Legislature(1995 - 1996)
03/08/1996 08:07 AM House RES
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE RESOURCES STANDING COMMITTEE
March 8, 1996
8:07 a.m.
MEMBERS PRESENT
Representative Joe Green, Co-Chairman
Representative William K. "Bill" Williams, Co-Chairman
Representative Scott Ogan, Vice Chairman
Representative Alan Austerman
Representative John Davies
Representative Pete Kott
MEMBERS ABSENT
Representative Ramona Barnes
Representative Don Long
Representative Irene Nicholia
COMMITTEE CALENDAR
CS FOR SENATE BILL NO. 162(FIN)
"An Act relating to land used for agricultural purposes and to
state land classified for agricultural purposes or subject to the
restriction of use for agricultural purposes only; and annulling
certain program regulations of the Department of Natural Resources
that are inconsistent with the amendments made by this Act."
- PASSED CSSB 162(FIN) OUT OF COMMITTEE
HOUSE BILL 394
"An Act authorizing a program of natural gas and coal bed methane
development licensing and leasing; relating to regulation of
certain natural gas exploration facilities and coal bed methane
exploration facilities for purposes of preparation of discharge
prevention and contingency plans and compliance with financial
responsibility requirements; amending the duties of the Alaska Oil
and Gas Conservation Commission as they relate to natural gas
exploration activities and coal bed methane exploration activities;
and amending the exemption from obtaining a waste disposal permit
for disposal of waste produced from coal bed methane drilling."
- HEARD AND HELD
*HOUSE BILL 511
"An Act relating to deposits into the fish and game fund."
- SCHEDULED BUT NOT HEARD
(* First Public Hearing)
PREVIOUS ACTION
BILL: SB 162
SHORT TITLE: AGRICULTURAL LAND
SPONSOR(S): SENATOR(S) GREEN, Torgerson, Lincoln; REPRESENTATIVE(S)
Austerman
JRN-DATE JRN-PG ACTION
04/20/95 1108 (S) READ THE FIRST TIME - REFERRAL(S)
04/20/95 1108 (S) RES, FIN
10/24/95 (S) RES AT 2:00 PM MAT-SU LIO
10/24/95 (S) MINUTE(RES)
01/17/96 (S) RES AT 3:30 PM BUTROVICH ROOM 205
01/17/96 (S) MINUTE(RES)
01/22/96 (S) RES AT 3:30 PM BUTROVICH ROOM 205
01/24/96 2212 (S) RES RPT CS 5DP 1NR 1AM SAME TITLE
01/24/96 2212 (S) FISCAL NOTE TO SB (DNR-#1)
01/30/96 2250 (S) FISCAL NOTE TO SB & CS (DNR-#2)
01/30/96 2250 (S) FISCAL NOTE TO CS (DNR-#3)
01/24/96 2214 (S) COSPONSOR(S): TORGERSON
02/01/96 (S) FIN AT 9:00 AM SENATE FINANCE 532
02/01/96 (S) MINUTE(FIN)
02/07/96 (S) FIN AT 9:00 AM SENATE FINANCE 532
02/09/96 (S) FIN AT 9:00 AM SENATE FINANCE 532
02/09/96 (S) MINUTE(FIN)
02/14/96 2423 (S) FIN RPT CS 3DP 3NR SAME TITLE
02/14/96 2423 (S) FISCAL NOTES TO CS (DNR-2)
02/19/96 (S) RLS AT 11:35 AM FAHRENKAMP RM 203
02/19/96 (S) MINUTE(RLS)
02/21/96 2489 (S) RULES TO CALENDAR 2/21/96
02/21/96 2493 (S) READ THE SECOND TIME
02/21/96 2493 (S) FIN CS ADOPTED Y18 N- E1 A1
02/21/96 2494 (S) ADVANCE TO 3RD RDG FLD Y11 N8 X1
02/21/96 2494 (S) THIRD READING 2/23 CALENDAR
02/23/96 2517 (S) READ THE THIRD TIME CSSB 162(FIN)
02/23/96 2517 (S) PASSED Y16 N2 E2
02/23/96 2518 (S) DUNCAN NOTICE OF RECONSIDERATION
02/26/96 2540 (S) RECON TAKEN UP - IN THIRD READING
02/26/96 2541 (S) PASSED ON RECONSIDERATION Y16 N4
02/26/96 2540 (S) COSPONSOR(S): LINCOLN
02/26/96 2550 (S) TRANSMITTED TO (H)
02/28/96 2897 (H) READ THE FIRST TIME - REFERRAL(S)
02/28/96 2897 (H) RESOURCES, FINANCE
03/08/96 (H) RES AT 8:00 AM CAPITOL 124
BILL: HB 394
SHORT TITLE: GAS & COAL METHANE LICENSES & LEASES
SPONSOR(S): REPRESENTATIVE(S) OGAN, ROKEBERG, James, Kohring
JRN-DATE JRN-PG ACTION
01/05/96 2369 (H) PREFILE RELEASED
01/08/96 2370 (H) READ THE FIRST TIME - REFERRAL(S)
01/08/96 2370 (H) O&G, RESOURCES, FINANCE
02/08/96 (H) O&G AT 10:00 AM CAPITOL 124
02/08/96 (H) MINUTE(O&G)
02/13/96 (H) O&G AT 10:00 AM CAPITOL 124
02/13/96 (H) MINUTE(O&G)
02/21/96 2846 (H) COSPONSOR(S): JAMES
02/27/96 (H) O&G AT 10:00 AM CAPITOL 124
02/27/96 (H) MINUTE(O&G)
02/28/96 2909 (H) O&G RPT CS(O&G) NT 2DP 4NR 1AM
02/28/96 2910 (H) DP: ROKEBERG, OGAN
02/28/96 2910 (H) NR: BRICE, B.DAVIS, G.DAVIS, WILLIAMS
02/28/96 2910 (H) AM: FINKELSTEIN
02/28/96 2910 (H) FISCAL NOTE (DNR)
02/28/96 2910 (H) ZERO FISCAL NOTE (DEC)
02/29/96 2972 (H) COSPONSOR(S): KOHRING
03/08/96 (H) RES AT 8:00 AM CAPITOL 124
WITNESS REGISTER
SENATOR LYDA GREEN
Alaska State Legislature
Capitol Building, Room 423
Juneau, AK 99801
Telephone: (907) 465-3805
POSITION STATEMENT: Sponsor of SB 162
BRETT HUBER, Legislative Assistant
to Senator Lyda Green
Alaska State Legislature
Capitol Building, Room 423
Juneau, AK 99801
Telephone: (907) 465-3805
POSITION STATEMENT: Available for questions on SB 162.
