Legislature(2001 - 2002)

04/11/2002 08:12 AM House CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
              HOUSE COMMUNITY AND REGIONAL AFFAIRS                                                                            
                       STANDING COMMITTEE                                                                                     
                         April 11, 2002                                                                                         
                           8:12 a.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Kevin Meyer, Co-Chair                                                                                            
Representative Carl Morgan, Co-Chair                                                                                            
Representative Drew Scalzi                                                                                                      
Representative Gretchen Guess                                                                                                   
Representative Beth Kerttula                                                                                                    
MEMBERS ABSENT                                                                                                                
Representative Andrew Halcro                                                                                                    
Representative Lisa Murkowski                                                                                                   
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 500                                                                                                              
"An Act relating to the advance acquisition of real property for                                                                
public purposes."                                                                                                               
     - HEARD AND HELD                                                                                                           
PREVIOUS ACTION                                                                                                               
BILL: HB 500                                                                                                                  
SHORT TITLE:ADVANCE ACQUISITION OF REAL PROPERTY                                                                                
SPONSOR(S): TRANSPORTATION                                                                                                      
Jrn-Date   Jrn-Page                     Action                                                                                  
02/27/02     2407       (H)        READ THE FIRST TIME -                                                                        
02/27/02     2407       (H)        CRA, TRA                                                                                     
04/04/02                (H)        CRA AT 8:00 AM CAPITOL 124                                                                   
04/04/02                (H)        -- Meeting Canceled --                                                                       
04/11/02                (H)        CRA AT 8:00 AM CAPITOL 124                                                                   
WITNESS REGISTER                                                                                                              
REPRESENTATIVE VIC KOHRING                                                                                                      
Alaska State Legislature                                                                                                        
Capitol Building, Room 24                                                                                                       
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Testified as the sponsor of HB 500.                                                                        
MIKE KRIEBER, Staff                                                                                                             
to Representative Kohring                                                                                                       
House Transportation Standing Committee                                                                                         
Alaska State Legislature                                                                                                        
Capitol Building, Room 24                                                                                                       
Juneau, Alaska  99801                                                                                                           
POSITION STATEMENT:  Answered questions.                                                                                        
BRUCE CARR, Director                                                                                                            
Strategic Planning                                                                                                              
Alaska Railroad Corporation                                                                                                     
POSITION STATEMENT:  Testified in support of HB 407.                                                                            
RICK KAUZLARICH, Right-of-Way Chief                                                                                             
Department of Transportation & Public Facilities                                                                                
(No address provided)                                                                                                           
POSITION STATEMENT:  Testified in support of HB 407.                                                                            
JOHN BITNEY, Legislative Liaison                                                                                                
Alaska Housing Finance Corporation                                                                                              
4300 Boniface                                                                                                                   
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified on AHFC's provision in HB 500.                                                                   
ACTION NARRATIVE                                                                                                              
TAPE 02-22, SIDE A                                                                                                              
Number 0001                                                                                                                     
CO-CHAIR  KEVIN MEYER  called the  House  Community and  Regional                                                               
Affairs  Standing  Committee  meeting   to  order  at  8:12  a.m.                                                               
Representatives Morgan,  Meyer, Scalzi, Guess, and  Kerttula were                                                               
present at the call to order.                                                                                                   
HB 500-ADVANCE ACQUISITION OF REAL PROPERTY                                                                                   
CO-CHAIR MEYER announced that the only order of business would                                                                  
be HOUSE BILL NO. 500, "An Act relating to the advance                                                                          
acquisition of real property for public purposes."                                                                              
Number 0090                                                                                                                     
REPRESENTATIVE VIC  KOHRING, Alaska State  Legislature, testified                                                               
as the  sponsor of  HB 500.   Representative  Kohring paraphrased                                                               
