Legislature(2015 - 2016)BARNES 124

03/12/2015 08:00 AM House COMMUNITY & REGIONAL AFFAIRS



Audio Topic
08:05:13 AM Start
08:05:39 AM Confirmation Hearing(s): State Assessment Review Board
08:21:09 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Confirmation Hearing: TELECONFERENCED
State Assessment Review Board
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
    HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                   
                         March 12, 2015                                                                                         
                           8:05 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Cathy Tilton, Chair                                                                                              
Representative Paul Seaton, Vice Chair                                                                                          
Representative Shelley Hughes                                                                                                   
Representative Harriet Drummond                                                                                                 
Representative Dan Ortiz                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Benjamin Nageak                                                                                                  
Representative Lora Reinbold                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
CONFIRMATION HEARING(S):                                                                                                        
                                                                                                                                
     State Assessment Review Board                                                                                            
                                                                                                                                
     William Roberts - Kodiak                                                                                                   
                                                                                                                                
     - CONFIRMATION(S) ADVANCED                                                                                                 
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to record                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
WILLIAM ROBERTS, Appointee                                                                                                      
State Assessment Review Board                                                                                                   
Kodiak, Alaska                                                                                                                  
POSITION STATEMENT:  During the confirmation hearing for the                                                                  
State Assessment Review Board, provided his background and                                                                      
answered questions.                                                                                                             
                                                                                                                                
STEVE VAN SANT, Appointee                                                                                                       
State Assessment Review Board                                                                                                   
Palmer, Alaska                                                                                                                  
POSITION STATEMENT:  During the confirmation hearing for the                                                                  
State Assessment Review Board, provided his background and                                                                      
answered questions.                                                                                                             
                                                                                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:05:13 AM                                                                                                                    
                                                                                                                                
CHAIR  CATHY  TILTON  called the  House  Community  and  Regional                                                             
Affairs  Standing  Committee  meeting   to  order  at  8:05  a.m.                                                               
Representatives Seaton,  Hughes, Ortiz,  and Tilton  were present                                                               
at the  call to  order.  Representative  Drummond arrived  as the                                                               
meeting was in progress.                                                                                                        
                                                                                                                                
^CONFIRMATION HEARING(S):  State Assessment Review Board                                                                        
                    CONFIRMATION HEARING(S):                                                                                
                 State Assessment Review Board                                                                              
                                                                                                                              
8:05:39 AM                                                                                                                    
                                                                                                                                
CHAIR TILTON announced  that the only order of  business would be                                                               
the  consideration  of the  appointees  to  the State  Assessment                                                               
Review   Board,  which   is  a   five-member  board   of  members                                                               
knowledgeable    in    assessment   procedures    for    pipeline                                                               
transportation  of gas  or unrefined  oil.   The  members of  the                                                               
board are  appointed by the  governor.  She highlighted  that the                                                               
board conducts  oil and gas  property assessment  appeal hearings                                                               
on values  set by the Department  of Revenue.  Chair  Tilton then                                                               
reminded  the  committee that  its  job  is  only to  review  the                                                               
histories and qualifications of  the appointees and [that signing                                                               
the reports  regarding appointments to boards  and commissions in                                                               
no way  reflects individual members'  approval or  disapproval of                                                               
the appointees, and that the  nominations are merely forwarded to                                                               
the full legislature for confirmation or rejection.]                                                                            
                                                                                                                                
8:06:55 AM                                                                                                                    
                                                                                                                                
WILLIAM  ROBERTS,  Appointee,   State  Assessment  Review  Board,                                                               
informed the  committee that he  is a 39-year resident  of Alaska                                                               
and Kodiak  and is currently  the assessor for the  Kodiak Island                                                               
Borough and  has been in  the appraising and assessing  field for                                                               
about 32 years.  He related that  he began as an appraiser in the                                                               
Kodiak Island Assessing  Office and then became  a fee appraiser.                                                               
He said he has appraised around  the state as a general appraiser                                                               
for both residential  and commercial [property].   In his present                                                               
job, Mr.  Roberts explained  that he  was hired  to take  over an                                                               
assessment office  that needed  to be  reorganized.   Through the                                                               
reorganization,  he  said  he has  stressed  fair  and  equitable                                                               
assessments  across  the  board.    As  a  member  of  the  State                                                               
Assessment  Review  Board, he  acknowledged  that  he would  hear                                                               
appraisals for the pipeline and  other oil and gas properties and                                                               
determine  whether those  appraisals, the  methodologies used  to                                                               
reach  those   appraisals,  and  the  conclusions   reached  were                                                               
reasonable.                                                                                                                     
                                                                                                                                
