Legislature(1995 - 1996)
03/27/1996 01:29 PM House TRA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE
March 27, 1996
1:29 p.m.
MEMBERS PRESENT
Representative Gary Davis, Chairman
Representative Beverly Masek, Vice Chair
Representative Tom Brice
Representative Jerry Sanders
Representative Bill Williams
Representative Don Long
MEMBERS ABSENT
Representative Jeanette James
OTHER HOUSE MEMBERS PRESENT
Representative Norman Rokeberg
COMMITTEE CALENDAR
SENATE BILL NO. 241
"An Act relating to the use of studded tires on the Sterling
Highway."
- MOVED OUT OF COMMITTEE
*HOUSE BILL NO. 436
"An Act relating to purchase and sale of mobile homes by mobile
home dealers or agents; to mobile home titles; and providing for an
effective date."
- MOVED CSHB 436 (TRA) OUT OF COMMITTEE
CS FOR SENATE BILL NO. 86(FIN)
"An Act relating to issuance of commemorative gold rush motor
vehicle license plates."
- MOVED CSSB 86 (FIN) OUT OF COMMITTEE
HOUSE BILL NO. 543
"An Act establishing a preference when entering into state airport
land leases."
- HEARD AND HELD
(* First public hearing)
PREVIOUS ACTION
BILL: SB 241
SHORT TITLE: STUDDED TIRES ON STERLING HIGHWAY
SPONSOR(S): SENATOR(S) TORGERSON
JRN-DATE JRN-PG ACTION
01/26/96 2223 (S) READ THE FIRST TIME - REFERRAL(S)
01/26/96 2223 (S) TRANSPORTATION
02/13/96 (S) TRA AT 1:30 PM BUTROVICH ROOM 205
02/13/96 (S) MINUTE(TRA)
02/14/96 2425 (S) TRA RPT 2DP 1NR
02/14/96 2425 (S) FISCAL NOTE (DOT)
02/14/96 2425 (S) ZERO FISCAL NOTE (DPS)
02/14/96 2425 (S) FIN REFERRAL ADDED
03/07/96 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/08/96 2655 (S) FIN RPT 7DP
03/08/96 2655 (S) ZERO FISCAL NOTE (DOT)
03/08/96 2655 (S) PREVIOUS ZERO FN (DPS)
03/13/96 (S) RLS AT 11:00 AM FAHRENKAMP RM 203
03/13/96 (S) MINUTE(RLS)
03/18/96 2774 (S) RULES TO CALENDAR 3/18/96
03/18/96 2777 (S) READ THE SECOND TIME
03/18/96 2777 (S) ADVANCED TO THIRD READING UNAN CONSENT
03/18/96 2777 (S) READ THE THIRD TIME SB 241
03/18/96 2777 (S) PASSED Y18 N- E2
03/18/96 2786 (S) TRANSMITTED TO (H)
03/19/96 3191 (H) READ THE FIRST TIME - REFERRAL(S)
03/19/96 3191 (H) TRANSPORTATION
03/27/96 (H) TRA AT 1:00 PM CAPITOL 17
BILL: HB 436
SHORT TITLE: MOBILE HOME DEALERS & TITLES
SPONSOR(S): REPRESENTATIVE(S) MARTIN
JRN-DATE JRN-PG ACTION
01/19/96 2489 (H) READ THE FIRST TIME - REFERRAL(S)
01/19/96 2489 (H) TRANSPORTATION, L&C, FINANCE
03/20/96 (H) TRA AT 1:00 PM CAPITOL 17
03/27/96 (H) TRA AT 1:00 PM CAPITOL 17
BILL: SB 86
SHORT TITLE: COMMEMORATIVE GOLD RUSH LICENSE PLATES
SPONSOR(S): SENATOR(S) SHARP,Zharoff,Green,Frank,Taylor,Halford;
REPRESENTATIVE(S) Mackie,Toohey
JRN-DATE JRN-PG ACTION
02/14/95 269 (S) READ THE FIRST TIME - REFERRAL(S)
02/14/95 269 (S) TRA, FIN
03/02/95 (S) TRA AT 1:30 PM BUTROVICH ROOM 205
03/02/95 (S) MINUTE(TRA)
03/03/95 468 (S) TRA RPT CS 3DP 2NR SAME TITLE
03/03/95 469 (S) FISCAL NOTE TO SB (DPS)
03/03/95 469 (S) FISCAL NOTE TO CS (DPS)