RON SWANSON, Deputy Director
Division of Land
Department of Natural Resources
3601 C Street, Suite 1122
Anchorage, AK 99503-5947
Telephone: (907) 269-8503
POSITION STATEMENT: Answered questions on SB 162.
MICHAEL SWAN
Alaska Soil & Water Conservation Board
P. O. Box 987
Soldotna, AK 99669
Telephone: (907) 262-1014
POSITION STATEMENT: Supports SB 162.
RAY DEVILBIS
HC 04 Box 9190
Palmer, AK 99645
POSITION STATEMENT: Testified on SB 162.
BILL WARD
Ward Farms
P. O. Box 350
Soldotna, AK 99669
Telephone: (907) 262-5135
POSITION STATEMENT: Supports SB 162.
PETE ROBERTS
Fox R. Cattleman
P. O. Box 1134
Homer, AK 99603
Telephone: (907) 235-4113
POSITION STATEMENT: Supports SB 162.
ED BOSTROM
P. O. Box 56822
North Pole, AK 99705
Telephone: (907) 488-3940
POSITION STATEMENT: Supports SB 162.
DAVE SCHMITZ
P. O. Box 57268
North Pole, AK 99705
Telephone: (907) 488-4984
POSITION STATEMENT: Supports SB 162.
JIM ELLISON
P. O. Box 55590
North Pole, AK 99705
Telephone: (907) 488-1970
POSITION STATEMENT: Supports SB 162.
ANNE CRANE
4790 A University Drive
Anchorage, AK 99508
Telephone: (907) 563-0224
POSITION STATEMENT: Testified on SB 162.
ALLAN KLATT
411 West 123 Avenue
Anchorage, AK 99515
Telephone: (907) 522-5528
POSITION STATEMENT: Supports SB 162.
MIKE CROUCH
HC 62 Box 5780
Delta Junction, AK 99737
Telephone: (907) 895-4329
POSITION STATEMENT: Supports SB 162.
JON DUFENDACH
P. O. Box 309
Delta Junction, AK 99737
Telephone: (907) 895-4309
POSITION STATEMENT: Supports SB 162.
BILL SPENCER
Nenana, AK 99760
Telephone: (907) 832-5280
POSITION STATEMENT: Supports SB 162.
SCOTT SCHULTZ
Schultz Farm, Inc.
HC 62 Box 5440
Delta Junction, AK 99737
Telephone: (907) 895-4865
POSITION STATEMENT: Supports SB 162.
SARA HANNAN, Executive Director
Alaska Environmental Lobby
419 6th Street
Juneau, AK 99801
Telephone: (907) 463-3366
POSITION STATEMENT: Testified on SB 162.
WILLIAM H. MONTANO
597 Kay Street
Fairbanks, AK 99709
Telephone: (907) 479-4418
POSITION STATEMENT: Supports SB 162.
ACTION NARRATIVE
TAPE 96-28, SIDE A
Number 000
CO-CHAIRMAN JOE GREEN called the House Resources Committee meeting
to order at 8:07 a.m. Members present at the call to order were
Representatives Green, Williams, Ogan, Austerman and Davies.
Representative Kott arrived late. Representatives Barnes, Long and
Nicholia were absent.
CO-CHAIRMAN GREEN announced that SB 162 and HB 394 would be heard,
but HB 511 was postponed. He invited Senator Lyda Green to
testify.
SB 162 - AGRICULTURAL LAND
Number 100
The first order of business was CSSB 162(FIN) "An Act relating to
land used for agricultural purposes and to state land classified
for agricultural purposes or subject to the restriction of use for
agricultural purposes only; and annulling certain program
regulations of the Department of Natural Resources that are
inconsistent with the amendments made by this Act."
SENATOR LYDA GREEN, Sponsor of the measure, recounted that
agriculture parcel owners and potential agriculture parcel owners
experiencing or anticipating ownership problems contacted her and
requested changes in the law. SB 162 was introduced to address
those concerns and to assist in encouraging agriculture production,
thereby assisting the state, as agriculture consumers, to take part
in an industry that is in excess of $30,000,000 in Alaska.
SENATOR GREEN stated that the primary intent of SB 162 provides for
the conveyance of fee simple title to agriculture lands subject to
a restrictive covenant running with the land, limiting the use to
agricultural purposes.
