Legislature(1997 - 1998)

05/05/1998 09:23 AM Senate FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
SENATE BILL 340                                                              
                                                                               
     "An Act relating to the University of Alaska and                          
     university land, and authorizing the University of                        
     Alaska to select additional state land."                                  
                                                                               
RALPH BENNETT,  STAFF, SENATOR ROBIN  TAYLOR, stated  that the                 
provisions  of SB  340 would  allow the  University of  Alaska                 
to select  250,000 acres  of state land,  subject to  approval                 
by  the   legislature.  Land   approved  for  transfer   would                 
include  interest in  minerals  and oil  and  gas (subject  to                 
certain limitations).  He  noted that land  subject to  a coal                 
lease  or   with  a  pending   lease  application   would  not                 
available for  selection. The university  would bear  the cost                 
of selection,  platting, surveying,  and conveyance.  All land                 
selections  had  to be  made  by  December  31, 2012,  and  20                 
percent of  income derived from  selected land had to  be used                 
at  the campus  closest  to the  income-generating  parcel  or                 
parcels.  All  lands  conveyed  under  the  program  would  be                 
exempt from municipal taxation.                                                
                                                                               
Mr.  Bennett  reported   that  SB  340  was  compatible   with                 
Senator Murkowski's  SB 660,  legislation pending in  Congress                 
that would  convey additional public  lands to the  University                 
of  Alaska.  The  Alaska  system  was  created  under  federal                 
authority  as a  land-grant  institution  to provide  for  the                 
higher-education   requirements    of   Alaska's   people   in                 
perpetuity.  Most colleges  established  under the  land-grant                 
program were  endowed with sizeable  land bases from  which to                 
generate  income to  be used  for operating  purposes.  Unlike                 
most institutions  in the Lower  48, the University  of Alaska                 
did not have  a large population  base and proximity  to other                 
beneficial  support services.  The University  of Alaska  also                 
suffered  from  a smaller  pool  of  alumni and  other  normal                 
sources of  endowment income,  which many institutions  relied                 
on  to  help  support  operations,  especially  subsidies  for                 
teaching positions.  In the  past decade, several  legislators                 
had  introduced   legislation   allowing  the  university   to                 
select additional  lands from  the state.  The purpose  of all                 
such  legislation  had been  to  provide  more lands  for  the                 
university's state-wide system and to provide more income-                     
producing  assets where  monetary resources  were more  scarce                 
and unpredictable.                                                             
                                                                               
Mr.  Bennett  maintained  that   SB  340  would  continue  the                 
effort to  give the  university a larger  and more  productive                 
land-base.  The bill  would  also provide  clear  expectations                 
that  land conveyed  be  used for  the development  of  value-                 
added industries where appropriate.                                            
                                                                               
Mr. Bennett provided a sectional analysis of SB 340:                           
                                                                               
   · Section 1: Findings and purposes section, including                       
     that the University of Alaska should own income-                          
     producing land to provide income for the support of                       
     higher education.                                                         
                                                                               
   · Section 2: Legislative intent language for the                            
     university to encourage the development of in-state,                      
     value-added industries in developing the land conveyed                    
     to it.                                                                    
                                                                               
   · Section 3: Technical amendment, adding that the                           
     provisions grant the Board of Regents the care,                           
     control, and management of other university lands.                        
                                                                               
   · Section 4: Technical amendment to account for the land                    
     conveyed under the bill.                                                  
                                                                               
   · Section 5: A major section adding new subsections                         
     dealing with new land selections:                                         
                                                                               
