Legislature(2005 - 2006)SENATE FINANCE 532

05/04/2006 09:00 AM Senate FINANCE

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Moved CSHB 307(RES) Out of Committee
Moved CSHB 29(L&C)(title am) Out Cmte.
Moved CSHB 446(JUD) Out of Committee
Moved SCS CSHB 326(JUD) Out of Committee
Moved SCS CSHB 41(JUD) Out of Committee
Moved CSSSHB 57(FIN) Out of Committee
Moved HB 419 Out of Committee
+ Bills Previously Heard/Scheduled TELECONFERENCED
     CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 57(FIN)                                                                       
     "An Act relating to the sale of certain state land to                                                                      
     adjacent landowners."                                                                                                      
This was  the first hearing for  this bill in the  Senate Finance                                                               
9:58:50 AM                                                                                                                    
TERRY  HARVEY,  Staff  to  Representative  Bruce  Weyhrauch,  the                                                               
bill's sponsor, explained the bill  would revise State Statute to                                                               
allow the  Department of  Natural Resources  to negotiate  with a                                                               
private landowner  the sale of a  parcel of State land,  20 acres                                                               
or smaller,  which was  surrounded by land  held by  that private                                                               
landowner. These land parcels are  unique in that the only access                                                               
to  these  parcels  would  be   through  the  private  landowners                                                               
property. This  negatively impacts  the ability  of the  State to                                                               
sell the land to another entity.                                                                                                
Mr. Harvey  noted that Representative Weyhrauch  has been working                                                               
with Representative  Bill Thomas in  regards to such a  parcel of                                                               
land  in Haines,  which is  in  Representative Thomas's  election                                                               
district. A  person in Haines  has been  working for 30  years on                                                               
developing his land  for a mining operation, which  would be open                                                               
to the public. That individual's  property completely surrounds a                                                               
pre-Statehood mining claim that  has reverted to State ownership.                                                               
The  individual in  this  situation "should  be  allowed to  work                                                               
directly  with the  State,"  as  it would  remove  the burden  of                                                               
advertising and survey work he would  be required to pay for were                                                               
he  to attempt  to purchase  the land  through the  typical State                                                               
land disposal process.                                                                                                          
10:00:27 AM                                                                                                                   
Mr. Harvey noted that Dick  Mylius, Director, Division of Mining,                                                               
Land and  Water, Department of  Natural Resources,  was available                                                               
to answer  technical questions about  the bill.  Sarah Gilbertson                                                               
with  the Department  of  Fish  and Game  was  also available  to                                                               
address public access  issues that might arise were  the State to                                                               
engage in such  a sale. The Haines landowner,  John Schnabel, was                                                               
also available to discuss his situation.                                                                                        
10:01:03 AM                                                                                                                   
Senator Bunde  asked whether a  survey would be required  on such                                                               
Mr.  Harvey assumed  a  survey would  be  required. However,  the                                                               
direct negotiation sale process  would forego the advertising and                                                               
other requirements for someone in Mr. Schnabel's position.                                                                      
Senator Bunde,  agreeing to the  uniqueness of there  being State                                                               
land  surrounded  by privately  held  land,  asked whether  other                                                               
private landowners were seeking to acquire such land.                                                                           
Mr.  Harvey  understood  there were  other  cases,  however,  Mr.                                                               
Schnabel was the  only one seeking to purchase such  land at this                                                               
That being  the case,  Senator Bunde declared  this "seems  to be                                                               
kinda pushing the edge of special interest legislation".                                                                        
Co-Chair Green asked whether this  situation might be referred to                                                               
as "an in-holding".                                                                                                             
Mr. Harvey responded in the affirmative.                                                                                        
Co-Chair  Green characterized  this situation  as "a  reverse in-                                                               
holding". There are numerous parcels  of "in-holding" land in the                                                               
State with access issues.                                                                                                       
10:02:40 AM                                                                                                                   
DICK  MYLIUS,  Director,  Division  of Mining,  Land  and  Water,                                                               
Department  of Natural  Resources,  testified via  teleconference                                                               
from  an  offnet  location. This  legislation  would  change  the                                                               
State's  "preference rights"  statutes. Typically  State land  is                                                               
sold  through a  competitive  process through  which any  Alaskan                                                               
could   participate.   However,   "preference  rights   are   the                                                               
exception" as they  allow the State to negotiate a  sale with one                                                               
individual.   Typically  this   process  is   utilized  when   an                                                               