SENATOR GREEN said other provisions of the bill provide greater
autonomy for the farmer or the agriculture parcel owner ensuring
that the state's interests are still protected. Under this bill,
agricultural owners and operators have greater autonomy and ability
to make business decisions based on their particular needs and
circumstances.
SENATOR GREEN advised that SB 162 has gained great support among
agriculture industry supporters across the state. It is good for
Alaska's producers as well as consumers.
CO-CHAIRMAN GREEN noted the arrival of Representative Pete Kott and
mentioned that the meeting was on statewide teleconference.
Number 324
CO-CHAIRMAN GREEN asked Senator Green to explain fee simple, is it
inclusive of subsurface.
SENATOR GREEN responded that it is not.
CO-CHAIRMAN GREEN asked if the bill included gravel or water.
SENATOR GREEN said gravel was included.
Number 354
REPRESENTATIVE JOHN DAVIES clarified that gravel was included but
only if it was directly used for agricultural purposes such as
building roads.
Number 413
REPRESENTATIVE DON LONG wondered if the gravel was considered a
mineral resource.
Number 453
REPRESENTATIVE DAVIES advised that he had several amendments and
would hold them until after testimony.
Number 480
CO-CHAIRMAN BILL WILLIAMS asked explanation of certain restrictive
covenants, "If you have the land, would you immediately be able to
borrow money on it? What happens to the land after that?
SENATOR GREEN said one of the impediments to an agricultural land
holder or producer who does not have other assets to collateralize
is the inability to borrow money for development based on using
that land as collateral because lending institutions will not do
that if it is agriculture rights only.
SENATOR GREEN stated that there are private vendors who would be
delighted to have access to this market and would likely have
competitive rates to offer farmers and agricultural producers who
are in need of money.
SENATOR GREEN advised that there are federal reinsurance or
"reborrowing" monies that are offered at a competitive rates.
Number 603
CO-CHAIRMAN WILLIAMS asked the procedure should the borrower be
unable to repay the money.
SENATOR GREEN said that is between the landowner and the lender.
Number 649
REPRESENTATIVE DAVIES understood that if that situation arose and
the bank foreclosed, the agricultural covenant would follow with
the land. The bank would have fee simple title but the covenant
would still be on the land so the agricultural use of the land is
protected.
Number 679
CO-CHAIRMAN WILLIAMS expressed concern that after borrowing money
on a piece of state acquired land, the money was lost and the state
loses title to the property.
SENATOR GREEN clarified that the state sold the land to these
agricultural parcel owners, but it is agricultural rights only and
some have explained it as "lifetime tenant farmer."
Number 735
CO-CHAIRMAN GREEN added that was probably the lending institution's
concern that the land would revert to the state as opposed to
having fee simple and they have a commodity to recover their loss.
REPRESENTATIVE ALAN AUSTERMAN inquired whether a farmer having
title to the land, has a better value than just having agricultural
rights only, subject to the covenant.
CO-CHAIRMAN GREEN responded that should the farmer acquire fee
simple title to the land, it is still restricted to agricultural
uses only and subject to the covenant meaning that it is not free
to subdivide and turn into a parking lot, for example.
Number 821
REPRESENTATIVE DAVIES agreed and stated that the value of the land
would rise up to some intermediate value between agricultural
rights only and pure fee simple ownership. He wondered then if the
land would be subject to increased property tax and, if in the
process of acquiring this increase in value, subject to IRS taxes.
Number 861
SENATOR GREEN said the utilization of the land remains unchanged,
it is still agricultural covenant land, and an increase in value is
not anticipated. She elaborated on the tracking of various sizes
of agricultural parcels.
Number 941
BRETT HUBER, Legislative Staff to Senator Lyda Green, said the
question of the tax assessed or the IRS assessed value was based on
the utilization of the land not the form of title. The category is
agricultural utilization and the utilization does not change under
these provisions. It does change from rights only to a covenant
situation but the utilization remains the same.
Number 1026
REPRESENTATIVE DAVIES theorized that in a free market, the value of
the land rises and the ability to subdivide and sell off a portion
makes it a more desirable commodity. More desirable commodities
generally increase in price, and if the price increases, it seems
there would be some tax liability associated.
Number 1050
CO-CHAIRMAN GREEN agreed stating that if the evaluation does go up
the land owner would be subject to that taxation.
SENATOR GREEN said, "This is an applicant driven process and if you
are a parcel owner who did not desire to avail yourself of the
change in title, you would not have to."
Number 1086
REPRESENTATIVE ALAN AUSTERMAN expressed his support of SB 162 but
inquired about the rationale of the state giving the land owner the
benefit of the land and a banking institution willing to lend money
on it, but not willing to lend money on merely the agricultural
ability of the land. He wondered what that perceived value is by
the bank, to lay its money on the line that it did not have before.
Number 1174
CO-CHAIRMAN GREEN and Representative Austerman debated several
analogies and hypothetical situations involving banking
institutions willingness to lend.
Number 1220
REPRESENTATIVE SCOTT OGAN pointed out that the state is giving
someone the opportunity to make a living and that is a significant
difference than a recreational situation.
CO-CHAIRMAN GREEN asked Ron Swanson to respond.
Number 1246
RON SWANSON, Deputy Director, Division of Land, Department of
Natural Resources, explained that currently the department does
convey the land in fee simple but subject to an agricultural
covenant that says the state may enter the land and recoup it if it
is not being used for agricultural purposes.