     · Subsection 14.43.65: Would allow the university to                      
        select 250,000 acres  of state land. The list  of land                 
        proposed  to  be  conveyed  by  the   state  would  be                 
        periodically   submitted  to   the  legislature;   the                 
        legislature  could  approve or  disapprove  the  list.                 
        The section would  also set requirements for  the land                 
        that could be selected.  Transfer of ownership  of the                 
        land to the university  would include the  interest of                 
        the state  in minerals  and to oil  and gas, but  only                 
        related to  land selected  at least  five years  after                 
        the  effective  date  of  the  bill.   The  subsection                 
        describes the  power of the  state to manage  the land                 
        selected but  not  yet conveyed,  and  lists types  of                 
        land that could  not be conveyed,  including  land the                 
        conveyance   of   which   was   determined    by   the                 
        Commissioner of  the Department  of Natural  Resources                 
        not to  be in  the best  interests of  the state.  The                 
        university   would  bear   the  cost   of   selecting,                 
        platting,  surveying,  and  conveying  the  land;  the                 
        state  would  pay  costs  of  recording   patents  and                 
        documents of interim  conveyance. The university  must                 
        make all selections  by December 31, 2012.  Land would                 
        revert to  the  state if  the commissioner  found  the                 
        university  was  not actively  managing  the  land  to                 
        provide  income  on  the  tenth   anniversary  of  the                 
        conveyance.                                                            
                                                                               
     ·  Subsection  14.43.66:  Provides   that  the  Board  of                 
        Regents  must   establish   procedures   substantially                 
        similar to  state procedures  for  mineral leasing  on                 
        the conveyed lands.  The board must prepare  an annual                 
        plan for the  management of  the land and seek  public                 
        comment  on the  plan.  At  least  20 percent  of  the                 
        income derived  from the management  of selected  land                 
        must be used  at the campus  closest to the  land from                 
        which the income was derived.                                          
                                                                               
     ·  Subsection 14.43.67:  A new section in Section  5 that                 
        would  deal with  confidential  records;  Mr.  Bennett                 
        noted  that  the   section  did  not  appear   in  the                 
        committee's copy of the sectional.                                     
                                                                               
     ·  Subsection 14.43.67:  Provides for land conveyed  that                 
        would  be  subject  to  certain  types  of  agreements                 
        (leases,  claims,  permits,  and  so  on);  the  state                 
        would  be entitled  to  receive  the  income  and  the                 
        management  would be  turned  over to  the  university                 
       only after the terms of the agreement expired.                          
                                                                               
     ·  Subsection 14.43.69:  Provides  that before  conveying                 
        or  disposing  of  interest  in  selected  lands,  the                 
        university would be  required to manage the  land in a                 
        manner that  would  permit customary  and  traditional                 
        uses of resources to the maximum extent practical.                     
                                                                               
   · Sections 6 and 7: A new section related to torte                          
     immunity  on unimproved land.  He noted that the  section                 
     did not  appear in the  committee's sectional.  Section 6                 
     was a  renumbered Section 7  and would provide  an income                 
     derived  from  the management  of  selected  land in  the                 
     endowment trust fund.                                                     
                                                                               
   · Section 8: Previously Section 7; exempts the                              
     university lands from municipal taxation.                                 
                                                                               
Senator  Parnell  referred  to  Section  6  related  to  torte                 
immunity  for  personal  injury.   He  noted  that  the  state                 
already  had  some immunity  from  certain  actions  on  state                 
property.  He  asked  whether  the  doctrine  applied  to  the                 
university  and  university  actions;  if  so,  he  questioned                 
making  torte immunity  for  the  university higher  than  the                 
immunity of state property in general.                                         
                                                                               
WENDY    REDMOND,   EXECUTIVE    VICE-PRESIDENT,    UNIVERSITY                 
RELATIONS,  UNIVERSITY OF ALASKA,  answered that the  language                 
in  the  bill   was  exactly  the  language  used   for  state                 
immunity.  She  emphasized  that  the  language  was  not  the                 
university's  preference,  and  was  not  the  torte  immunity                 
language  that had  been in  the bill  previously. She  wanted                 
the  previous   language,  which   took  the  immunity   to  a                 
slightly higher  level. The higher  level was the result  of a                 
previous   section   (14.43.69)    requiring   the   continued                 
provision   of   customary   and  traditional   use   on   all                 
university  land  until  transferred  to a  third  party;  the                 
university  felt it  was important  to have  the higher  level                 
of torte immunity.                                                             
                                                                               
Senator  Parnell asked  whether  the level  requested was  the                 
same  level   as  granted  the   state  of  Alaska   on  other                 
unimproved  land.  Ms. Redmond  replied  yes;  she noted  that                 
the  Resources  Committee  had lifted  the  language  directly                 
out of statute.                                                                
                                                                               
