Legislature(2009 - 2010)CAPITOL 17
03/16/2010 01:00 PM House TRANSPORTATION
Audio | Topic |
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Start | |
HB357 | |
HB267 | |
Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
*+ | HB 357 | TELECONFERENCED | |
+= | HB 267 | TELECONFERENCED | |
+= | HB 257 | TELECONFERENCED | |
+ | TELECONFERENCED |
HB 357-AK RAILROAD CORP. LAND SALES CHAIR P. WILSON announced that the first order of business would be HOUSE BILL NO. 357, "An Act relating to the sale of land owned by the Alaska Railroad that is not needed for railroad purposes." 1:07:01 PM REPRESENTATIVE BILL STOLTZE, Alaska State Legislature, related that many private businesses are frustrated with the unpredictability of the Alaska Railroad Corporation's (ARRC) lease terms and the corporation's unwillingness to make investment improvements to their property. He said he thought that the ARRC may need "a little bit of help interfacing with the private sector on these lease holdings." Some municipalities have expressed interest in the bill since they embrace private sector activity. He paraphrased from his sponsor statement, which read as follows [original punctuation provided]: To spur economic development throughout the state, House Bill 357 adds a fourth clause to the existing language governing how the Alaska Railroad Corporation may dispose of land. House Bill 357 will enable the railroad to sell land that is not needed for essential railroad purposes. This bill does not ask for any irresponsible disposal of land, as the sale must be initiated by the board of directors on two conditions. The first condition is that the land is not essential to railroad operations, and the second condition is that the sale is in the best interest of the state of Alaska. As support has shown, current leaseholders are very unhappy with the inability to purchase their leased properties from the railroad. In general real estate dealings, private purchases are made in mutually beneficial sales. House Bill 357 encourages these sales after determination by the board of directors of the railroad looks at each sale with the overall benefit to the state of Alaska as the key driver. Not only will the private sector benefit from this addition to state law, the railroad will also have increased ability to make decisions regarding their overall real estate portfolio. The sale and relationship of private and public lands are vital to the economic growth of the state of Alaska. I ask for your consideration and support of House Bill 357 to promote Alaskan growth through the diversification of land ownership, increasing the tax base of the state, and encouraging responsible development of Alaskan land. 1:10:25 PM REPRESENTATIVE STOLTZE characterized the bill "as a permissive bill." The committee may wish to make changes to HB 357, he stated. 1:11:07 PM REPRESENTATIVE PETERSEN asked whether the land would be sold and if proceeds would go to the ARRC for further development or to purchase equipment. REPRESENTATIVE STOLTZE offered his intent for the proceeds to be retained by the ARRC for its operations. 1:12:08 PM REPRESENTATIVE JOHNSON referred to page 2, lines 1-7 and asked whether this would require a competitive bid process or if he could explain the process. REPRESENTATIVE STOLTZE related his intent that the lessee who has an investment would have the first right of refusal. 1:13:17 PM CHAIR P. WILSON asked whether the land is state land and if that is allowable. REPRESENTATIVE STOLTZE responded that if any restrictions exist the bill drafters did not flag the issue during the drafting process. He offered that this is his best first effort. 1:14:20 PM REPRESENTATIVE P. WILSON interpreted that she did not know whether it is allowable to offer the first right of refusal to leaseholders of state land. She suggested that question should be answered by the Department of Law (DOL). REPRESENTATIVE STOLTZE said he wished he knew the inner workings of the ARRC. The ARRC's budget is not subject to state review. He stated that the ARRC's executive payroll is not aligned to the ARRC's economic growth. He also related his desire for the ARRC to run more like a private business in instances in which it is involved in the private sector. He remarked that the breadth of testimony from local government and a consortium of business and industry have endorsed this bill. However, he maintained that he did not solicit the letters in members' packets. He offered that these "folks were yearning for some type of bill like this." Simply by holding this hearing the committee has informed the public that "the private sector has friends" in Juneau who are responsive, he stated. 1:16:08 PM REPRESENTATIVE T. WILSON asked whether this bill would include easements crossing private property if the easement is no longer in use by the railroad. REPRESENTATIVE STOLTZE said he did not know but his staff would check into it. He suggested that many complicated arrangements with the ARRC and ownership issues exist. 