Legislature(2001 - 2002)
04/23/2001 01:15 PM RES
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.