8:08:12 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON   inquired  as  to  the   differences  and                                                               
similarities  between reviewing  the assessment  for oil  and gas                                                               
facilities  and   pipelines  versus  commercial   and  industrial                                                               
buildings, such as a processing plants.                                                                                         
                                                                                                                                
MR.  ROBERTS   specified  that  appraisals  and   assessments  on                                                               
industrial properties, whether they are  oil and gas pipelines or                                                               
fish  processing  plants or  manufacturing  plants,  are all  the                                                               
same.  Although there are  three methodologies that are used, the                                                               
methodology typically used for oil and  gas and the pipeline is a                                                               
cost approach.  The cost approach  is the cost to replace it less                                                               
the depreciation,  which is based  on both physical  and economic                                                               
depreciation in  terms of  its ability to  generate income.   The                                                               
aforementioned  is the  case for  industrial properties  as well.                                                               
He acknowledged  that there  is an  income approach,  but pointed                                                               
out  that most  typically, a  cost approach  is used  for complex                                                               
properties,   factoring  into   that  economic   conditions  that                                                               
surround the property.                                                                                                          
                                                                                                                                
8:09:58 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON   surmised  then  that  Mr.   Roberts  has                                                               
participated in  the cost approach  assessments and reviews.   He                                                               
asked if the  cost approach is the current  approach utilized for                                                               
the Trans-Alaska  Pipeline System  (TAPS).   He further  asked if                                                               
there  has been  a  problem  with TAPS  and  whether  he had  any                                                               
problems with how it has been achieved.                                                                                         
                                                                                                                                
MR.  ROBERTS  said  he  has  reviewed  some  of  the  past  State                                                               
Assessment  Review Board  (SARB) findings,  which have  typically                                                               
been the cost  approach.  He related that he  has no problem with                                                               
using the cost approach.                                                                                                        
                                                                                                                                
8:11:15 AM                                                                                                                    
                                                                                                                                
STEVE  VAN  SANT,  Appointee,   State  Assessment  Review  Board,                                                               
informed   the    committee   that    he   has   been    in   the                                                               
assessment/appraisal  field for  over  40 years  in  Alaska.   He                                                               
noted that  he has been an  assessor in the Fairbanks  North Star                                                               
Borough, the  Matanuska-Susitna Borough, and the  Municipality of                                                               
Anchorage.   He pointed out  that for the  past 22 years,  he has                                                               
been the  state assessor for the  State of Alaska.   Mr. Van Sant                                                               
also pointed  out that he  served on the State  Assessment Review                                                               
Board for 25 years 15 years of which  he served as the chair.  He                                                               
mentioned that  he has owned  his own appraisal business  as well                                                               
as several other businesses in the  state.  He told the committee                                                               
that he  understands the dealings of  the SARB as he  has been on                                                               
the SARB for  25 years until he  took a break in 2009.   In fact,                                                               
he related that he was a member  of SARB when the first appeal of                                                               
TAPS  was before  the  Board in  2006.   Mr.  Van  Sant said  his                                                               
application is before the committee as  he was asked to return to                                                               
SARB.                                                                                                                           
                                                                                                                                
8:12:37 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES inquired  as to why Mr. Van  Sant agreed to                                                               
serve again.                                                                                                                    
                                                                                                                                
MR.  VAN SANT  explained that  he resigned  in 2009,  but briefly                                                               
returned in 2010 because the SARB  couldn't achieve a quorum.  He                                                               
further explained  that now  that he is  retired, he  believes he                                                               
can serve  as it doesn't consume  a lot of time  since it usually                                                               
only meets once a year for about a week.                                                                                        
                                                                                                                                