1:16:41 PM CHAIR P. WILSON asked whether the ARRC is selling land without giving its lessees the right of first refusal. REPRESENTATIVE STOLTZE offered that the ARRC does not have a consistent policy on leases or sales. The ARRC has had inconsistent policies with respect to leases, he stated. He recalled last year, during the course of working on another bill, that the ARRC negotiated new leases. He surmised that the ARRC reacts more like a political organization than a business organization. He said, "I don't know that I could say that they have a consistent lease policy and therein lies a lot of the problems. I don't think we would like to have our individual businesses subject to those vagaries." 1:17:45 PM REPRESENTATIVE MUNOZ asked for the number of leases on the ARRC's non-essential property. REPRESENTATIVE STOLTZE offered that currently the ARRC holds about 350 leases. He was not certain how many of the leases fell into the category of essential property. CHAIR P. WILSON asked how the ARRC acquired its land. REPRESENTATIVE STOLTZE offered that the ARRC acquired its land in the mid-1980s as a result of the federal Alaska Railroad Transfer Act (ARTA) of 1982 and the subsequent state act, the Alaska Railroad Act. 1:19:07 PM REPRESENTATIVE STOLTZE, in response to Representative Munoz, responded that under the state's Executive Budget Act, the legislature does not have access to ARRC budget information. He maintained that numerous members of the public can testify to explain their relationships and frustrations with the Alaska Railroad Corporation. 1:21:30 PM JIM KUBITZ, Vice President, Real Estate and Facilities, Alaska Railroad Corporation (ARRC), stated that he has worked for the ARRC for twelve years. He provided a little background information. In 1985, the state purchased the railroad from the federal government and received about 36,000 acres of land. He described the land as about one-third right-of-way, where the trains run, one-third rail and operations yard, one-third "reserve land" or land that is available to lease. The ARRC is required by law to lease its land for fair market value. He remarked that when the state bought the railroad, the federal government was losing money. The state wanted to give the Alaska Railroad Corporation (ARRC) an opportunity to succeed and live under its own profits. Thus, the land must be leased at fair market value, noting there are a few exceptions. 1:23:23 PM MR. KUBITZ explained that the ARRC does not always know whether it will need land. Currently, projects to expand the yards in Fairbanks, Anchorage, and Whittier are underway to meet customer needs and improve the dock operations. Sometimes the ARRC must buy out tenants to expand its operations. He said, "We do not always have a crystal ball knowing exactly what could be defined as essential railroad land since it does move." For example, the Anchorage International Airport has numerous private tenants but does not sell its land. One big issue that some tenants have had is the requirement that they must pay property taxes on the leased land. In 2004, the State Assessor advised the Municipality of Anchorage that it must charge fair market value rent for any leased land that is owned by a tax-free entity, such as the ARRC. Thus, for the first time in that area the lessees had to pay property tax for the land. The tenants previously were required to pay taxes on their buildings and improvements, but the new requirement to add taxes on leased land upset some of the tenants. 1:25:00 PM CHAIR P. WILSON asked for the duration of the ARRC's leases. MR. KUBITZ answered that the leases range from 20 to 40 years. Tenants suddenly had to pay property taxes on leased land on which they had held long-term leases, he stated. REPRESENTATIVE JOHNSON asked who made the determination and asked for the statutory background. MR. KUBITZ related that the State Assessor made the determination. He offered to provide the legal opinion issued by the Department of Law to the committee. Ultimately, the state's Attorney General required the lessees to pay tax on land. 1:25:56 PM REPRESENTATIVE MUNOZ asked whether the assessment is on the land that is leased or if the assessment is on all ARRC parcels. MR. KUBITZ related that the tenant leases are subject to assessment, but the non-leased parcels are not assessed. He explained that the State Assessor does have some flexibility. He offered that a brand new 35-year lease would be assessed at full fair market value on the property. However, if only two years remained on the lease, the State Assessor would charge a much reduced rate for the land portion of the lease. 1:26:44 PM MR. KUBITZ, in response to Chair Wilson, explained that the ARRC is tax exempt. He pointed out that advantages exist for parties who lease land. He explained that the tax cap cannot go increase more than 35 percent each five-year period. The ARRC also has a floor on its leases, which means the tax rates do not decrease. However, the ARRC is currently reviewing its leasing policy given the economy. He commented that the ARRC does have a public leasing policy. 