Legislature(2003 - 2004)

03/06/2003 01:30 PM House TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB  97-LONG-TERM LEASES OF ALASKA RR LAND                                                                                     
CO-CHAIR HOLM announced that the  next order of business would be                                                               
HOUSE  BILL NO.  97, "An  Act  authorizing a  long-term lease  of                                                               
certain  Alaska  Railroad  Corporation  land  at  Anchorage;  and                                                               
providing for an effective date."                                                                                               
Number 1213                                                                                                                     
REPRESENTATIVE  KOHRING, the  bill's sponsor,  stated that  HB 97                                                               
allows the Alaska  Railroad Corporation to grant  a 55-year lease                                                               
without   a  termination   clause.      This  potentially   gives                                                               
organizations like the Alaska  Enfranchise Facilities, Inc. (AEF)                                                               
the opportunity to build a  senior housing facility on Government                                                               
Hill  in  Anchorage  -  property  that is  owned  by  the  Alaska                                                               
Railroad  Corporation.   He said  the problem  is that  the [U.S.                                                               
Department  of  Housing  and Urban  Development]  HUD  202  grant                                                               
requires a 75-year  lease; however, since current  law allows for                                                               
a 55-year  lease, that  organization will  not qualify  to obtain                                                               
the lease necessary to build the senior housing project.                                                                        
REPRESENTATIVE KOHRING  referred to  legislation that  had passed                                                               
from  the  House  Transportation   Standing  Committee  during  a                                                               
previous year  [HB 298, passed  in 2002] that allowed  for leases                                                               
to be extended from 35 years, which  was the time that was set in                                                               
1984,  to 55  years.    The intent  of  that  legislation was  to                                                               
encourage economic development in  communities along the Railbelt                                                               
and  to facilitate  commercial and  residential development.   He                                                               
pointed out  that if 35  years does not  meet the standards  of a                                                               
lending institution, it's difficult  to obtain financing to build                                                               
a facility.  He added that  there are certain exceptions in which                                                               
55  years is  not sufficient.   One  such exception  is a  senior                                                               
housing project effort in Anchorage  in which there is an attempt                                                               
to obtain a 75-year lease on a particular site.                                                                                 
Number 1188                                                                                                                     
REPRESENTATIVE  KOHRING continued  that  if  the Alaska  Railroad                                                               
Corporation  is  allowed  to  grant a  55-year  lease  without  a                                                               
termination clause, the  time period for a lease  on a particular                                                               
site  that is  owned  by the  Alaska  Railroad Corporation  would                                                               
essentially  be extended  indefinitely.   The  result of  passing                                                               
this law  would be to  pave the  way to build  much-needed senior                                                               
housing - housing intended for low-income seniors.                                                                              
Number 1046                                                                                                                     
CO-CHAIR  MASEK referred  to the  previous  legislation that  had                                                               
become  law  and  asked  if changes  in  HUD's  requirements  had                                                               
resulted in disqualifying the aforementioned project.                                                                           
Number 1030                                                                                                                     
REPRESENTATIVE KOHRING  stated that  the legislation  allowed the                                                               
railroad to extend  its leases to 55 years rather  than 35 years.                                                               
He informed  the committee  that there  are new  HUD requirements                                                               
for the HUD  202 grant - a grant used  to build low-income senior                                                               
housing.   He explained that  after the previous  legislation had                                                               
been passed,  HUD regulations then  changed to require  a 75-year                                                               
lease on Section 202 grant loans.                                                                                               
Number 0973                                                                                                                     
MARK MARLOW, Alaska Enfranchise  Facilities, Inc. (AEF), said the                                                               
agency seeks to apply  for a lease of at least  75 years for land                                                               
on  Government Hill  so that  the  application of  a Section  202                                                               
grant for that area can be  facilitated.  He testified in support                                                               
of HB 97,  saying that the legislation that was  passed last year                                                               
had nothing to do with this  particular grant program.  He stated                                                               
that it was "just a good idea  whose time had come" to extend the                                                               
railroad's ability  to lease  ground from 35  years to  55 years.                                                               