individual  legally occupies  the land  and has  made significant                                                               
investments on the property.                                                                                                    
Mr. Mylius  stated that  the preference  rights process  could be                                                               
expanded to  allow State land,  which is surrounded  by privately                                                               
held  land, such  as the  aforementioned  land in  Haines, to  be                                                               
sold.  Such  land would  be  unattractive  to  others, as  it  is                                                               
Mr. Mylius stated  that this legislation would  include such land                                                               
in an  existing "remnant" preference  rights statute  that allows                                                               
the State to negotiate the sale  of a small parcel of land within                                                               
a municipality  to an  individual. A  best use  interest finding,                                                               
land survey, and appraisal would  be required, and the land would                                                               
be  sold at  fair market  value. He  noted that  the Haines  land                                                               
exceeds the  parcel size  currently specified  in the  statute. A                                                               
survey has already been conducted on the parcel.                                                                                
Mr.  Mylius noted  that, while  the land  in Haines  is the  only                                                               
known parcel, there could be  others, considering the size of the                                                               
State and the amount of land the State owns.                                                                                    
Senator  Bunde  questioned the  claim  that  such land  would  be                                                               
inaccessible,  as  he  understood  an existing  State  law  would                                                               
require granting right-of-way access to land.                                                                                   
10:06:32 AM                                                                                                                   
Mr. Mylius  clarified that the law  was specific to land  sold by                                                               
the State; the State would be  required to insure there was legal                                                               
access to  any land  it sold.  A private  landowner would  not be                                                               
required to provide  legal access to land sold by  the State; the                                                               
purchaser  would  be  required  to negotiate  directly  with  the                                                               
private landowner  for access. He  was unsure whether  the access                                                               
requirement  was required  by  State law,  as  the Department  of                                                               
Natural Resources  provides access to  land it sells as  a matter                                                               
of policy.                                                                                                                      
Senator Bunde  asked whether  the land  might qualify  for access                                                               
under  the  provisions  of  the  State's  RS  2477  rights-of-way                                                               
Mr. Mylius  understood there was a  RS 2477 route near  or on the                                                               
Haines parcel. Its  exact location has not been  confirmed, as it                                                               
has  not  been  surveyed.  While RS  2477  "would  provide  trail                                                               
access, one  of the problems with  RS 2477 is it's  not unlimited                                                               
access" and  there are other [unspecified]  RS 2477 restrictions.                                                               
Thus, it  is unclear as  to whether the  RS 2477 access  would be                                                               
sufficient to allow  development of the land. While  the route is                                                               
recognized under  State law,  it has not  been recognized  by the                                                               
court system  and thus, at this  point, could not be  relied upon                                                               
to provide legal access to the land.                                                                                            
Senator  Bunde  appreciated  Mr. Schnabel's  situation,  however,                                                               
suggested the bill be referred  to the Senate Judiciary Committee                                                               
so  his   concern  about  whether   this  was   special  interest                                                               
legislation could be addressed.                                                                                                 
10:08:50 AM                                                                                                                   
Senator  Stedman furthered  Senator Bunde's  access question,  by                                                               
asking  whether  "prescriptive  easements",  which  are  used  to                                                               
acquire access across property that  is privately owned, could be                                                               
utilized in these cases.                                                                                                        
10:09:27 AM                                                                                                                   
Mr.  Mylius, noting  he  was  not proficient  in  the subject  of                                                               
prescriptive  easements  (PEs),  explained that  the  court  must                                                               
approve  PEs. The  Court  would  require seven  to  ten years  of                                                               
actual documented  use as well as  documentation proclaiming that                                                               
no one had  attempted to block the access. Nothing  like that has                                                               
been filed  in the Haines  case. The Department could  attempt to                                                               
establish  a PE,  however,  it  would be  "a  time consuming  and                                                               
expensive process" with an unforeseeable outcome.                                                                               
Senator   Stedman  informed   the  Committee   that,  while   the                                                               
Department felt  there could  be other  similar parcels  like the                                                               
Haines land, no  inventory of parcels had been  provided when the                                                               
bill was heard in the Senate Resources Committee.                                                                               
Co-Chair Green  assumed there could  be other parcels of  land to                                                               