Co-chair  Sharp  asked whether  there  was a  section  dealing                 
with  returning the  land if  it was  not used  appropriately.                 
Ms. Redmond  replied that there  were still a few  sections of                 
the bill  that were troubling  to the  university. One  of the                 
sections  had been  referred to  as the  "use it  or lose  it"                 
clause,  and was found  on page  9, beginning  on line  17 and                 
extending  to page  10,  line 9.  The clause  stipulated  that                 
the university  would have  ten years  to actively manage  the                 
property  for income  or the land  would revert  to the  state                 
of Alaska.                                                                     
                                                                               
Co-chair Sharp  stated concerns  about another item  (page 10,                 
lines  30 to  31  to page  11,  lines 1  and 2).  Ms.  Redmond                 
agreed that  the clause was even  more troubling.  The section                 
was new  and stipulated  that 20  percent of  the income  from                 
the management  of the land had  to go to the closest  campus.                 
She  detailed  that currently,  all  of  the income  from  the                 
land-grant  trust  went  into  the  Natural   Resources  fund,                 
established   in  statute  to   generate  income   to  support                 
resource  development  in  Alaska.  The  fund  was  inflation-                 
proofed  and  the   university  spent  the  earnings   through                 
grants;  approximately  $3.7 million  had  been  given out  in                 
the current year.                                                              
                                                                               
Ms. Redmond  continued  that the language  would target  money                 
to  the  campus  closest to  where  the  money  was  generated                 
regardless  of  need,  in  addition  to  diverting  the  money                 
before  it  got  to the  endowment.  She  did  not  think  the                 
clause  was in the  best interest  of the  university and  did                 
not accomplish  what the  trust fund was  set up to  do, which                 
was to support resource development in the state.                              
                                                                               
Senator Torgerson  queried language  that had previously  been                 
suggested  to address  the  issue.  Ms. Redmond  replied  that                 
she had  suggested broadening  the language  to use the  money                 
within  the  region and  linking  it  to  the purpose  of  the                 
fund.                                                                          
                                                                               
Senator  Torgerson asked  how she would  define "region."  Ms.                 
Redmond  did not  have  the answer.  She conjectured  that  it                 
would be broader than an election district.                                    
                                                                               
Senator  Torgerson believed  Senator  Taylor  had intended  to                 
work on the  language. Mr. Bennett  replied that a  work draft                 
had  been prepared  dealing only  with  the 20-percent  issue;                 
it did  not address  the problem  of  broadening the  regions.                 
He had  not been instructed  to bring  the changes before  the                 
committee and did not have suggested changes.                                  
                                                                               
CAROL  CARROLL,   DIRECTOR,  DIVISION  OF  SUPPORT   SERVICES,                 
DEPARTMENT  OF  NATURAL  RESOURCES, wanted  the  committee  to                 
have the department's opinion of the bill.                                     
                                                                               
JANE  ANGVIK,  DIRECTOR,  DIVISION   OF  LAND,  DEPARTMENT  OF                 
NATURAL  RESOURCES (via  teleconference),  testified that  the                 
department opposed the bill for seven reasons:                                 
                                                                               
   1. While the state owned a great deal of acreage, only a                    
     very  small  amount of  the  land produced  revenue.  The                 
     university   would    most   likely   select   the   most                 
     productive  land,   which  would  remove  it  from  state                 
     management  and  decrease revenue  to  the general  fund;                 
     currently,  85  percent  of  all  general-fund   revenues                 
     came from state-owned land.                                               
                                                                               
   2. It would be difficult to find 250,000 acres of                           
     suitable  state lands  for the university  to select.  In                 
     addition,   there  would   be  a   large  public   outcry                 
     resulting  from  the transfer  of specific  parcels.  She                 
     noted   that  the   department  had   witnessed  such   a                 
     response  when it  had tried  to reconstruct  the  Mental                 
     Health Trust.                                                             
                                                                               
   3. It would be costly to transfer titles for the amount                     
     of land;  it could  cost over $800,000  per year  for ten                 
     years to convey the amount of land to the university.                     
                                                                               