02/27/96 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/07/96 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/12/96 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/12/96 2707 (S) FIN RPT CS 5DP 2NR NEW TITLE
03/13/96 (S) RLS AT 11:00 AM FAHRENKAMP RM 203
03/13/96 (S) MINUTE(RLS)
03/14/96 2734 (S) FISCAL NOTE TO CS (DPS)
03/14/96 2737 (S) RULES TO CALENDAR & 1 OTHER REC 3/14/96
03/14/96 2739 (S) READ THE SECOND TIME
03/14/96 2740 (S) FIN CS ADOPTED Y11 N7 E2
03/14/96 2740 (S) ADVANCED TO THIRD READING Y18 N- E2
03/14/96 2741 (S) READ THE THIRD TIME CSSB 86(FIN)
03/14/96 2741 (S) COSPONSOR(S): ZHAROFF, GREEN, FRANK,
03/14/96 2741 (S) TAYLOR, HALFORD
03/14/96 2741 (S) PASSED Y18 N- E2
03/14/96 2749 (S) TRANSMITTED TO (H)
03/18/96 3170 (H) READ THE FIRST TIME - REFERRAL(S)
03/18/96 3171 (H) TRANSPORTATION, FINANCE
03/18/96 3186 (H) CROSS SPONSOR(S): MACKIE
03/25/96 3356 (H) CROSS SPONSOR(S): TOOHEY
03/27/96 (H) TRA AT 1:00 PM CAPITOL 17
BILL: HB 543
SHORT TITLE: STATE AIRPORT LAND LEASE PREFERENCE
SPONSOR(S): TRANSPORTATION
JRN-DATE JRN-PG ACTION
03/14/96 3149 (H) READ THE FIRST TIME - REFERRAL(S)
03/14/96 3149 (H) TRANSPORTATION
03/20/96 (H) TRA AT 1:00 PM CAPITOL 17
03/20/96 (H) MINUTE(TRA)
03/27/96 (H) TRA AT 1:00 PM CAPITOL 17
WITNESS REGISTER
SENATOR JOHN TORGERSON
Alaska State Legislature
State Capitol, Room 427
Juneau, AK 99801
Telephone: (907) 465-2828
POSITION STATEMENT: Sponsor of SB 241
TOM ANDERSON, Legislative Aide
to Representative Martin
Alaska State Legislature
State Capitol, Room 502
Juneau, AK 99801
Telephone: (907) 465-3783
POSITION STATEMENT: Testified on HB 436
CATHERINE REARDON, Director
Central Office
Division of Occupational Licensing
Department of Commerce and Economic Development
P.O. Box 110806
Juneau, Alaska 99811-0806
Telephone: (907) 465-2534
POSITION STATEMENT: Testified on HB 436
SENATOR BERT SHARP
Alaska State Legislature
State Capitol, Room 514
Juneau, AK 99801
Telephone: (907) 465-3004
POSITION STATEMENT: Sponsor of SB 86
WENDY WOLF, Programs Manager
Division of Tourism
Department of Commerce and Economic Development
P.O. Box 110801
Juneau, Alaska 99811-0801
Telephone: (907) 465-5471
POSITION STATEMENT: Testified in support of SB 86
JUANITA HENSLEY, Chief
Driver Services
Division of Motor Vehicles
Department of Public Safety
P.O. Box 20020
Juneau, Alaska 99811-0020
POSITION STATEMENT: Testified on SB 86
KURT PARKAN, Deputy Commissioner
Office of the Commissioner
Department of Transportation and Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
Telephone: (907) 465-6977
POSITION STATEMENT: Testified on CSHB 543 (TRA)
ELIZABETH HICKERSON, Assistant Attorney General
Transportation Section
Civil Division
Department of Law
1031 West 4th Avenue, Suite 200
Anchorage, Alaska 99501-1994
Telephone: (907) 269-5100
POSITION STATEMENT: Testified on CSHB 543 (TRA)
JACK BIRMINGHAM, President
ERA Aviation
6160 South Airport Drive
Anchorage, Alaska 99502
Telephone: (907) 248-4422
POSITION STATEMENT: Testified on CSHB 543 (TRA)
CHARLES COLE, Attorney
Representing Fairbanks Air Taxi Charters
406 Cushman Street
Fairbanks, Alaska 99701