1:27:48 PM REPRESENTATIVE MUNOZ related that other leased property is not charged property tax. She related that if the leases are comparable to other leases whether the ARRC takes property taxes into account when setting the rate. MR. KUBITZ responded that only the value of property is considered. Thus, if property is valued at $1 million, the ARRC would charge eight percent rent on $1 million. The ARRC is also not involved with improvements and the appraiser must appraise the land as though it is vacant land. 1:28:37 PM MR. KUBITZ, in response to Chair P. Wilson, related that the ARRC hires an independent appraiser to determine the land value. REPRESENTATIVE MUNOZ asked whether all the lease terms are set at eight percent. MR. KUBITZ answered that the interest rate on leases ranges from 8 percent to 10 percent, with 9 percent for waterfront and 10 percent for commercial property. The bulk of the ARRC leases are set at 8 percent. He stated that the ARRC follows standard procedures for setting its interest rates. In further response to Chair P. Wilson, he responded that the ARRC has published its leasing policies, which are sometimes adjusted. He stated that currently, due to the downturn in the economy, the ARRC is considering eliminating the floor, but traditionally the lease rates have stayed flat. 1:30:08 PM MR. KUBITZ stated that the ARRC indemnifies its tenants for contamination since the ARRC has been around for 85 years. The ARRC does not hold its tenants responsible for contamination unless the tenant contaminated the property. 1:30:29 PM MR. KUBITZ, in response to Representative Johnson, explained if a person were to purchase ARRC property that it would depend on the structure of the real estate agreement as to whether indemnification would be included in the terms. He offered that any potential buyer should perform due diligence, have the ground tested and if a problem exists that the party should hold discussions to determine who will be responsible. This would all be covered in the sales contract, he stated. 1:31:03 PM REPRESENTATIVE JOHNSON recalled several years ago a battery company went out of business. He asked Mr. Kubitz to describe a similar scenario with respect to the railroad. MR. KUBITZ recalled the site mentioned is a Superfund Site under control by the Environmental Protection Agency (EPA). He recalled that the site usage is restricted. He further recalled that this site was capped and a list of restrictions would apply to the property use. He was unsure if someone would want to buy the property, but he related that if a sale did occur, discussions on contamination would be part of the due diligence process. 1:32:15 PM CHAIR P. WILSON speculated that the ARRC would do its part to protect and inform any potential buyers. MR. KUBITZ responded that professionals would perform tests to determine any contamination. He said he does not want to leave impression that all the ARRC property has environmental issues. The ARRC is diligent about identifying any issues with its property, but would not necessarily know about recent environmental issues on leased land. He characterized the ARRC as knowledgeable about its property and advised members that the ARRC has a good file on hand for each of its properties. 1:33:26 PM REPRESENTATIVE JOHNSON asked whether anyone has reviewed the cost of owning versus leasing ARRC land given the new interpretation on property taxes. MR. KUBITZ answered that the ARRC Board has policies in place. He offered that the ARRC performed a market analysis and that eight percent is a standard interest rate for leased property. 1:34:37 PM REPRESENTATIVE JOHNSON asked when the property tax interpretation was adopted and whether the market analysis was performed prior to when the tax policy was adopted. MR. KUBITZ related that it occurred at about the same time. In 2004, the tax letter was received from the State Assessor. The ARRC continually reviews the market, he stated. He maintained his belief that the market study was done at about the same time. REPRESENTATIVE JOHNSON asked whether he could provide any examples of other communities or states that charge eight percent interest in addition to the property tax. MR. KUBITZ related that ARRC tenants have always paid taxes on their building. He commented that the property tax on land is based on a decreasing rate scale. He explained that the ARRC also requires its tenants to follow local state and federal laws. 1:36:34 PM CHAIR P. WILSON asked whether the Municipality of Anchorage (MOA) was trying to find more ways to bring in revenue without raising taxes. MR. KUBITZ acknowledged that the MOA has been very successful. 1:37:08 PM MR. KUBITZ, in response to Representative Johnson, reiterated that the State Assessor wrote a letter to Municipality of Anchorage referencing the Department of Law's legal opinion that the MOA had to assess property. MR. KUBITZ, in response to Chair P. Wilson, related that the communities have the option on whether to assess taxes. He stated that Anchorage and Fairbanks assesses taxes on ARRC property. 