8:13:52 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE HUGHES then inquired as  to the years in which Mr.                                                               
Van Sant was the president of the Palmer Chamber of Commerce.                                                                   
                                                                                                                                
MR. VAN SANT recalled that it was 1985.                                                                                         
                                                                                                                                
8:14:23 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  requested clarification as to  why Mr. Van                                                               
Sant's general  information says he  or any member of  his family                                                               
could be  affected financially by  decisions by SARB  but doesn't                                                               
explain the potential financial benefit.                                                                                        
                                                                                                                                
MR.  VAN SANT  explained that  typically any  tax dollars  gained                                                               
through any  of the appeals  of oil  and gas properties  would be                                                               
reflected  in the  permanent fund  dividend  (PFD) that  Alaskans                                                               
receive.  Therefore,  decisions could impact the  PFD and benefit                                                               
him or  members of  his family,  but no more  than for  any other                                                               
resident of the state.                                                                                                          
                                                                                                                                
8:15:48 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND said  she was  glad [for  the state]  to                                                               
have  Mr. Van  Sant's experience.   She  then questioned  whether                                                               
existing legislation  regarding the  right-of-way of  the gasline                                                               
traveling through  the Matanuska-Susitna Borough could  result in                                                               
a  potential  financial  impact  on Mr.  Van  Sant's  family  via                                                               
property taxes.                                                                                                                 
                                                                                                                                
MR. VAN  SANT replied that  conceivably it could.   However, SARB                                                               
listens  to  appeals   from  both  sides  of  the   oil  and  gas                                                               
properties,  including  the  property  owner  and  the  assessing                                                               
entity.    Mr.  Van  Sant  clarified that  SARB  doesn't  do  the                                                               
assessments,  rather it  merely  makes a  decision  on the  final                                                               
value conclusion based on the evidence presented.                                                                               
                                                                                                                                
8:17:47 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE SEATON  recalled from Mr. Roberts'  testimony that                                                               
of  the three  methodologies,  the cost  approach methodology  is                                                               
most  typically  used.    He  then asked  if  the  cost  approach                                                               
methodology would be  the methodology Mr. Van  Sant would support                                                               
using for oil and gas properties in his review.                                                                                 
                                                                                                                                
MR.  VAN SANT  concurred that  typically  the value  on the  TAPS                                                               
project has  been concluded on  the cost approach.   Although the                                                               
other two  approaches are  available during  the review,  Mr. Van                                                               
Sant pointed out  that TAPS presents a unique  structure as there                                                               
is nothing  like it  in the entire  world.   Furthermore, statute                                                               
places limitation on oil and gas  properties in terms of what the                                                               
department  can  use  to  set the  value.  Therefore,  the  other                                                               
approaches,  the  income  and  market  approaches,  are  somewhat                                                               
limited.   Mr. Van  Sant concluded  by relating  that he  has had                                                               
years of experience with the cost approach.                                                                                     
                                                                                                                                
8:19:21 AM                                                                                                                    
                                                                                                                                
CHAIR TILTON,  upon determining  no one  else wished  to testify,                                                               
closed public testimony.                                                                                                        
                                                                                                                                
8:19:45 AM                                                                                                                    
                                                                                                                                
CHAIR TILTON reminded  the committee that it  is merely reviewing                                                               
the  qualifications  of  the appointees  and  [that  signing  the                                                               
reports regarding  appointments to  boards and commissions  in no                                                               
way reflects  individual members' approval or  disapproval of the                                                               
appointees, and that the nominations  are merely forwarded to the                                                               
full legislature for confirmation or rejection.]                                                                                
                                                                                                                                
8:20:01 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  moved to  forward  the  names of  William                                                               
Roberts and Steve  Van Sant to the State  Assessment Review Board                                                               
for  consideration in  joint  session by  the  House and  Senate.                                                               
There being no objection, the names were forwarded.                                                                             
                                                                                                                                
8:21:09 AM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Community and Regional Affairs Standing Committee meeting was                                                                   
adjourned at 8:21 a.m.                                                                                                          

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