   4. The municipalities would be in competition with the                      
     university  for the same land.  The state currently  owed                 
     the   municipalities   over  600,000   acres  under   the                 
     municipal-entitlement   program.  There  were  a  limited                 
     amount   of  revenue-generating   lands  that   both  the                 
     municipalities  and  the  university  wanted.  While  the                 
     legislation  would  protect   existing  selections,  most                 
     municipalities   found  it  necessary  to   modify  their                 
     collections  over time  as their  priorities changed  and                 
     land-ownership    patterns   evolved   due   to   federal                 
     conveyances  to the  state  and to  Alaska Native  Claims                 
     Settlement   Act   (ANCSA)   corporations.   Furthermore,                 
     about  one-half of  Alaska was  in unorganized  boroughs.                 
     When  those  areas organized,  the  state  would have  an                 
     obligation  to convey 10 percent  of certain state  lands                 
     within  the municipal  boundaries, but  much of the  best                 
     land might have already gone to the university.                           
                                                                               
   5. Timber harvesting could be negatively impacted by the                    
     bill. The  university would  most likely select  the most                 
     productive  timber  lands,  reducing the  state's  timber                 
     base   used  to   calculate  the   sustained  yield   and                 
     limiting   the  state's  current  efforts   to  establish                 
     timber   sales    that   supported   local    value-added                 
     processing.  As  a  trust, the  university  would  manage                 
     its  lands for  maximizing revenue,  and therefore  would                 
     sell timber  for export. She  argued that the  Department                 
     of Natural  Resource's ability  to offer sales  for local                 
     value-added   processing  would   be  decreased   if  the                 
     university selected timber lands.                                         
                                                                               
   6. The university would be exempt from most state land                      
     laws  adopted by the  legislature  to protect the  public                 
     interest.   For  example,   Title  38  requirements   for                 
     public  notice  and the  state's  best-interest  findings                 
     process  would not  apply to  the  university lands.  The                 
     university   forest  operations   were  not  subject   to                 
     public  review for  the forest  land-use  plan and  five-                 
     year  schedule.  Also, university  land  was not  subject                 
     multiple-use   management  requirements   and  the  lands                 
     would be exempt from conformance in CNR area plans.                       
                                                                               
   7. The bill lacked a method by which to resolve                             
     disagreements  between DNR  and the university  regarding                 
     what  lands  should  be  submitted  to  the  legislature.                 
     Without  supervision,  disagreements could  result in  no                 
     land  list being submitted  or the  state and  university                 
     could  end  up  in costly  litigation.  She  thought  the                 
     bill  needed a provision  to allow  the governor  to make                 
     the  final  decision  and submit  the  land list  to  the                 
     legislature  if there  was disagreement  between DNR  and                 
     the  university. Senate  Bill  340 would  require DNR  to                 
     re-enter   and  re-convey  title  back  to   CNR  if  the                 
     university  was not managing  lands to generate  revenue.                 
     She  argued that  the provision  was unreasonable,  since                 
     most state  land did not  generate revenue.  Furthermore,                 
     enforcement  would  be costly  and was  likely to  result                 
     in  litigation.  The  department   recommended  that  the                 
     provision be deleted.                                                     
                                                                               
Ms. Angvik  referred to amendments  that had been  recommended                 
and conveyed  to the  committee  through a  May 1 letter.  She                 
noted that  the director of the  Division of Mining,  Land and                 
Water was  available to answer  questions about the  effect of                 
the bill on mining in Alaska.                                                  
                                                                               
Senator Phillips  reported that  the members did not  have the                 
letter with  the proposed  amendments.  Ms. Angvik offered  to                 
get a copy to the committee.                                                   
                                                                               