1:38:13 PM REPRESENTATIVE T. WILSON asked for the percentage of ARRC property that is currently vacant. MR. KUBITZ explained that the ARRC owns one parcel of approximately 5,000 acres that does not have tenant. Thus, one of its largest parcels is vacant. He offered his belief that about 20 percent of ARRC property is under lease, but approximately 80 percent of the revenue from ARRC's real estate is derived from 600 acres in Anchorage at Ship Creek. The rest of the leases are primarily located in Fairbanks, Talkeetna, Seward, and Whittier. 1:39:07 PM REPRESENTATIVE T. WILSON asked if the ARRC sold property whether it would provide more revenue for the ARRC over time. MR. KUBITZ related that a parcel valued at $1 million leased at 8 percent would provide $80,000 in revenue annually. If the ARRC deposited $1 million, it may earn approximately $20,000 a year. Thus, selling ARRC's land would represent a big decrease in annual income for the railroad. 1:40:07 PM MR. KUBITZ, in response to Chair P. Wilson, explained that during the economic downturn the real estate income "tides the ARRC over". He stated that the ARRC earns about $18 million in leases and reinvests it. He related some investments are made on behalf of tenants, such as water and sewer installation and dock enhancements to create efficiencies. 1:41:34 PM REPRESENTATIVE JOHNSON asked of the 80 percent of leases, how many of the ARRC leases in Anchorage will expire within the next five years. MR. KUBITZ offered his belief that not many leases will expire. He said that typically most lessees holding a 30-year lease will renegotiate the lease about ten years out. He related that the largest ARRC customer is Flint Hills in Anchorage and the second largest customer is Lynden Transport. He stated that the ARRC renews its leases on a continual basis. 1:42:42 PM REPRESENTATIVE JOHNSON asked whether the lessees will renew their leases closer to the end date of the lease in order to avoid paying higher property taxes. MR. KUBITZ said he was unsure. He characterized the ARRC's customers as sophisticated customers who renew their leases when 10 to 15 years remain on the lease. He commented that most leases are renewed. 1:43:44 PM MR. KUBITZ explained at times ARRC may need to let tenants know a lease will not be renewed in the event that the ARRC needs the land for its railroad operations. He stated that the ARRC currently holds 350 active long-term leases and 900 permits, which are for leases under 5 years in duration. 1:44:19 PM REPRESENTATIVE JOHNSON asked how disposing ARRC's property would affect the ARRC's bonding status and whether it would have a negative effect. MR. KUBITZ answered that selling ARRC's land probably would have a negative effect. He commented that the ARRC produces an annual report with audited financial information. The ARRC also borrows funds based on lease revenue income. For example, the ARRC recently borrowed $1 million and pledged its lease revenue for loan repayment. He anticipated that if suddenly the ARRC's portfolio of leases were to shrink, it could adversely affect the interest rate. He reiterated the lease income is used for property improvements, but sometimes the ARRC will borrow funds to complete necessary project improvements. 1:45:36 PM REPRESENTATIVE JOHNSON asked whether federal funding would slow down projects. MR. KUBITZ offered that the ARRC receives some federal railroad funds based on a passenger transportation formula, but the federal dollars are restricted to passenger transportation. He stated that the ARRC could build new depot or buy a new passenger car, but could not spend the federal funds on real estate. He restated that the federal funding "comes with a lot of strings." 1:46:41 PM MR. KUBITZ stated that the ARRC's tenants have access to the Board of Directors. The Board has the final say on leases. The ARRC uses money to partner with tenants to improve the plant. In 2002, the ARRC raised the ability to lease land from 35 years to 55 years. The legislature agreed to the change. The plan has been to ask the legislature for the ability to increase some leases to 95-year leases for those seeking long-term leases. He offered that land lease payments are tax deductible. Thus, many tenants would never consider buying their land. In further response to Representative Johnson, he stated that the appraised value is the highest amount that the land can be assessed. REPRESENTATIVE JOHNSON related that if a tenant had 2 years left on a 95-year lease, he/she would pay less in property taxes. MR. KUBITZ agreed. 1:48:46 PM MR. KUBITZ, in response to Chair P. Wilson, explained the tenant typically will approach the ARRC and ask to extend his/her lease. MR. KUBITZ related that passage of HB 357 might start a speculation spree because the land is state-owned land. For example a person could lease land in April, purchase it in May, and then "flip the land." He suggested that this would not in the ARRC's best interest. He said that he was unsure if that type of speculation would happen. 