the following portion of the sponsor statement:                                                                                 
     Infrastructure   development   is   key   to   economic                                                                    
     development throughout Alaska.   Right-of-way corridors                                                                    
     are required  to access resources and  markets, enhance                                                                    
     intrastate commerce,  and improve Alaskan's  quality of                                                                    
     life.    Inter-modal  access  to  existing  and  future                                                                    
     harbors  and airports  will  also play  a  key role  in                                                                    
     determining many of the corridors.                                                                                         
     Economical  transportation and  utilities are  vital to                                                                    
     developing  Alaska's  raw   resources  and  value-added                                                                    
     products.    Lowering  the  cost  of  developing  these                                                                    
     corridors will  allow Alaska's resources to  compete in                                                                    
     national and international markets.                                                                                        
     Many  times proposed  resource extraction  projects are                                                                    
     hindered due  to lack  of established  rights-of-way to                                                                    
     access the sites or to move the resources to markets.                                                                      
     In urbanized areas, the public  process to identify new                                                                    
     rights-of-way  (transportation  and utility  corridors)                                                                    
     for  past-due projects  can extend  over long  periods.                                                                    
     This  results  in   bitter  battles,  pitting  neighbor                                                                    
     against  neighbor,  ending   up  with  many  dislocated                                                                    
     property owners.  Sky  rocketing right-of-way costs and                                                                    
     more  expensive construction  costs  result in  project                                                                    
     delays and fewer projects statewide.                                                                                       
REPRESENTATIVE  KOHRING  specified   that  two  separate  groups,                                                               
property owners and  public entities such as  the Alaska Railroad                                                               
and  the   Department  of  Transportation  &   Public  Facilities                                                               
(DOT&PF),  are  impacted  in  opposite  ways  under  the  current                                                               
method.  Usually the process to  obtain a right-of-way (ROW) is a                                                               
long process,  up to five  years or  more.  During  that process,                                                               
costs can  escalate over time.   Currently there are  no statutes                                                               
that  address  this  issue  and   allow  the  identification  and                                                               
preservation  of   corridors  for   future  use,  which   HB  400                                                               
addresses.   Representative  Kohring  pointed out  that ROWs  for                                                               
roads  and utilities  tremendously impact  property owners.   The                                                               
solution,  HB 500,  is  a  process that  allows  state and  local                                                               
governments  and public  utilities to  memorialize transportation                                                               
or utility ROW  corridors.  This legislation would  allow for the                                                               
advance acquisition of  these corridors in order  to avoid delays                                                               
in  construction and  the cost  [increases].   The result  of [HB
500]  is long-term  savings for  the ROW  acquisition as  well as                                                               
avoiding construction delays.   Furthermore, this advanced notice                                                               
protects the  public because the  public will be  better informed                                                               
with access to long-range development plans.                                                                                    
Number 0600                                                                                                                     
REPRESENTATIVE KOHRING  pointed out  that HB  500 focuses  on the                                                               
use  of "eminent  domain" for  the advanced  purchase of  the ROW                                                               
only  when certain  conditions are  met.   Representative Kohring                                                               
explained that  eminent domain is a  request to the courts  for a                                                               
public entity  to purchase  property for  ROW acquisition  when a                                                               
purchase  agreement with  a property  owner  cannot be  obtained.                                                               
Therefore, a  judge would make the  decision as to whether  it is                                                               
in the public's interest to sell  the property.  If so, the judge                                                               
establishes the  purchase price and  conditions of  the property,                                                               
which  almost  always results  in  disagreements.   For  example,                                                               
eminent domain might  be used when a highway needs  to be widened                                                               
such as  the case with the  Parks Highway.  The  requirements for                                                               
use of eminent domain are to  ensure that the proposed future use                                                               
isn't too speculative.  The proposed  use of the property must be                                                               
reasonably  foreseeable  and the  use  of  the property  must  be                                                               
identified in  a development plan  that is made available  to the                                                               
public.    Therefore,  the  passage  of HB  500  will  result  in                                                               
decreased ROW  acquisition costs  and accelerated  permitting for                                                               
future transportation  utility projects, which would  result in a                                                               
more expeditious  process.  Furthermore, the  resource extraction                                                               
