized.    Ms.                                                               
Hecker informed the  committee that she was told  late last year,                                                               
early this year  that she could bid on those  lease properties in                                                               
the Spring just  like everyone else.  However, at  the last board                                                               
meeting it was  stated that there was no one  interested in those                                                               
lease properties and thus it was  in the board's best interest to                                                               
return the land to those that  were leasing them.  Therefore, Ms.                                                               
Hecker  expressed her  desire to  sell the  land in  an open  and                                                               
competitive  bid process  and the  land that  can't be  sold yet,                                                               
should be leased to the highest bidder.                                                                                         
                                                                                                                                
TODD  HECKER testified  via teleconference  and  agreed with  his                                                               
wife that  he would like  to have the  opportunity to bid  on the                                                               
[Point MacKenzie]  land, which was  clearly brought forth  at the                                                               
[board] meeting although [the board]  didn't acknowledge it.  Mr.                                                               
Hecker  explained that  he purchased  his land,  a bare  piece of                                                               
property, for $400,000 and placed  $.5 million worth in buildings                                                               
on the  property because  the state  has "forced  our hand  to do                                                               
that."   When he first moved  to this location, he  was told that                                                               
another place would be for sale,  which has been the case for the                                                               
past four  years.   This is  a piece of  property for  which [the                                                               
board] is  planning on using  an RFP.  Those  practices shouldn't                                                               
happen that  way.  He charged  that there is much  property being                                                               
held in order to justify jobs.   Mr. Hecker said, "If the state's                                                               
going to  maximize their  benefits out of  this and  their price,                                                               
they should  sell it now  because the market  is as good  as it's                                                               
ever  going to  be  down there  and the  last  sales have  proved                                                               
that."                                                                                                                          
                                                                                                                                
Number 1230                                                                                                                     
                                                                                                                                
MARK BROUILLET testified via teleconference.   He began by saying                                                               
that he has  been interested in acquiring some  property at Point                                                               
MacKenzie,  but he  has run  into some  problems.   Therefore, he                                                               
felt that HB 249 may help alleviate some of his concerns.                                                                       
                                                                                                                                
DAVID   HECKER,  Partner,   Black   Sun   Farms,  testified   via                                                               
teleconference that he is interested  in bidding on land at Point                                                               
MacKenzie.    Mr.  Hecker  noted that  during  the  last  bidding                                                               
process he bid on Number 10,  which was appraised at $240,000 and                                                               
sold to someone else for $305,000.   That is money in the state's                                                               
pocket.                                                                                                                         
                                                                                                                                
CRAIG TRYTTEN,  Dairy Farmer, testified via  teleconference.  Mr.                                                               
Trytten stated  his support  of HB  249 so  that the  state could                                                               
receive  the best  return  on its  dollar.   He  agreed that  the                                                               
appraised value  [used for the  RFP] is four years  old; however,                                                               
those  are  "kind  of  a  minimum  bid."     He  said,  "It  also                                                               
discriminates against  any other Alaskan without  a dairy ability                                                               
from  being held  off  from  buying a  farm."   Furthermore,  the                                                               
intent of  the board  was to  obtain the  maximum return  for the                                                               
state.    Mr.  Trytten  informed   the  committee  that  he  just                                                               
completed building a new dairy farm  and his barn cost as much as                                                               
the appraised value on the farm to be  sold.  If a deal is cut to                                                               
sell a  $1 million  piece of  property for $.5  million, it  is a                                                               
great loss to the state and  it lowers the value of his property,                                                               
which is determined  by the average sale price of  the land.  Mr.                                                               
Trytten expressed his desire to have  an open public bid in which                                                               
the [highest bidder] takes the  land.  He emphasized the problems                                                               
that  occurred  when  the  government   has  the  land  at  Point                                                               
MacKenzie.                                                                                                                      
                                                                                                                                
CO-CHAIR MASEK closed public testimony on HB 249.                                                                               
                                                                                                                                
Number 0925                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE moved to report  HB 249 out of committee with                                                               
individual  recommendations  and  the  accompanying  zero  fiscal                                                               
note.   There being no  objection, HB  249 was reported  from the                                                               
House Resources Standing Committee.                                                                                             
                                                                                                                                

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