1:50:05 PM CHAIR P. WILSON asked whether the ARRC's land is owned by the state. MR. KUBITZ answered that the ARRC's land is state land, but the land is controlled, managed, and operated by the ARRC. He also noted that the ARRC did not receive all of its federal transfer land as of 12 years ago. The ARRC is currently down to about 5 percent of the land remaining to be transferred. CHAIR P. WILSON inquired as to whether the state allows first right of refusal to its tenants on state lands that are leased. MR. KUBITZ said he did not know. He suggested that the legislature could pass a law if it chose to do so. He thought it might put "a cloud over it" to have first right of refusal. He explained that if the state leased the land and then sold it, the public may complain that it was not aware that the state was selling property. He thought if the state wanted to receive the best value that the ARRC should simply sell the land. He pointed out that the tenants are protected during sales since the potential buyer cannot "kick" any tenants off the leased land, but must honor the lease. 1:52:18 PM MR. KUBITZ, in response to Representative Petersen, stated that the 5 percent of 36,000 acres of federal transfer land has not yet been transferred to the state. He pointed out that the ARRC has an exclusive easement, which is one step below full fee on the proposed transfer. He remarked it will be "nice to get all the land" from the federal government. 1:52:53 PM REPRESENTATIVE PETERSEN asked whether the potential land designated for transfer is located in one location or if it is spread out. MR. KUBITZ offered that "a fair amount of it" is located in Anchorage. Much of the land is located along the right-of-way near the inlet, he stated. He related that some confusion exists since the 1964 earthquake moved some of the land. He characterized the land transfer process as a complicated process, but pointed out that the ARRC is working closely with the Bureau of Land Management (BLM) on the matter. Once the process is finished and agreed to the agreement will be sent to Washington D.C. for signature and the ARRC will receive the land, he related. 1:53:32 PM REPRESENTATIVE PETERSEN recalled that 5,000 acres of ARRC land is not leased and asked whether this is land that poses difficulties to lease and asked whether the land should be sold. MR. KUBITZ said he did not think there was any benefit to sell the land not currently leased. He stated that the land does not currently have utilities available, and the land is located "50 miles from the closest power pole." He commented that a "section house" is located on the land and the land has a strategic value to the ARRC. He remarked that several uses have also been considered. MR. KUBITZ, in response to Chair P. Wilson, answered that the parcel does have road access. He reiterated that the ARRC's income stream could be affected if the land was sold. He also thought that changing any existing terms of the ARRC's real estate contract could be problematic. He offered his best professional advice is the ARRC does not want to start the precedent by selling property. He stated that the ARRC income is important and the ARRC's real estate is necessary for its survival. He also remarked that 100 people were laid off last year. 1:55:53 PM MR. KUBITZ, in response to Representative T. Wilson, responded that the ARRC does not grant easements. REPRESENTATIVE T. WILSON asked whether the ARRC has any mechanism to release easements it no longer needs. MR. KUBITZ answered that any land disposal or transfer of ARRC property must be approved by the legislature. In further response to Representative T. Wilson, he said he was unsure if this bill would allow the ARRC to do so. In response to Chair Wilson, he agreed that currently the ARRC's Board of Directors could decide to sell land. If such an instance arose, the ARRC would ask the legislature for approval. This bill contains special provisions, including that the person occupying the land would have the first right of refusal on the property. 1:57:12 PM REPRESENTATIVE T. WILSON said she thought this bill allowed the ARRC to sell the land without legislative approval, and asked whether the ARRC would still need legislative approval. MR. KUBITZ agreed that this is state land and the legislature would need to approval any sale. 1:57:24 PM REPRESENTATIVE JOHNSON asked whether the ARRC shares any facilities with the Alaska Marine Highway System (AMHS). MR. KUBITZ responded that the ARRC leases land to the AMHS in Whittier. MR. KUBITZ, in further response to Representative Johnson, advised that the AMHS could purchase the land it leases from the ARC, but he did not think it would do so. He explained that the AMHS pre-paid a long-term lease using federal funding. He offered his belief that the current lease is a 20-30 year lease. 