MR. SWANSON said, under this bill, conveying fee simple with a
covenant means going to court instead of the administrative process
and the state will not get the land back. The department can only
afford the agricultural covenant meaning that a person can keep
doing what they are doing, and without the agricultural purpose,
the burden of proof is on the state.
MR. SWANSON said the advantage of what the bill's sponsor is trying
to do is to be able to borrow money from a different source where
the person that retains title to the land does not have to worry
about the state coming in and taking it away.
Number 1313
MR. HUBER confirmed with Mr. Swanson that the state basically ends
up in court anyway. He said the reversionary clause of the current
title transfer is the major concern of lending institutions not the
agricultural utilization or the agricultural process of the farm
but the reversionary clause itself.
MR. SWANSON responded that is correct, "Most of the time you do end
up going to court under the existing system because the person has
the right to appeal an administrative process and go to court. The
difference is that the burden of proof is on the applicant instead
of the state which would happen under this case."
Number 1347
MR. HUBER explained several areas of judiciary action and said the
court will issue an immediate injunctive relief to stop whatever
action is taking place on the land outside of the covenant.
SENATOR GREEN elaborated that there are greater opportunities for
a neighbor, borough representative or a city official, and nothing
to prohibit the state from doing this as well, to say that land is
not being utilized as agricultural land. She said SB 162 takes the
responsibility out of the sole hands of the commissioner of the
Department of Natural Resources.
Number 1420
MR. HUBER indicated to Chairman Green that today's testimony would
reflect that agricultural rights land owners contend that they have
bought and are working the land, yet are not afforded due process.
Number 1454
REPRESENTATIVE DAVIES asked Ron Swanson to address earlier question
about the increase in value of the land and whether the land is
being used according to the covenant. Specifically, the management
plans and how that is affected by this bill.
MR. SWANSON replied that the change in the type of deed the
department would issue would make a negligible increase in the
appraisal. He said the advantage definitely goes to the land
holder and his ability to borrow money.
MR. SWANSON stated that the department only uses management plans
when they prequalify bidders which the department has not done for
many years.
Number 1520
SENATOR GREEN responded to Chairman Green that the issuances of
agricultural land is applicant driven.
Number 1600
MR. HUBER repeated Mr. Swanson's testimony that the value is very
negligible. "The sponsor began this bill with a broader subdivision
allowance and looked at two ways of addressing the situation, (1)
is there increased value; and (2) how would the state be paid for
that increased value. Senator Green took the route through the
committee process on the Senate side with limiting the subdivision
under four parcels and a one-time only subdivision."
MR. HUBER said the big concern with increased valuation is that a
thousand acre tract turned into scores of 40 acre tracts means more
money will be made on that than the change in title.
Number 1665
SENATOR GREEN theorized subdividing a parcel requiring departmental
approval and the future possibility of surveying and subdividing at
the expense of the owner, but the only thing that can be done with
that subdivided parcel is a crop or grazing. There can be no
facilities and no structures.
SENATOR GREEN said there are cases where people have bought these
subdivided pieces and now cannot build structures or live there or
be resident farmers.
Number 1749
REPRESENTATIVE AUSTERMAN wanted to know who classifies the land as
agricultural, the state? The municipality?
MR. SWANSON responded that the state classifies the land for
agricultural purposes and currently there are 550,000 acres of
classified agricultural land around the state.
REPRESENTATIVE AUSTERMAN asked if there is a revert clause that if
land is lying dormant, not being used as agricultural land, that it
reverts back to the state for reclassification.
MR. SWANSON replied that there is a clause in the contract that
says if the land is not being used for the purposes designated, it
can come back to the state. Once the land has been conveyed to the
land owner, it is out of the state's hands.
Number 1800
MR. HUBER addressed Representative Austerman that the bill still
provides that the department and the commissioner establish farm
development plans and set benchmarks through the regulation
process.
Number 1899
SENATOR GREEN addressed Chairman Green that there is always the
opportunity to retrieve the land through non-utilization of the
land as agricultural land. It is the same standard that is held
now. She said the question is how many inspections are there and
how many parcel owners are having their land taken back for non-
utilization as agricultural rights land.
Number 1947
MR. SWANSON replied there is no difference between before or after.
The covenant states that the land can be used for agricultural land
only. If a community wanted to expand on that area they have to
condemn it and buy the additional rights to be able to use it for
other than agricultural purposes.
MR. SWANSON responded to the Chair that the community would pay the
state because the state is the owner of the other interests.
CO-CHAIRMAN GREEN understood that if the land is paid off and the
surface rights are vested with the individual, even though the
subsurface rights are still with the state, we are talking here
about a rezoning on the surface only.
MR. SWANSON agreed with Chairman Green's statement.
CO-CHAIRMAN GREEN wanted to know who pays in an ownership situation
of fee land subject to agricultural restrictions.
Number 1993
MR. SWANSON explained the land use planning process end result
being land reclassification. At that point, if somebody buys the
land, the agricultural rights would be held by the land owner and
all other rights would be purchased from the state.
Number 2009
MR. HUBER said what we have is a patent transfer between the state
and individual landowners that says the surface rights of the state
in fee simple is transferred. He said the major changes in this
bill is how the state enforces that: SB 162 makes it by civil
proceeding instead of administrative action and removes the
condition subsequent, or the reversionary clause, in the title.
Other than that there is no great change in what is currently
transferred, it is just transferred in a different way by a
covenant instead of a condition subsequent under the current title.