JULES  CHARLESTON,  DIRECTOR,  DIVISION  OF MINING,  LAND  AND                 
WATER,  DEPARTMENT   OF  NATURAL   RESOURCES  (testified   via                 
teleconference),   stated  that   SB  340   (Version  F)   had                 
significant  potential  to  damage the  enthusiasm  of  mining                 
companies  to  invest in  the  mineral  wealth of  Alaska.  He                 
reported  that for  the past  two years,  the mining  industry                 
had created  value totaling  over $1  billion. He referred  to                 
the  "we  are  open  for  business"   message  from  both  the                 
governor and  the legislature. He  noted that DNR  anticipated                 
about $1.7  million in  direct revenue  to the state  treasury                 
during FY  99 from mineral  rents, royalties, and  application                 
and   administrative   fees   from   state-owned,    locatable                 
minerals.  The department  projected a  total of about  50,000                 
mineral  properties   and  about   1,000  ownerships   (mining                 
claims, mining  leases, mill-site  leases, prospecting  sites,                 
and  prospecting permits);  about  1 million  acres of  state-                 
owned or state-collected land would be encumbered.                             
                                                                               
Mr. Charleston  emphasized that  the version as drafted  would                 
create  financial  and  legal  uncertainties  for  the  mining                 
industry  similar  to  those  experienced  during  the  Mental                 
Health Trust  lands litigation,  which  would not be  resolved                 
until  after  2012.  He  pointed  out  that  the  language  in                 
Section  5  of  the  bill  (dealing  with  minerals  on  state                 
properties)    was   difficult    to   understand;    Sections                 
14.40.365(a)(3)  and  (4)  appeared  to  exempt  only  certain                 
state  lands  associated   with  state  oil,   gas,  and  coal                 
leases.  The language  of Section  (a)(4),  line 5  on page  5                 
and lines  3 through  7 stipulated that  the university  could                 
select  any of  approximately 40,000  mining  claims, as  well                 
as  any  of about  5,000  prospecting  sites  (covering  about                 
650,000  acres). He referred  to another  kind of  prospecting                 
site that  the state  did not  have at the  present time,  but                 
could  in the future.  The  university could  also select  any                 
of  approximately 100  mineral  leases covering  abut  100,000                 
acres, or  any of five existing  or pending mill-site  leases.                 
In addition,  the university  could select  any land  that was                 
slated  for both  intensive  and extensive  mineral  inventory                 
for  the  Division  of  Geological  and  Geophysical  Surveys,                 
thereby  excluding the  public and  the industry  from a  fair                 
chance to  locate mining  claims and  prospecting sites  under                 
existing Alaska laws covering mines and mining.                                
                                                                               
Mr.  Charleston  continued  that  Section  14.40.365(b)(1)  on                 
page  5, lines  19 to  20  reaffirmed that  state-owned  coal,                 
ores, minerals,  geothermal  resources, and  fossils would  be                 
under   the  exclusive   ownership  and   management  of   the                 
university  for  the  sole  benefit   of  the  university.  He                 
believed  there  would  be  substantive  questions  about  who                 
must  deal   with  whom   for  continued   operation   of  new                 
development  of mineral  property  (not in  the Mental  Health                 
Trust)  to  the  extent  that  SB  340  authorized  university                 
selection  of  mineral  properties  other  than  certain  oil,                 
gas,  and  coal  leases.  He  listed  properties  the  version                 
would  permit the  university to  select,  including parts  of                 
Fort Knox  Mine, Golden  Zone Mine, Red  Dog Mine, True  North                 
Mine  at  Fairbanks,  and  any  of more  than  200  small-  or                 
medium-sized placer mines and claims.                                          
                                                                               
Mr.  Charleston   argued  that   if  SB  340  authorized   the                 
selection  of  mineral  properties  including  oil,  gas,  and                 
coal (which  were not  expressly excluded),  the  requirements                 
of  Section   6(i)  of  the   Alaska  Statehood  Act   in  its                 
reversionary   provisions   as  well   as   revenues  to   the                 
permanent  fund  would raise  substantial  legal  issues  that                 
could  further delay  any mineral  development  on state  land                 
that  the university  selected.  He  claimed the  stigma  that                 
influenced   adverse  investment   by  the  mineral   industry                 
during   the  Mental   Health   Trust  litigation   would   be                 
reinstituted.  In  addition,  there  could  be  a  handle  for                 
litigation  that was otherwise  prudently and  environmentally                 
responsible  when there was opposition  to some oil,  gas, and                 
coal projects.                                                                 
                                                                               