and  value-added  industries will  be  able  to capture  emerging                                                               
resource markets when it's optimum for them.                                                                                    
REPRESENTATIVE  SCALZI referred  to page  3, and  inquired as  to                                                               
what Section 4 is about.                                                                                                        
Number 0888                                                                                                                     
MIKE   KRIEBER,   Staff    to   Representative   Kohring,   House                                                               
Transportation  Standing  Committee,  Alaska  State  Legislature,                                                               
answered  that  [AS  18.55.550]  refers  to  the  Alaska  Housing                                                               
Finance  Corporation  (AHFC).    This  legislation  takes  AHFC's                                                               
existing power of eminent domain  and allows them to also utilize                                                               
advanced  acquisition of  property  through eminent  domain.   In                                                               
response  to Representative  Scalzi,  Mr. Krieber  said that  the                                                               
change  of  "it"  to  "the  corporation"  is  merely  a  language                                                           
cleanup.   He  further explained  that  what has  changed is  the                                                               
advanced  acquisition  of  property through  eminent  domain  for                                                               
CO-CHAIR  MEYER   recalled,  from  his  days   on  the  Anchorage                                                               
Assembly,  that eminent  domain  was a  "dirty  word" because  it                                                               
meant taking  someone's property  against their will,  which [the                                                               
assembly] tried to avoid at  all costs.  Co-Chair Meyer expressed                                                               
concern with  the possibility of  using eminent domain  even more                                                               
aggressively than in the past.                                                                                                  
MR. KRIEBER  agreed that  is a possibility.   However,  under the                                                               
current  situation  property  owners can  block  major  projects.                                                               
Alaska has had resource development  opportunities that have been                                                               
blocked, through  ROW acquisition  problems, because there  is no                                                               
way to get the resource to  market.  This happens in urban areas.                                                               
He pointed  out that  the ability  to have  eminent domain  at an                                                               
earlier  stage  will  keep   further  property  development  from                                                               
occurring, which  may prevent others  from being  unduly impacted                                                               
if eminent domain was utilized just prior to the project.                                                                       
Number 1106                                                                                                                     
CO-CHAIR MEYER  remarked that  it is  a delicate  balance because                                                               
the American dream is to own  property, and the last thing anyone                                                               
wants is for the government to  take it away.  However, one piece                                                               
of property [shouldn't be allowed] to block a project.                                                                          
MR. KRIEBER provided the committee  with the following situation.                                                               
The Alaska  Railroad is looking  at relocating the tracks  out of                                                               
downtown Wasilla  due to safety  issues concerning  the proximity                                                               
of  the Parks  Highway  with the  railroad tracks.    One of  the                                                               
routes  that was  reviewed was  identical to  a route  DOT&PF had                                                               
identified in  the 1980s  for a bypass.   However,  DOT&PF didn't                                                               
memorialize that study and thus in  the last 20 years people have                                                               
purchased property in that area.   When the study went public and                                                               
community  meetings were  held,  those folks  [spoke up]  because                                                               
they had  no idea about  the project.   Mr. Krieber said  that in                                                               
this  situation there  will either  be  a highway  bypass or  the                                                               
railroad  will  have to  be  relocated  in  order to  expand  the                                                               
highway within the  existing corridor.  The  alternative would be                                                               
that a large  part of downtown Wasilla will have  to be purchased                                                               
in  order  to  widen  the  Parks  Highway.    This  is  a  no-win                                                               
situation.   Had  DOT&PF been  able  to memorialize  that ROW  20                                                               
years ago and begin the  acquisition process, this wouldn't be an                                                               
Number 1293                                                                                                                     
REPRESENTATIVE KERTTULA asked  if any place in  the nation allows                                                               
this advanced acquisition.                                                                                                      
MR.  KRIEBER replied  yes, there  are about  a half  dozen states                                                               
that do this.                                                                                                                   
REPRESENTATIVE  KERTTULA   inquired  as   to  how   those  states                                                               
determine  the  fair market  value  to  the individual  [property                                                               
owner].  At what point in time is that value determined.                                                                        
MR. KRIEBER  answered that the  value is determined at  the point                                                               
the property is to be acquired.                                                                                                 
REPRESENTATIVE KERTTULA  pointed out  that would mean  five years                                                               
in advance  of when the property  would be used.   Therefore, she                                                               