Number 2116
REPRESENTATIVE DON LONG understood that the bill makes a multiple
use land transfer of agricultural land and once the owner has
possession it is up to the owner to determine the use of that land
whether it be agricultural, recreational, mining or transportation.
SENATOR GREEN said the bill is agricultural only, it does spell out
agricultural related businesses but it does not expand to anything
else. It is still agricultural covenant land and the use and
utilization has not changed.
CO-CHAIRMAN GREEN discussed instances with Mr. Swanson concerning
ownership of agricultural land and state subsurface rights and who
gets compensation for damage or loss of use of the surface.
Number 2224
REPRESENTATIVE DAVIES comprehended the motivation of the bill
saying he had learned that banks do not want to loan money on the
agricultural rights situation that exists now. He had a hard time
understanding that if so little is changed by what we are doing
here and SB 162 only eliminates the reversionary clause, why is it
that the banks have so much heartburn.
REPRESENTATIVE DAVIES asked why banks would not loan money if they
ended up with, in a developed situation, the agricultural rights to
the land. Why can't they sell the rights to another person who
wants to farm the land.
Number 2304
MR. HUBER disclosed that financial institutions, as well as real
estate attorneys and title companies, have expressed that the
biggest problem with the agricultural rights only transfer is the
cloudy title. He said no title insurance company will come in and
insure this because of the title and until a determination is made
by the court, nobody is sure where that title is going to be. It
is such a cloudy title that no one will issue title insurance on
it.
MR. HUBER said SB 162 brings the issue to a specific one entity
title and the title insurance companies do not have a problem with
coming in and doing insurance. If there is a change in value, then
it is a very minimal change.
REPRESENTATIVE DAVIES debated that Mr. Swanson had testified that
the state has title to all other rights on the land so the state
still has multiple ownership of the land. The person who gets this
new fee simple title with the covenant on it, only has agricultural
rights on the land and that individual cannot do anything else with
the land. The subsurface rights are still with the state.
Number 2424
MR. SWANSON explained that currently an individual had difficulty
borrowing from an outside institution, meaning not the state,
because the state can take the land back and the bank is stuck with
the third party holding the money and has no way to recoup the
loss.
MR. SWANSON further explained that under this bill's process, the
individual would borrow money, the state could only go to court and
get the agricultural issues protected. If the bank thought the land
was not being used for agricultural purposes they could foreclose
on it and then own that agricultural interest themselves.
Basically, they have something to attach as collateral.
Number 2453
REPRESENTATIVE DAVIES asked why the bank could not foreclose and
end up with the agricultural rights now.
MR. SWANSON responded that it goes to the state.
SENATOR GREEN reaffirmed that the reversionary reverts to the
state.
Number 2466
REPRESENTATIVE AUSTERMAN expressed interest in understanding the
bill and conjectured about a hypothetical situation.....(change
tape)
TAPE 96-28, SIDE B
Number 000
REPRESENTATIVE AUSTERMAN was concerned about the individual who
speculates on a piece of property and then holds it because he was
unsuccessful as a farmer and, years later, finds that land has
substantial value.
CO-CHAIRMAN GREEN asked Mr. Swanson whether the transfer of title
allows that land not utilized for agriculture to remain idle or
does the covenant express that it must be used for agriculture or
it reverts.
Number 110
MR. SWANSON said the land can only be used for agricultural
purposes but it can lay dormant. He said the department is not
considering a person's economic conditions, the department's only
concern is that the land be used for agricultural purposes.
Number 139
MR. HUBER wondered if Mr. Swanson would elaborate on the problems
that were encountered when Pt. McKenzie and Delta were put out with
performance criteria.
CO-CHAIRMAN GREEN announced that a plethora of people were waiting
to testify on the teleconference network.
Number 174
REPRESENTATIVE OGAN voiced his support of SB 162 and stated his
opinion that agriculture has had a bad rap through state controlled
programs in the past. He said the Agriculture Revolving Loan Fund
funding is threatened and may need to be recapitalized in the near
future. That fund capitalizes the farmers and the state has a
tremendous amount of land coming available because of the mental
health trust land resolution and emphasized that land become
available in fee simple. This bill is a major shift in policy and
provides less government control. He said the state has a track
record of micromanagement, which he felt, caused farmers to fail.
He said that SB 162 will help to bring Alaskan farming into a free
enterprise market driven business that will allow them to prosper.
Number 275
MICHAEL SWAN, President, Alaska Soil & Water Conservation District,
and Chairman, Kenai Soil & Water Conservation District, testified
in support of SB 162 and urged passage by the committee.
Number 300
RAY DEVILBIS, Mat-Su farmer, said he agreed with Representative
Davies assertion that a value is being given away. He recommended
that fee simple title not be retroactive but set aside for the
future. He referred to Senator Green's statement about fee simple
title being applicant driven and wanted to know how this will work
in future.
Number 373
BILL WARD representing the Alaska Farm Bureau, Board of Directors,
read a resolution from the Bureau supporting SB 162 and encouraging
passage of the legislation.
Number 480
PETE ROBERTS, Fox R. Cattleman Ranch, testified that he has an
agricultural rights parcel in Homer. He related past participation
on the Alaska Soil and Water Conservation Board and his involvement
in developing fee simple title 12 years ago because of the same
issue with the banks. The issue was right of reentry, the
revisionary clause, meaning bureaucrats in the state wanted to have
the first right to reenter if they did not like what the farmer was
doing. He encouraged passage of the bill and suggested the bill be
amended to not let the state micromanage. He said, "A farmer
cannot be in the tractor repair business, his wife cannot be in the
weaving business, they cannot run a bed and breakfast and they
cannot be in the wilderness ranch/lodge business." He said parcels
would lend themselves to an economic agricultural unit if the
people could also have guests on the place. He emphasized that the
requirements need to be changed.