Mr.  Charleston  maintained  that questions  could  be  raised                 
about  severing  the  surface  from  the  sub-surface  mineral                 
estate.  In addition,  there  would  be adverse  impacts  from                 
added  costs resulting  from fees  the  university would  have                 
to charge  in order to avoid  relinquishment of the  property,                 
even if  minerals were not selectable  by the university.  The                 
fees  could  stop marginally  economical  projects  and  cause                 
delay   for   others    waiting   for   better    world-market                 
conditions;  the end result  could be the  loss of local  jobs                 
and otherwise prudent and timely economic development.                         
                                                                               
Mr.  Charleston   questioned  whether  meeting   the  proposed                 
requirements  for timely  economic development  of  university                 
lands   could  cause   other  economic   uses   such  as   the                 
subdivision  for  homes, commercial  lodges,  business  sites,                 
or  recreational   cabins,  which   could  then  become   non-                 
conforming  land use  that  the mineral  property  development                 
had to buy.  He feared there  could be other additional  costs                 
to  an  otherwise  prudent  development.   The  mineral  lease                 
could  last  as  long  as 55  years;  the  average  lease  was                 
currently  about 20  years.  Mineral leases  had  a right  for                 
renewal  when other  conditions were  met. He  asked what  the                 
university  would gain  from selecting  mineral properties  if                 
the  existing lease  income  continued to  go  to the  general                 
treasury and permanent fund for the life of the mine.                          
                                                                               
Mr. Charleston  noted that  under Alaska  mining law,  mineral                 
property owners  had the exclusive  right for regular  renewal                 
of property  rights as  long as they  otherwise complied  with                 
the law;  under SB 340,  he questioned  the period the  annual                 
rental   fees  would  come   to  the   general  treasury.   He                 
questioned  whether the  university could  select the  Red Dog                 
mine  loading facilities  on  a DNR  lease or  select a  small                 
tract across  the new road to  Fort Knox mine and  then charge                 
a  trespass  fee and  reduce  income.  He worried  that  there                 
could be  charges against Fort  Knox mine vehicles  and reduce                 
income to  the Mental Health Trust  or to the Fairbanks  North                 
Star Borough.  He did not think  the bill answered any  of his                 
questions.  He pointed  out that unanswered  questions  in the                 
mineral industry automatically meant a delay.                                  
                                                                               
Mr.  Charleston concluded  that  SB 340  would  send a  strong                 
message  to the  mineral industry  that  until sometime  after                 
the year  2012, state  mineral property  should be  considered                 
as   having   significant    investment   risk    because   of                 
uncertainty  about  who the  landlord  would  be,  prospective                 
litigation   over  deposits  to   the  general  treasury   and                 
permanent  fund,  and adverse  impact  similar  to the  Mental                 
Health  Trust  litigation.  He strongly  recommended  that  SB
340 be amended  by the Senate  Finance Committee to  expressly                 
exclude  selection   of  any   state  minerals:  coals,   ore,                 
minerals,  and other materials,  as well  as oil and  gas that                 
were presently  in mining  claims,  mineral leases,  mill-site                 
leases,  or other mineral  property rights  under Alaska  law,                 
the  Alaska Statehood  Act, and  the Alaska  Constitution.  He                 
also  recommended that  land  selected  by the  state for  its                 
mineral  value  be excluded,  whether  encumbered  or not,  as                 
well  as land  that  the  legislature  had authorized  to  the                 
Division  of  Geological  and Geophysical  Survey  to  conduct                 
mineral-related  studies  as  a result  of  suspected  mineral                 
potential.                                                                     
                                                                               
SB 340 was SET ASIDE until later in the meeting.                               
                                                                               
SENATE BILL 340                                                              
                                                                               
     "An Act relating to the University of Alaska and                          
     university land, and authorizing the University of                        
     Alaska to select additional state land."                                  
                                                                               
Senator Torgerson MOVED Amendment 1:                                           
                                                                               
     Page 10, line 30, subsection (c):                                         
     Delete line 30 through 31, and lines 1 and 2 on the                       
     top of page 11.                                                           
     Insert new language:                                                      
                                                                               