asked  what would  happen  if  in that  time  the property  value                                                               
MR. KRIEBER highlighted that the  property owner would've already                                                               
relinquished the property, in a sense, through eminent domain.                                                                  
REPRESENTATIVE KERTTULA inquired  as to what would  happen in the                                                               
case in  which the property  isn't used.   Would the  property be                                                               
returned to  the property  owner, she  asked.   Furthermore, what                                                               
happens  if the  value of  the property  has increased  100 times                                                               
during that  time; would the  government be allowed to  hold that                                                               
property and the increased value, she asked.                                                                                    
MR.  KRIEBER  answered   that  can  happen.     However,  HB  500                                                               
[requires]  "some high level  of assurance" that the project will                                                               
move forward.  In an eminent  domain case, the judge would review                                                               
the degree of certainty [that  the project will move forward] and                                                               
make a  determination.   For example,  the Parks  Highway project                                                               
and its  environmental impact study  (EIS) was approved  in 1994.                                                               
However, the escalation in price for  the next phase of the Parks                                                               
Highway ROW  acquisition, 1.5  miles, has  increased to  over $15                                                               
million.  Therefore,  the ROW acquisition is  more expensive than                                                               
the road construction itself.  He  noted that there was a case of                                                               
eminent domain for the Parks Highway project.                                                                                   
Number 1498                                                                                                                     
REPRESENTATIVE KERTTULA inquired as  to why DOT&PF didn't condemn                                                               
the ROW at the point when the project was built.                                                                                
MR.  KRIEBER  deferred  to  DOT&PF.     In  further  response  to                                                               
Representative  Kerttula,  Mr.   Krieber  explained  that  DOT&PF                                                               
operates  under   federal  guidelines,   which  allows   for  ROW                                                               
acquisition on a  much shorter timeframe.  Again,  he deferred to                                                               
DOT&PF,  but  noted that  there  is  nothing  in state  law  that                                                               
provides for state entities to perform advanced acquisition.                                                                    
REPRESENTATIVE  KERTTULA pointed  out  that [the  state] has  the                                                               
ability to purchase the ROW at the time.                                                                                        
MR. KRIEBER explained  that once an entity moves  forward with an                                                               
eminent  domain act,  there are  "court restrictions"  to proceed                                                               
within a short  time period.  Therefore, HB 500  provides that an                                                               
entity could take a 5-10 year  time period and spread out the ROW                                                               
acquisition.      This   legislation  addressed   the   potential                                                               
[obstacle] in the process.                                                                                                      
Number 1631                                                                                                                     
REPRESENTATIVE  SCALZI  asked  if  [HB  500]  provides  that  the                                                               
property is merely identified in  advance or does it provide that                                                               
the property is acquired in advance.                                                                                            
MR.  KRIEBER explained  that eminent  domain means  that a  court                                                               
action is being taken in  order to acquire something [for prices]                                                               
at that  specific time.   In  further response  to Representative                                                               
Scalzi,  Mr. Krieber  said that  even if  there are  changes, the                                                               
judge  would  still need  to  make  the determination  that  this                                                               
project is eminent to go forward.   The judge would still need to                                                               
make the  same findings  made under the  current law  for eminent                                                               
REPRESENTATIVE SCALZI  asked if there  would be an  adjustment in                                                               
the price [at the time of a change in the price].                                                                               
MR. KRIEBER  answered that  typically when  the judge  issues the                                                               
declaration [of eminent domain] the price is established.                                                                       
REPRESENTATIVE GUESS questioned whether  HB 500 would resolve the                                                               
problem in  Wasilla.   This legislation  refers to  situations in                                                               
which something is to be done in the next five years.                                                                           
MR. KRIEBER clarified  that HB 500 addressed a  time greater than                                                               
five  years.   In further  response to  Representative Guess,  he                                                               
answered that the  price is still set at the  time eminent domain                                                               
is [established],  which is  also at the  time when  the property                                                               
transfer occurs.                                                                                                                
Number 1785                                                                                                                     
BRUCE  CARR,   Director,  Strategic  Planning,   Alaska  Railroad                                                               
Corporation, testified  via teleconference in support  of HB 500.                                                               
Although  in the  history  of  ARRC there  has  been  no case  of                                                               
eminent  domain,  HB 500  provides  another  tool that  could  be                                                               