Number 632
CO-CHAIRMAN GREEN confirmed with Ron Swanson that a tractor repair
service would be a permissible business on agricultural land but a
bed and breakfast would not.
Number 710
REPRESENTATIVE OGAN expressed support for farmers to have the means
of making their farms economically viable. It is a very realistic
concern.
Number 763
MR. HUBER stated that the language in the bill provides for a
business as long as it is not inconsistent with the primary intent
of agricultural use. He noted that 90 percent of the farms in the
lower 48 do not survive on sole farm income.
Number 800
ED BOSTROM testified in support of SB 162 stating that he is owner
of a 240 acre agricultural parcel in the Eielson agricultural
project which is 40 tracts totalling 3,500 acres twenty miles south
of Fairbanks. He related personal background information of
developing his agricultural property emphasizing that the state's
regulations have been detrimental to the agricultural economic
development.
Number 1041
REPRESENTATIVE DAVIES said that SB 162 addresses agricultural
purposes but does not reference horticulture and stated that he was
considering an amendment to add horticulture.
CO-CHAIRMAN GREEN announced to the teleconference sites that the
committee would not have time to hear HB 394.
Number 1100
DAVE SCHMITZ testified in support of SB 162 stating that he is a
new farmer recently purchasing 160 acre farm on Eielson Farm Road
near Fairbanks. Present regulations are restricting his ability to
construct additional permanent structures on the farm, hamstringing
his ability to best utilize the farm's potential. Senate Bill 162
will stimulate agricultural and economic development.
Number 1202
JIM ELLISON, Owner, Farm Alaska, stated that his business is an
equipment repair shop slated toward agriculture equipment. He
pointed out that one American farmer feeds 128 people because the
farmer owns the land and can control the financial concern. Senate
Bill 162, "it's about time."
Number 1311
MR. SWANSON clarified that Section 8 fixes the interest rate at no
higher than 9.5 percent which is the only land type program with
that cap. He wanted to make it clear that the department will not
do any refinancing for existing contracts.
Number 1367
MR. SWANSON referenced Section 9, by current regulation you can
subdivide into 40 acre parcels but you can not do any construction
with this bill you would be able to do some additional
construction. There is possibly some increase in value in that but
there are only four subdivisions and I think pretty minimal.
Number 1407
REPRESENTATIVE DAVIES presumed that Mr. Swanson did not have a
problem with the deletion of the prequalification language.
MR. SWANSON said there was not a problem, there have been no
prequalifications since Point McKenzie went to court. The court
found that prequalifications were illegal and the statute was
changed to allow prequalifications but it has not been done since.
Number 1440
REPRESENTATIVE DAVIES asked if the Division of Land had any
problems with the change in survey requirements.
MR. SWANSON said the language was changed to may, the commissioner
still has the authority to require a survey where necessary, it is
not a mandatory issue.
Number 1459
REPRESENTATIVE OGAN asked Mr. Swanson to address the size, or the
maximum acreage, of the current agricultural parcels.
MR. SWANSON responded there are, currently, 150 parcels of zero to
100 acres; 100 parcels at 100 - 160 acres; 200 parcels at 160 - 640
acres; and 54 parcels at 640 acres or more.
Number 1502
REPRESENTATIVE OGAN inferred that, a 640 acre parcel subdivided
into a total of four parcels, the smallest that one of those
subdivided parcels could be is 40 acres.
Number 1535
ANNE CRANE, Trapper Creek, testified in support of SB 162, "It is
a step in the right direction, but it does not solve my problem."
She stated that her parcel is classified as "Class VI Soil," it
does not meet the statutory definition of agricultural land which
is 60 percent Class II and III soil. She explained that her land
is essentially useless and requested that the legislature provide
some remedy for people who do not have agricultural soil.
CO-CHAIRMAN GREEN informed Ms. Crane that her recommended solution
did not address this legislation.
Number 1758
REPRESENTATIVE DAVIES asked Mr. Swanson what kind of remedies might
be available to Ms. Crane. He felt a solution for land which is
clearly not suitable for agricultural should be reclassified so it
could be disposed of some other way.
Number 1781
MR. SWANSON responded that solution is a possibility that the land
could be reclassified and those additional (indisc.) parts be
purchased by the landowner.
Number 1811
ALAN KLATT testified in support of SB 162 explaining that he is an
agricultural parcel owner at Moose Creek.
Number 1920
MIKE CROUCH, Alaskan resident since 1977, farming in the Copper
River Valley, the Mat-Su Valley and Delta stated that the biggest
benefit of SB 162, which he supports, is the ability to divert the
five-year operation and be more like the farming operations in the
lower 48. He said, "When you go through a farming area in the
lower 48 there all kinds of agricultural related businesses that
help support that community and diversify the income base."
Number 1999
JON DUFENDACH, Delta farmer since 1967, testified in support of SB
162. He said this legislation will make farming more economically
viable, and stated he felt that the banking institutions would be
more sensible to loans. He said landowners rights will be more
flexible without destroying the intent and he appreciates the due
process the bill brings.