          Subject to appropriation of the income, the Board                    
          of Regents shall have an amount up to 20 percent                     
          of  the  income  derived   from  the  management  of                 
          university  land  selected  under  AS  14.43.65  for                 
          the  campus  of  the  university   that  is  located                 
          closest  to  the  land  from  which  the  income  is                 
          derived,  if  the borough  or  unified  municipality                 
          within  which   the  campus  is  located  agrees  to                 
          provide   a  match  for  the  same   amount  to  the                 
          campus.                                                              
                                                                               
Senator Torgerson MOVED amendment 1 to Amendment 1:                            
                                                                               
     Page 11, line 2                                                           
     Delete the word "unified"                                                 
                                                                               
Senator   Parnell  OBJECTED.   He  asked   for   clarification                 
regarding   the  amendment  to   the  amendment.  He   queried                 
whether  the intent  was to  broaden the  word  municipalities                 
to include cities as well.                                                     
                                                                               
Senator  Torgerson   responded  that  the  existing   language                 
would  not include  home-rule,  first-class,  or  second-class                 
cities.   Deleting   the  word   "unified"   would  open   the                 
provision    up   to   municipalities,    including    unified                 
municipalities.                                                                
                                                                               
Senator Parnell REMOVED his OBJECTION.                                         
                                                                               
Senator Adams  clarified that there  was an Alaskan  campus in                 
Barrow (Ilisagvik  College) not  related to the University  of                 
Alaska. He  queried the  revenues that  would be available  to                 
the Barrow institution.                                                        
                                                                               
Senator  Torgerson  did not  think  SB 340  would  apply to  a                 
campus that was not attached to the University of Alaska.                      
                                                                               
There  being  no   further  objection,  the  Amendment   1  as                 
amended was ADOPTED.                                                           
                                                                               
Senator Torgerson MOVED Amendment 2:                                           
                                                                               
     Page 9, line 17 through page 10, line 9 Subsection                        
     (m):                                                                      
     Delete in its entirety                                                    
                                                                               
Senator Adams  OBJECTED. He  asked whether  the work  would be                 
done (by  the Department  of Natural  Resources) to issue  the                 
documents necessary to convey the land.                                        
                                                                               
Senator Torgerson  believed the  issue was covered.  He wanted                 
to take  out the parts  related to land  not developed  in ten                 
years that  would then  revert back to  the state. He  thought                 
the    land-selection    process    and   the    duties    and                 
responsibilities   of  both  the  Board  of  Regents   of  the                 
University  of Alaska and  the Division  of Land would  remain                 
intact.                                                                        
                                                                               
Senator Adams MAINTAINED his OBJECTION.                                        
                                                                               
A roll call was taken on the amendment.                                        
                                                                               
In favor: Parnell, Phillips, Torgerson, Sharp, Pearce                          
Against: Adams                                                                 
                                                                               
Senator Donley was absent from the vote.                                       
                                                                               
The motion FAILED (5/1). Amendment 2 was adopted.                              
                                                                               
Co-chair  Sharp informed  the  committee  that the  Department                 
of Natural  Resources (DNR)  had just  faxed several  pages of                 
amendments.   He  believed   the  DNR   amendments  would   be                 
addressed on the floor of the Senate.                                          
                                                                               
Co-chair Sharp  stated that he  did not like the fiscal  notes                 
attached  to  the   bill.  He  referred  to  a   $1.5  million                 
request; he did not know how it would be used.                                 
                                                                               
Senator  Pearce opined  that the  bill could  not be  reported                 
out with  the fiscal  notes. She  believed  the item could  be                 
addressed in  Conference Committee.  She did not want  to give                 
the university  $1.5 million each  year. In addition,  DNR was                 
asked for another $800,000 in inter-agency receipts.                           
                                                                               
WENDY    REDMOND,   EXECUTIVE    VICE-PRESIDENT,    UNIVERSITY                 
RELATIONS,  UNIVERSITY OF  ALASKA, thought  there might  be an                 
error. She  stated that the university  fiscal note  should be                 
university receipts and not general funds.                                     
                                                                               
