Legislature(2001 - 2002)
04/11/2002 08:12 AM House CRA
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* first hearing in first committee of referral
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+ 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 -
REFERRALS
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
AHFC.
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
issue.
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
rises.
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
domain.
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
utilized.
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
funds.
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
housing.
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
complexes.
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
states.
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
Kerttula.
CO-CHAIR MEYER announced that HB 500 would be held.
ADJOURNMENT
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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