He said that  it was a coincidence that HUD  changed the terms of                                                               
the  "202  program"  last  year.   The  current  requirement  for                                                               
Section 202  grant monies being  used to build housing  on leased                                                               
land is  to have  a lease  duration of  75 years.   He  said that                                                               
previously the duration requirement had been 40 years.                                                                          
MR.  MARLOW  testified  that statute  currently  reads  that  the                                                               
railroad  is  able to  lease  ground  for  longer than  55  years                                                               
provided that the legislature approves of  such a lease.  He said                                                               
the  request for  the  legislature to  approve  of extending  the                                                               
lease would allow for the  Alaska Railroad Corporation to approve                                                               
of  the lease,  should AEF  be  successful in  being awarded  the                                                               
Number 0840                                                                                                                     
REPRESENTATIVE FATE asked if Mr.  Marlow had been in negotiations                                                               
with the railroad.                                                                                                              
MR. MARLOW confirmed that this was so.                                                                                          
REPRESENTATIVE   FATE  asked   if  anybody   else  had   been  in                                                               
negotiations with the railroad.                                                                                                 
Number 0821                                                                                                                     
MR. MARLOW said  he leased the ground last year  for 55 years, in                                                               
anticipation of  the application  period for this  year's Section                                                               
202 grant.   When the  regulation changed to requiring  a 75-year                                                               
lease  there  was  the  question  of  seeking  the  legislature's                                                               
approval  for  a  longer  lease   (indisc.)  and  the  railroad's                                                               
position, should the grant be awarded.                                                                                          
Number 0785                                                                                                                     
REPRESENTATIVE FATE  asked if  the intent was  to build  a senior                                                               
MR. MARLOW confirmed that this was correct.                                                                                     
REPRESENTATIVE FATE asked  if the project would  require a public                                                               
process  due to  involving  land belonging  to  the railroad  but                                                               
involving a dispersal clause in  state statute indicating a "best                                                               
interest finding."                                                                                                              
Number 0758                                                                                                                     
MR.  MARLOW  replied that  he  didn't  know  the answer  to  that                                                               
question.   He reported  that when he  initially leased  the land                                                               
from  the  railroad  his  application  was  advertised  and  went                                                               
through  the  railroad's process,  resulting  in  the lease  that                                                               
currently exists.                                                                                                               
Number 0737                                                                                                                     
REPRESENTATIVE  FATE   said  he  wondered  if   the  lease  would                                                               
terminate  if something  to prevent  completion  of building  the                                                               
senior citizens' home occurred during the public process.                                                                       
Number 0715                                                                                                                     
MR. MARLOW replied  that it would not  terminate unless something                                                               
else was  built that  was similarly  appropriate for  the zoning,                                                               
adding that  something would have  to be started on  the property                                                               
by September 2004.  He said if AEF  was not able to get the grant                                                               
- and  grant applications typically have  to be in by  the end of                                                               
May  - then  between  now  and September  of  2004,  it would  be                                                               
incumbent  upon  him  to  either  sell  the  lease  or  to  build                                                               
something himself.   In any event, he said it  would be a housing                                                               
project, since the property is zoned residential.                                                                               
Number 0666                                                                                                                     
REPRESENTATIVE  FATE offered  that a  "best interest  finding" is                                                               
usually a  required process, noting  that he wasn't  sure whether                                                               
this was a HUD requirement.                                                                                                     
Number 0618                                                                                                                     
CO-CHAIR  MASEK moved  to  report  HB 97  out  of committee  with                                                               
individual recommendations and the  accompanying fiscal note; she                                                               
requested unanimous  consent.   There being  no objection,  HB 97                                                               
was reported from the House Transportation Standing Committee.                                                                  

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