Number 2146
BILL SPENCER testified that he had met his neighbors, there are 18
agricultural holders in the Nenana area, and they unanimously ask
the committee to support and pass SB 162.
Number 2220
SCOTT SCHULTZ, Delta Junction resident since 1982, testified in
support of SB 162. He explained that his family is more interested
in combining agricultural parcels than subdividing them. He
encouraged the committee to pass the bill as soon as possible....
(END TAPE).
TAPE 96-29, SIDE A
Number 000
SCOTT MILLER, President, Delta Junction Farm Bureau, informed that
the organization passed a resolution unanimously supporting SB 162.
He related that at the February board meeting of the Agricultural
Revolving Loan Fund, $600,000 was approved in loans for Delta
alone. He said, "If anybody thinks that agriculture is not
happening in Alaska, particularly, in Delta, then they are not
paying attention." He also related that agriculture development
was voted the most popular economic development idea for Delta's
long term economic stability.
Number 165
SARA HANNAN, Executive Director, Alaska Environmental Lobby, said
that the Lobby does not necessarily support the bill but neither do
they oppose it. She reported that Senator Green's office had
addressed many initial concerns of the AEL. Primarily, the AEL
constituency was concerned that agricultural land would be turned
into strip malls, such as the lower 48. As communities expanded,
green space and productive economic liability of farms disappeared
as there were much higher values to use them as real estate
development and second homes.
MS. HANNAN felt that Senator Green's bill is fairly narrow in scope
and meets a real concern of economic farmers in Alaska. The AEL
wants to see farmers in Alaska farming on land, but in the
deliberations of this morning, the legislature is raising questions
that should be addressed for future land use policies that are
outside the scope of this bill.
Number 240
MS. HANNAN said two concerns were that the land would stay in
agricultural development and that it not be subdivided into small
enough parcels that someone would be encouraged to subdivide to
make a profit off their land.
MS. HANNAN encouraged the committee to think about some problems
the state has had in land use development where the state has given
people specific rights to mine, or to develop a shell fish farm and
they received a lease hold from the state. "People do not have
access to fee simple land so what we have found is that within the
Kenai Peninsula Borough the people were getting a lease to mine but
using it as a primary residence. Ongoing litigation has erupted
and evictions have taken place, it put policies in conflict with
users. Neighbors in conflict with neighbors, when people get a
leasehold, a right to do something on the land and they are paying
for a very narrow scope of use, but their neighbors have paid a
higher value for more use, they have built a home and they want to
live there. You have heard today from active farmers, those people
are in a tough economic situation and this bill remedies the
conflict that has arisen by them not having fee simple title. You
did not hear, and you will not hear, from someone who is a
speculator who bought agricultural rights land and is not working
it. If the land is laying dormant and you were a speculator, you
probably had the cash and not looking for a bank to help you with
your ongoing economic interests. You are waiting for the future
when the land goes up."
Number 434
MS. HANNAN asked the committee to think about looking at those
agricultural lands in the future. She said, "What we want in
Alaska is some economic stimulus from land that we put out under
agreement to provide economic stimulus. Keep the bill narrowly
crafted and keep looking at crafting some other language to address
policy questions raised today."
Number 486
REPRESENTATIVE DAVIES referred to the second covenant, on page 6,
which specifies that not more than four divisions, not less than 40
acres each, and asked Ms. Hannan if the AEL is comfortable with
that language.
MS. HANNAN responded that the AEL is comfortable with that section.
Number 573
WILLIAM H. MONTANO, Delta parcel owner, referred to page 3, line 29
"(7) waive, postpone or otherwise modify the development
requirements of a contract for the sale of agricultural land, if"
and page 4, lines 1 and 2. He said, "I have been discussing this
with the Department of Natural Resources for the past ten years and
we are being held to standards that were set up, they have taken
some of these parcels away from people and given them much more
(indisc.) clearing schedules." He said there needs to be some
flexibility in dealing with these agricultural parcels to deal with
the changes in times.
Number 700
CO-CHAIRMAN GREEN closed teleconferenced testimony and stated that
Representative Davies had several amendments.
Number 712
REPRESENTATIVE DAVIES stated that some concerns had been alleviated
by testimony and withdrew two amendments. He moved Amendment No. 1.
Page 7, line 10: Following "are" Delete "not in violation of the
minimum parcel size set out in (a)(2) of this section."
Insert "consistent with the covenants described in (a)."
Number 750
REPRESENTATIVE OGAN objected.
REPRESENTATIVE DAVIES said his concern was subsection (C) "the
landowner's right to subdivide and sell the land," and the only
constraint is the covenant in (a)(2). He felt the landowners right
to subdivide and/or sell the land should be subject to both of the
covenants in subsection (a): the agricultural rights and the parcel
size. The amendment does not change the intent, but clarifies that
when the landowner has a right to subdivide and sell, it is subject
to both of the covenants.
Number 857
MR. HUBER replied that the covenant section limits the parcel
subdivision. "The intent of Section 11, subsection 3, the
commissioner may not limit. So, we are back to making this not a
decision of the Administration on the subdivision which it
currently is. You have to go through the process of applying to
the division and at the discretion of the commissioner whether you
can or cannot subdivide. What we are saying is those subdivision
rights will be inherent with the agricultural covenant. It
references the agricultural covenant but the agricultural covenant
itself is the one that allows the subdivision down to 40 acres, no
more than four parcels. The reference in Section 11, back to
Section 9, basically says that it is not the commissioner's call,
it is a call of the covenant and then those subdivision rights will
be part of the covenants that will conveyed with the title
document." "There is a question of who gets to subdivide and that
is all done through the sale. If I have the initial land and I
want to sell half of my 640, 320 acres, to somebody else then it
will be part of sale whether I retain the rest of the subdivision
rights or the subdivision rights go from there. So, we are just
basically trying to take it out of a call of the commissioner and
putting it in with the covenant and saying that the commissioner
may not limit what is described in the covenants."