1:58:55 PM HANK BARTOS, Representative, Rail Safety and Development Group (RSDG), offered his belief that a duplication of land management effort occurs in the state. He suggested that the land currently not used by ARRC should be transferred to DNR since that agency could do a better job managing the land. The DNR could transfer any land as necessary. The Fairbanks North Star Borough (FNSB) asked the legislature to transfer some ARRC land not currently being used to the FNSB to improve the Fairbanks community. CHAIR P. WILSON asked whether the organization has specifically asked the ARRC to transfer the land. MR. BARTOS stated that the ARRC has been approached on numerous occasions to move the ARRC operations south of town to relieve traffic congestion. He characterized working with the ARRC as working with an "800 pound gorilla." 2:01:05 PM CHAIR P. WILSON said she misunderstood Mr. Bartos's issue. MR. BARTOS explained that the matter is actually two separate issues. In addition to relocating the ARRC rail yard to an areas south of Anchorage, the FNSB would also like the ARRC to transfer land currently used by the ice park to the FNSB. In further response to Chair P. Wilson, he agreed that the parcel used by the ice park is not used for ARRC operations. The land could be donated, traded, or sold to the FNSB, he said. CHAIR P. WILSON related that the ARRC must conduct its operation as a business. She would not like to see the ARRC come to the legislature and request additional operation funding. MR. BARTOS pointed out that the land actually belongs to the people of Alaska and whether the revenue is derived from land use operations or is transferred to DNR and is managed, it is still state land. Currently, a duplication of effort exists on land management since DNR and the ARRC both manage state land. CHAIR P. WILSON answered that the state is not the same category of land. MR. BARTOS offered if the ARRC land was transferred to one state entity, that the process could be streamlined and more efficient. 2:03:11 PM DON LOWELL President, Alaska Transportation Consultants; Member, Rail Safety and Development Group (RSDG), explained that the Alaska Transportation Consultants is a non-profit group. He stated that he supports the bill. Adding to Mr. Bartos's testimony, he recommended that HB 357 be amended to transfer land that is not essential to ARRC operations to the DNR. He explained that the DNR is the agency responsible for all state land. He offered his belief that the ARRC does not operate very well, but the DNR has held the long-term responsibility to manage state land. 2:04:57 PM BONNIE WOLDSTAD stated that her comments are directed to the Eielson spur line of the ARRC. She asserted that the ARRC currently encroaches on 10-12 acres of her property. She stated that under the 1914 Homestead Act, the United States allowed homesteaders to reserve rights for the railroad to traverse property. In 1946, her family applied for the property and received a U.S. patented homestead. She said that her property predates the railroad. Her ancestor was given 160 acres and in 1947 the railroad was built. She said that her ancestor received the deed for the entire 160 acres. Subsequently the state required the ARRC under ARTA, Section 1203, including language related to valid existing claims. She further asserted that the patented homestead deed is a valid claim. In 1969, her family acquired the remainder of the homestead and has never relinquished any property rights. She restated that her property predates the railroad. Thus, her family has continued to assert their property rights. Under Section 1208 and 1209 of the ARTA, a provision allows the governor to declare such property as no longer being used and allows the governor to transfer that property to the property owner. In 2003, that specific mechanism was repealed. Thus, property owners no longer have the means to receive property under that provision. She related that Section 4200-4400 also provides for a method to vacate easements. Those ARTA provisions allow the ARRC to vacate an easement and allow the state to acquire the easement. Therefore, since the state has the easement it should revert back to the owner, she stated. 2:07:50 PM DON CALLAHAN, Public Relations Chair, Ice Alaska; Member, Rail Safety and Development Group (RSDG), explained that since 2006 he has participated in the RSDG. He offered that an organization, Ice Alaska, presents the best winter event in Fairbanks for tourists and residents. Since 2006, he has been working with the RSDG to relocate the railroad out of Fairbanks. He characterized this as a frustrating experience since the ARRC has continuously defeated his organization's efforts to relocate the ARRC. He asserted that this is a safety issue since the rail yard is physically located in Fairbanks. As Chair, Ice Alaska, he has found the ARRC to be uncooperative. Ice Alaska would like to trade the property to the FNSB for property the ARRC could use for relocation. He understood Representative Stoltze's frustration with the ARRC since he is also "thoroughly frustrated." He recalled working for a year to obtain an easement from the federal government when it owned the railroad. When the state took ownership of the railroad, he expected the ARRC to be community activists and to be supportive of the community's interests. He suggested if the ARRC earns money on land leases to the detriment of the community, that something is wrong with their business plan. The ARRC should be a transportation entity and not a land entity. He said he also did not understand the profit issue. 