which this  bill would  apply, particularly  in areas  where road                                                               
construction has occurred.                                                                                                      
Senator Olson  understood that the  bill's previous  committee of                                                               
referral had  considered an amendment sponsored  by Senator Ralph                                                               
Mr.  Harvey communicated  that it  was not  until after  the bill                                                               
reported from  the Senate Resources  Committee, that  the sponsor                                                               
became aware  Senator Seekins had some  legal concerns pertaining                                                               
to  the  differences  between  a direct  preference  sale  to  an                                                               
individual  and  the  State's   typical  land  disposal  process.                                                               
Representative Weyhrauch  understood that the  Senator's concerns                                                               
arose because he did not have  the benefit of hearing Mr. Mylius'                                                               
testimony. No amendments have been requested.                                                                                   
Co-Chair Green opined  that the key language in the  bill is that                                                               
"the director  'may' allow the  land" in  question to be  sold to                                                               
the  adjoining  landowner  through  the  direct  preference  sale                                                               
option. This language  is located in Section 1(7) page  3 lines 1                                                               
though  11  of the  bill.  In  other  words, the  director  would                                                               
determine whether to allow this process to transpire.                                                                           
Mr. Harvey  noted that  Sarah Gilbertson  with the  Department of                                                               
Fish and Game  would explain the efforts taken  to address public                                                               
access concerns.                                                                                                                
10:13:25 AM                                                                                                                   
SARAH   GILBERTSON,  Special   Assistant  to   the  Commissioner,                                                               
Department of  Fish and  Game, announced  that the  Department is                                                               
aware of  numerous parcels  of land  in the  State to  which this                                                               
legislation could apply.  Some of these parcels  "are State owned                                                               
land that is  adjacent to a waterway" such as  a stream or river.                                                               
The surrounding  land is either  privately or federally  owned in                                                               
these cases. The Department's primary  concern with these parcels                                                               
of land was to preserve Alaskans' ability to access the water.                                                                  
Ms.  Gilbertson  stated  that   the  Department's  concerns  were                                                               
addressed  by  adding  the  requirement  that  a  best  interests                                                               
finding  be determined,  as specified  in  Section 1(7)(b)(A)  on                                                               
page 3  line 5 of  the bill. The  inclusion of the  best interest                                                               
findings would  ensure that the  access to waterways  issue would                                                               
be addressed.                                                                                                                   
Co-Chair Green asked  for confirmation that the  addition of that                                                               
language appeased the concerns of the Department.                                                                               
Ms. Gilbertson affirmed.                                                                                                        
AT EASE 10:14:54 AM / 10:15:58 AM                                                                                           
Co-Chair Green  appreciated the work  that has been  conducted on                                                               
the issue.                                                                                                                      
10:16:26 AM                                                                                                                   
JOHN  SCHNABEL, the  owner of  84 acres  of land  surrounding the                                                               
State  parcel in  Haines, testified  via  teleconference from  an                                                               
offnet location. His attempts to  purchase the State parcel began                                                               
in 1980,  and the  effort has been  very challenging.  He pointed                                                               
out that  in separate  efforts to purchase  other State  land via                                                               
the public  outcry auction, he  was held  financially responsible                                                               
for the land surveys and  advertising notices. Even though he had                                                               
paid those  expenses, other people  had the right to  bid against                                                               
him without any financial obligation.                                                                                           
Mr.  Schnabel said  he planned  to develop  the 84  acres into  a                                                               
wilderness and gold panning experience  for tourists. His concern                                                               
is that  a conflicting activity  might present itself on  the 13-                                                               
acres  parcel of  land within  his development,  were it  sold to                                                               
another individual at  an outcry auction. This  bill would assist                                                               
in making his development plans "secure".                                                                                       
Co-Chair  Wilken moved  to report  the bill  from Committee  with                                                               
individual recommendations and accompanying fiscal notes.                                                                       
Without objection, CS  SS HB 57(FIN) was  REPORTED from Committee                                                               
with previous  indeterminate fiscal note  #1 dated April  4, 2006                                                               
from the Department of Natural Resources.                                                                                       
10:18:30 AM                                                                                                                   

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