Number 1861                                                                                                                     
RICK    KAUZLARICH,    Right-of-Way    Chief,    Department    of                                                               
Transportation &  Public Facilities, informed the  committee that                                                               
he has worked as a ROW agent with  DOT&PF for over 22 years.  Mr.                                                               
Kauzlarich  announced that  DOT&PF supports  HB 500.   Currently,                                                               
DOT&PF  has   the  ability  to  perform   advanced  acquisitions,                                                               
although it's  a very complicated  process.  The  department must                                                               
receive prior  approval from  the Federal  Highway Administration                                                               
(FHWA)  for advanced  acquisitions.    Therefore, the  department                                                               
often must complete the required  environmental process, which is                                                               
time consuming  and difficult.   He pointed  out that  the reason                                                               
for this constraint  is because the majority  of the department's                                                               
funding comes from the federal  government.  Due to the obstacles                                                               
that  DOT&PF  faces   in  order  to  obtain   FHWA  dollars,  Mr.                                                               
Kauzlarich recommended that the  legislature consider an advanced                                                               
acquisition fund,  which would be  used for properties  that have                                                               
been identified  as necessary for  a project,  per HB 500.   This                                                               
legislation  provides  another tool  for  the  department in  its                                                               
negotiation and  acquisition process.   Furthermore, HB  500 will                                                               
help  with the  creation  of the  decisional  document, which  is                                                               
created when  a piece  of property  needs to  be acquired  by the                                                               
condemnation process  or eminent domain process.   The decisional                                                               
document  demonstrates that  the acquired  property is  necessary                                                               
for the public good.                                                                                                            
Number 1997                                                                                                                     
MR. KAUZLARICH  turned to the  issue of eminent domain,  which he                                                               
viewed as another  tool that can be used to  acquire property for                                                               
a  project.   There  are  times  when  there  is property  to  be                                                               
acquired from someone  who doesn't want to sell.   Therefore, the                                                               
use  of eminent  domain is  necessary.   However, there  are many                                                               
occasions when eminent domain is used  in order to clear a title.                                                               
Mr.  Kauzlarich  echoed  earlier   testimony  in  regard  to  how                                                               
advanced acquisition  would have saved  the state money  with the                                                               
Parks   Highway   project.     Mr.   Kauzlarich   restated   that                                                               
department's support of HB 500.                                                                                                 
REPRESENTATIVE SCALZI restated his  earlier question in regard to                                                               
whether the price  stays the same as was established  at the time                                                               
of eminent domain  even if that project doesn't  move forward for                                                               
five to six years and is re-evaluated after ten years.                                                                          
MR.  KAUZLARICH explained  that during  any acquisition  process,                                                               
the  department would  first have  the property  appraised by  an                                                               
independent fee appraiser and a  market value is determined.  The                                                               
negotiator   speaks   with   the  property   owner   about   [the                                                               
acquisition].   The  property owner  can  present the  department                                                               
with its own  appraisal.  Mr. Kauzlarich answered  that the value                                                               
of the  property would be  determined on the date  the department                                                               
acquires the property.                                                                                                          
Number 2195                                                                                                                     
CO-CHAIR MEYER inquired  as to what HB 500  allows the department                                                               
to do that it can't already do.                                                                                                 
MR.  KAUZLARICH  acknowledged  that the  department  can  already                                                               
perform  advanced  acquisitions.    However,  HB  500  places  in                                                               
statute the  notion that advanced  acquisitions are a  good thing                                                               
for the public.                                                                                                                 
Number 2259                                                                                                                     
REPRESENTATIVE KERTTULA inquired  as to what would  happen if the                                                               
department doesn't use the [acquired] property.                                                                                 
MR. KAUZLARICH  speculated that the  property would  be available                                                               
for  sale some  time  in  the future.    In  further response  to                                                               
Representative    Kerttula,    Mr.   Kauzlarich    related    his                                                               
understanding  that if  the property  values increase  during the                                                               
time in  which the property  wasn't used, then those  funds would                                                               
return to the general fund or  to the funding source if there was                                                               
some sort of land bank.                                                                                                         
REPRESENTATIVE KERTTULA  remarked that the department  will still                                                               