Telephone: (907) 452-1124
POSITION STATEMENT: Testified on CSHB 543
RICHARD WIEN
Representing 30 Fairbanks International Airport Users and Tenants
559 Aquila
Fairbanks, Alaska 99712
Telephone: (907) 457-7069
POSITION STATEMENT: Testified on CSHB 543
DIANE BARTH, Chief of Leasing
Anchorage International Airport
Department of Transportation and Public Facilities
P.O. Box 196960
Anchorage, Alaska 99519-6960
Telephone: (907) 266-2525
POSITION STATEMENT: Testified on CSHB 543
ACTION NARRATIVE
TAPE 96-14, SIDE A
Number 000
The House Transportation Standing Committee was called to order by
Chairman Gary Davis at 1:29 p.m. Members present at the call to
order were Representatives G. Davis, Masek, Brice and Sanders.
This meeting was teleconferenced to Anchorage and Fairbanks. A
quorum was present.
CHAIRMAN GARY DAVIS announce the agenda as SB 241, HB 436, CSSB 86
(FIN) and HB 543.
Representative Long joined the committee meeting at 1:30 p.m.
SB 241 - STUDDED TIRES ON STERLING HIGHWAY
Number 0086
CHAIRMAN GARY DAVIS announced the first item on the agenda was SB
241, an act relating to the use of studded tires on the Sterling
Highway.
SENATOR JOHN TORGERSON, sponsor of SB 241, said he introduced this
bill to correct a problem on the lower half of the Sterling Highway
which runs from Ninilchik down to Homer. He said when the statutes
were formed to identify the time line for studded tires, the
drafters used 60 North Latitude as the line to mark the dates for
studded tires. He said this line intersects the Sterling Highway
at Ninilchik and created two separate dates for which studded tires
could be used. He said the way the statutes exist right now, if
you were driving south between April 15, and May 1, you would need
to stop in Ninilchik and remove your studded tires, continue to
Homer and then on your way back you would change your tires again.
He said, currently, this does not take place, but it could happen
if the statute was enforced.
Representative Williams joined the committee meeting at 1:31 p.m.
Number 0193
REPRESENTATIVE TOM BRICE said it was obvious that Senator Torgerson
did not have any financial involvement with this bill.
Number 0248
SENATOR TORGERSON said no, and in a joking manner said the only
person opposed to SB 241 was the person who owned the service
station in Ninilchik. He said people are not removing their
studded tires and this bill came about because of an incident with
public safety. He said SB 241 would clear up the statutes before
any one wrote a ticket because of the tires.
Number 0269
REPRESENTATIVE BEVERLY MASEK clarified that a person could be
ticketed for having studded tires.
Number 0299
SENATOR TORGERSON said you could be ticketed during the 15 day
period on either side of the 60 degree latitude.
Number 0317
REPRESENTATIVE MASEK said SB 241 was a good bill and made a motion
to move SB 241 with zero fiscal note and individual
recommendations. Hearing no objections SB 241 was moved from the
House Standing Committee on Transportation.