Number 949
REPRESENTATIVE DAVIES said, "Surely, the commissioner cannot permit
something to occur that is in violation of the basic, underlying,
agricultural rights covenant." He expressed concern that the state
would be placed in a position for potential litigation because a
portion of the statute appears to allow the commissioner make the
decision.
MR. HUBER countered that the issue was clearly covered in the
covenant itself. The covenant is the instrument that will define
what subdivisions are allowable and how it is allowable.
Number 1006
CO-CHAIRMAN GREEN clarified whether Mr. Huber felt Representative
Davies amendment conflicted with the intent.
MR. HUBER said he did not feel the amendment would change the
intent but believed that it is clear and defined in the covenant.
CO-CHAIRMAN GREEN asked for a roll call vote.
Number 1057
Representatives Davies and Long voted in favor of Amendment Number
1. Representatives Austerman, Kott, Ogan, Williams and Green voted
against the amendment. The amendment failed.
Number 1093
REPRESENTATIVE DAVIES moved that on page 7, line 16, following
"trees." Insert "flowering plants."
REPRESENTATIVE KOTT objected for purposes of discussion.
REPRESENTATIVE DAVIES explicated that agricultural purposes is
understood to, generally, include horticulture. In the list of
examples on line 16, there is not a single illustration of
horticultural purpose, and explained that he wanted the statute to
be more explicit in providing one example of horticulture.
REPRESENTATIVE DAVIES reported that in the Fairbanks area, about 50
percent of the market value in agriculture is in horticulture, as
in greenhouse (indisc.) and flowering plant sales. The amendment
would add one example of horticulture to this list.
CO-CHAIRMAN GREEN asked if marijuana has a flower.
Number 1212
REPRESENTATIVE KOTT stated that the amendment would only clog up
the statutes. He felt the language on lines 15 and 16, "including
forage and sod crops, grains, etc.," was not meant to be all
inclusive. He maintained that the amendment was unnecessary.
Number 1249
REPRESENTATIVE AUSTERMAN remembered a prior problem with Christmas
trees. He said that he did not have a problem with the amendment
and thought that it would clarify the language.
Number 1277
SENATOR GREEN felt the amendment was superfluous.
REPRESENTATIVE DAVIES argued that it was not necessary either to
specify fruits, trees, vegetables or dairy animals. "All those
things are clearly agricultural purposes. The purpose of the
string in here is to be illustrative of what we mean by
agricultural purposes and it concerns me, slightly, that there is
not a single horticultural example in this list. Sometimes, courts
do weird things with constructing statutes." He explained, they
look at a list like that and see agricultural purposes and there is
a long list of illustrations there that are all on the food side
and none on the horticulture side, some court, in the future, might
construe that to be significant.
Number 1383
Representatives Austerman, Davies and Long voted in favor of
Amendment Number 2. Representatives Kott, Ogan, Williams and Green
voted against the amendment. So the amendment failed.
REPRESENTATIVE DAVIES moved Amendment Number 3, page 9, lines 2-5,
delete all material. He debated that it is unnecessary for the
legislature to annul these regulations. He said the statutory
language will take care of the regulations.
REPRESENTATIVE OGAN objected.
Number 1425
MR. HUBER recalled that testimony today indicated that overly
restrictive regulations have got in the way of a lot of farmers and
agricultural producers doing business and being able to
successfully do business. "We believe that all of these are
inconsistent with statutory changes made in this Act. We would
like to make sure that the department does go out and promulgate
regulations that fall under the statutory guidelines of this Act
and relieve those burdens. It would be our position that we ought
to repeal those specific regulations and let them go back to the
regulatory process under the new statutory language."
Number 1463
REPRESENTATIVE DAVIES said this is an issue of separation of
powers, the regulations is the Administrative function. He said
he, personally, had not had the time to go through each one of the
regulations. He further said, "Our purview here is to deal with
the statutes and it is the Administration's purview, who understand
the details of how the statutes are implemented through regulation,
to deal with the regulations."
Number 1512
SENATOR GREEN stated that the department had no objection to the
repeal of these specific amendments knowing that they would be
promulgating new regulations.
Representative Davies vote in favor of Amendment Number 3.
Representatives Austerman, Kott, Long, Ogan, Williams and Green
voted against the amendment. So Amendment Number 3 failed.
Number 1551
CO-CHAIRMAN WILLIAMS moved that CSSB 162(FIN) move from the House
Resources Committee with individual recommendations and attached
fiscal note. There being no objection, it was so ordered.
HB 394 - GAS & COAL METHANE LICENSES & LEASES
Number 1580
CO-CHAIRMAN GREEN brought committee substitute for HB 394 before
the committee to adopt the committee substitute.
REPRESENTATIVE OGAN moved for the adoption of CSHB 394(RES),
Version "M," dated 03/07/96 as a work draft for discussion on
03/11/96. Hearing no objection, it was so ordered.
ADJOURNMENT
There being no further business to come before the House Resources
Committee, Chairman Green adjourned the meeting at 10:07 a.m.
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