have to comply  with the federal law in order  to receive federal                                                               
MR. KAUZLARICH envisioned that the  department would approach the                                                               
federal government  after the property  has been acquired  and at                                                               
the time when  the project is on track for  development.  At that                                                               
time   the   federal   government   would   be   presented   with                                                               
documentation  in order  to be  reimbursed  for the  department's                                                               
costs for the acquisition.                                                                                                      
REPRESENTATIVE  KERTTULA related  her understanding  that such  a                                                               
process would be new and isn't in place now.                                                                                    
MR. KAUZLARICH  replied yes.   Currently, there are two  types of                                                               
acquisitions  through  the  federal   government.    There  is  a                                                               
hardship acquisition  in which a  property owner knows  a project                                                               
is coming  and they  want to  sell.   However, these  cases don't                                                               
happen very often.   There is also  advanced corridor purchasing,                                                               
which was utilized on the Eklutna-Parks project.                                                                                
Number 2451                                                                                                                     
JOHN   BITNEY,  Legislative   Liaison,  Alaska   Housing  Finance                                                               
Corporation (AHFC),  related his understanding that  AHFC has the                                                               
power  of eminent  domain under  urban  renewal statutes  created                                                               
under  the  former  Alaska  State   Housing  Authority  in  1951.                                                               
However,  AHFC doesn't  have any  active  urban renewal  projects                                                               
moving forward  at this time  nor is there  any intent to  do so.                                                               
The AHFC statutes  regarding this authority are  very detailed in                                                               
regard  to  the  requirements  to work  closely  with  the  local                                                               
governing body if AHFC ever  becomes involved in urban renewal or                                                               
eminent domain.   Mr.  Bitney explained  that if  AHFC was  to be                                                               
involved in some urban renewal, it  would be a situation in which                                                               
there  is a  large disaster  for which  the corporation  would be                                                               
asked to take advantage of some federal assistance.                                                                             
CO-CHAIR MEYER referred to a  letter from the Alaska Manufactured                                                               
Housing Association,  which is included in  the committee packet.                                                               
The association opposes  HB 500 because of concern  that it could                                                               
drop the  value of their property  if someone was to  come in via                                                               
eminent  domain and  purchase property  and construct  low income                                                               
MR. BITNEY explained  that the statute refers to an  area that is                                                               
a "slum"  area and thus [an  entity] would enter such  an area in                                                               
order to  improve the property values  in the area.   The concept                                                               
of  low income  housing doesn't  necessarily lower  the value  of                                                               
surrounding property.  He informed  the committee that generally,                                                               
[AHFC] is  required to do things  at a higher level.   Mr. Bitney                                                               
pointed  to the  Cedar  Park  project as  an  example  of a  good                                                               
quality property.   The current  concept with low  income housing                                                               
is to  disburse it in  communities rather than  have concentrated                                                               
CO-CHAIR MEYER surmised then that  if AHFC were to take advantage                                                               
of  HB 500  it would  be in  order to  improve the  value of  the                                                               
surrounding property.                                                                                                           
Number 2754                                                                                                                     
REPRESENTATIVE  KERTTULA said  that she  would like  to see  more                                                               
work on this, in particular what  has happened with this in other                                                               
CO-CHAIR  MEYER asked  if Representative  Kerttula had  any legal                                                               
concerns with HB 500.                                                                                                           
REPRESENTATIVE  KERTTULA replied  yes,  and  cited concerns  with                                                               
regard to  what constitutes just  compensation and at  what point                                                               
that  is determined.    "We're  the [farthest]  west  of all  the                                                               
western  states and  traditionally  western states  are very  pro                                                               
individual property right owners oriented.   And I'd just like to                                                               
understand that  issue better before we  move it on.   It's ... a                                                               
little  ironic  ... that  we  would  do  something like  this  in                                                               
Alaska," she remarked.                                                                                                          
MR.  KRIEBER  agreed  to  work  on  HB  500  with  Representative                                                               
CO-CHAIR MEYER announced that HB 500 would be held.                                                                             
There being no  further business before the  committee, the House                                                               
Community  and Regional  Affairs Standing  Committee meeting  was                                                               
adjourned at 8:53 a.m.                                                                                                          

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