Co-chair  Sharp  noted  that  the  fiscal  note  said  general                 
funds, so there could be an error.                                             
                                                                               
Ms.  Redmond  agreed  that  the  item   should  be  university                 
receipts. She  added that the  land development would  be paid                 
from the proceeds from the fund.                                               
                                                                               
Senator  Pearce  commented   that  the  item  was  showing  as                 
interagency  receipts;  it was  expected that  the  university                 
would pay  those. Ms.  Redmond responded  that there  had been                 
agreements   in  past   land  bills   about  how   interagency                 
receipts  would  be  handled; the  department  would  pay  the                 
costs  for  surveying  and  platting,   and  would  share  the                 
conveyance cost.  She offered to  get a corrected  fiscal note                 
for at  least the  university's  portion to  make sure it  was                 
university receipts.                                                           
                                                                               
Senator  Torgerson asked  whether the department  would  be in                 
favor of  university receipts  to DNR.  Ms. Redmond  responded                 
that  it   would  not   be  university   receipts  but   would                 
appropriately  show as interagency  receipts if they  received                 
some  university   receipts  to   handle  the  costs   of  the                 
platting.                                                                      
                                                                               
Senator  Torgerson asked  whether  the impact  to the  general                 
fund   would   be  zero.   Ms.   Redmond   answered   in   the                 
affirmative.                                                                   
                                                                               
JANE  ANGVIK,  DIRECTOR,  DIVISION   OF  LAND,  DEPARTMENT  OF                 
NATURAL  RESOURCES   (via  teleconference),  added   that  the                 
department's  understanding of  the DNR  fiscal note was  that                 
it  was   to  be  paid  by   the  university  for   all  costs                 
associated with the conveyance.                                                
                                                                               
Senator Torgerson agreed.                                                      
                                                                               
Senator  Pearce opined  that  there was  still  a problem,  as                 
the budget  would increase.  The interagency  receipt  account                 
was general  funds. She thought  the issue could be  worked on                 
in Conference Committee.                                                       
                                                                               
Co-chair   Sharp  asked   for   the  fiscal   note  from   the                 
university  to  be  changed  from a  fund  source  of  general                 
funds  to university  receipts. He  wanted it  to be clear  on                 
the DNR  fiscal note  that the interagency  receipts  would be                 
from  university  receipts  upon agreement  and  request  from                 
the university  for services desired.  He noted that  it would                 
not be dictated by DNR.                                                        
                                                                               
Ms.  Angvik clarified  that  the  University of  Alaska  would                 
pay all costs associated if the bill was adopted.                              
                                                                               
Co-chair Sharp agreed.                                                         
                                                                               
Senator  Torgerson   MOVED  to   REPORT  CSSB  340(FIN)   from                 
committee  with individual  recommendations  and the  attached                 
fiscal notes.                                                                  
                                                                               
Senator Adams  OBJECTED. He  believed the  bill was being  set                 
up to  be vetoed  because  it would  appropriate resources  of                 
the state  that  would hurt  the economic  development of  the                 
state.  He also  believed the  bill would  hamper the  process                 
of  organizing  for  unorganized  municipalities.  He  thought                 
the  economic development  and  selection  of  non-oil-and-gas                 
properties  would be  hampered as  well as  mining and  timber                 
harvesting.  He  asserted   that  the  bill  would  create  an                 
exemption  from most  state law.  He noted  past allowance  of                 
Mental  Health Trust  selection  of lands.  He  did not  think                 
the selection  would be known  with the University  of Alaska.                 
He argued that the bill would set bad public policy.                           
                                                                               
A roll call was taken on the motion.                                           
                                                                               
In favor: Torgerson, Parnell, Phillips, Sharp, Pearce                          
Against: Adams                                                                 
                                                                               
Senator Donley was absent from the vote.                                       
                                                                               
The motion PASSED (5/1).                                                       
                                                                               
CSSB  340(FIN)   was  REPORTED  out  of  committee   with  "no                 
recommendation"  and attached fiscal  notes by the  Department                 
of Natural Resources and the University of Alaska.                             
                                                                               

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