2:10:52 PM RICHARD FAULKNER, President, Steel Fabrication; President, Alaska Railroad Leaseholders Association (ARLA), spoke in favor of HB 357. He said that the ARRC land needs to be sold to private enterprise. At the present time only two percent of the state's land is in private hands. The rest of the land is either owned by the state or federal government. In Anchorage, treating the leased property as fee simple property is derelict, he stated. REPRESENTATIVE T. WILSON asked whether leaseholders are required to make any improvements to the land. MR. FAULKNER answered yes. However, he stated that after the lease takes effect, people do not want to make improvements due to the ARRC. He stated that the ARRC does not pay for water and sewer. He related that his business sits on 8 to 10 acres in Ship Creek area of Anchorage. He stated that he had a septic and well system, but the ARRC ran the water line from the main street to edge of property and sent him a bill. He characterized the issue with the ARRC as more of an economic development issue than any other issue. He recommended transferring the ARRC property to private ownership so individuals can improve the property and increase the tax base in Anchorage and the state. 2:13:45 PM CHAIR P. WILSON, after first determining no one else wished to testify, closed public testimony on HB 357. 2:14:27 PM REPRESENTATIVE PETERSEN asked whether Mr. Kubitz could answer questions about relocating the ARRC in Fairbanks. Mr. Kubitz answered that was not his purview. CHAIR P. WILSON inquired as to whether the ARRC is considering moving its operations in Fairbanks. PAT GAMBLE, President and CEO, Alaska Railroad Corporation,(ARRC) stated that moving the ARRC out of Fairbanks makes a lot of sense in the abstract. Typically, towns grew up around the tracks and many towns relocated the railroad. However, relocation is very expensive and the ARRC has undertaken with the RSDG and the FNSB to reconsider relocating the railroad in phases from the main part of town and to bypass as much of Fairbanks as it can. He stated that this process is actually a three phase process to make this a reality. The ARRC's efforts include North Pole and in an effort to relocate, the ARRC has closed crossings, some of which are close to schools, in order to improve safety. Some hazardous materials have been hauled out of residential areas. He characterized the goal to relocate the railroad as an excellent and worthy goal. Phase 1 included two meetings with the RSDG. Currently, the ARRC is working to scope Phases 2 and 3 of the project. He anticipated the ARRC would be more aggressive on the project. 2:17:15 PM MR. GAMBLE, in response to Chair P. Wilson, offered that quite often "not cooperating" is another way of saying that a disagreement exists over issues. He stated that there are serious issues to resolve, but he felt that more progress has recently been made. He stated that the former FNSB Mayor signed a memorandum of agreement (MOA) that codified a process to allow the ARRC to coordinate its approach. He assessed the progress to resolve issues to relocate the ARRC as slow, but steady progress since the MOA was signed. 2:18:08 PM REPRESENTATIVE JOHNSON asked what type of hazardous waste the ARRC would find if it relocated the railroad in Fairbanks to south of Fairbanks He further asked if the existing rail yard would need to be paved, if the ARRC would be able to sell the land, and if the rail yard is a contaminated site. MR. GAMBLE stated that the Fairbanks railroad sits on an industrial site. He agreed that likely some kind of contamination is present. He recalled a recent survey conducted at the railroad yard in Ship Creek in Anchorage. He related that the survey cost $6 million, but the ARRC did "not find a smoking gun." He explained that the ARRC would have to do the same thing in Fairbanks. He said he does not assume the Fairbanks property would be considered a "real dirty site," but that aspect would need to be dealt with before the rail yard could be relocated. He stated that currently, the ARRC is not aware of any problem, noting that the Fairbanks property has not been surveyed. [HB 357 was held over.]
Document Name | Date/Time | Subjects |
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HB257 cell phone ban sponsor stmt.pdf |
HTRA 2/16/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 257 |
HB257 cell phone ban sectional.pdf |
HTRA 2/16/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 257 |
hb257 cell phone ban backup.pdf |
HTRA 2/16/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 257 |
HB357 sponsor stmt.pdf |
HTRA 3/16/2010 1:00:00 PM |
HB 357 |
HB357 back up.pdf |
HTRA 3/16/2010 1:00:00 PM |
HB 357 |
HB267 sponsor stmt TRA.pdf |
HTRA 3/11/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 267 |
hb 267 backup TRA.pdf |
HTRA 3/11/2010 1:00:00 PM HTRA 3/16/2010 1:00:00 PM |
HB 267 |