HB 436 - MOBILE HOME DEALERS & TITLES
Number 0369
CHAIRMAN GARY DAVIS announced the next item on the agenda was HB
436, an act relating to the purchase and sale of mobile homes by
mobile home dealers or agents; to mobile home titles; and providing
for an effective date.
TOM ANDERSON, Legislative Aide to Representative Martin, said HB
436 was in response to the Alaska Manufactured Housing Association,
who represent mobile home dealers and park owners throughout
Alaska. He said the association has a problem with the current
lack of statutory regulation for mobile home dealers. The current
bill, HB 436 tries to regulate dealers and agents. He said the
committee substitute for HB 436 will eliminate the regulation of
agents section of HB 436.
MR. ANDERSON said, in essence, mobile home dealers are not
currently regulated, licensed or bonded in the legal services view.
This bill establishes, under Occupational Licensing, a bonding
procedure up to $100,000 as well as regulatory provisions. He said
it allows the Division of Motor Vehicles to title mobile homes so
that whether someone is selling or buying there is no confusion.
He read from the sponsor statement, "the problem exists often with
banks, and other lending institutions regarding certification of
title and often seller-financed sales and cash sales offer no
protection to the buyer or seller." He said HB 436 is more of a
consumer protective bill in the bonding, oversight and purview of
occupational licensing, but the authorized titling will also clean
up some gaps in the statutes.
Number 0510
CHAIRMAN GARY DAVIS asked in discussions with the Department of
Motor Vehicles (DMV) and Occupational Licensing if there had been
any problems with HB 436.
Number 0525
MR. ANDERSON referred to the committee substitute for HB 436 which
was drafted in response to Occupational Licensing's recommendations
and involve minor housekeeping elements. He said in addition to
these provisions CSHB 436 eliminates the provision which would
license agents.
Number 0553
REPRESENTATIVE BRICE said the sponsor of HB 436 made comments to
the over regulation in certain commercial aspects and remarked that
it was interesting that he was sponsoring this type of legislation.
Number 0620
CATHERINE REARDON, Director, Central Office, Division of
Occupational Licensing, Department of Commerce and Economic
Development, was next to testify. She requested the effective date
of HB 436, located on page four, line 11, currently listed as July
1, 1996, be changed to January 1, 1997. She said when there is a
new licensing program it is hard to get it up and running within a
month and the Division does not want to enforce a law that has not
given people ample chance with which to comply.
Number 0684
CHAIRMAN GARY DAVIS referred to the fiscal note and said there
appeared to be a cost of $48,400 and revenues of $24,200.
Number 0698
MS. REARDON said that is not what the fiscal note is attempting to
reflect. She said licenses are issued for two year periods, so all
of the revenue comes in for one fiscal year and then the next
fiscal year no revenue is received. She said the $48,400 is for
fiscal year 1997 and in fiscal year 1998 you get zero which
represents that cyclical pattern.
Number 0733
CHAIRMAN GARY DAVIS clarified that the fiscal note was revenue
neutral in relation to the fees.
Number 0761
MR. ANDERSON said the sponsor had no problem with the change of the
effective date in HB 436.
Number 0772
REPRESENTATIVE BRICE made a motion to adopt CSHB 436 ( ), version
9-LS1376\C, dated March 19, 1996. Hearing no objections CSHB 436
was before the House Standing Committee on Transportation.
Number 0803
REPRESENTATIVE BRICE made a motion to adopt Amendment 1, changing
the effective date from "July 1, 1996" to "January 1, 1997".
Hearing no objection Amendment 1 was adopted to CSHB 436 by the
House Standing Committee on Transportation.
Number 0834
REPRESENTATIVE MASEK referred to page one, line 11, regarding the
registration fee requirement. She asked what type of registration
fee was being suggested.
Number 0861
MS. REARDON said the Division of Occupational Licensing is funded
entirely off of licensing fees. She said, by statute, the Division
is required to charge fees that cover the costs of regulating each
program within the Division. She said the doctors pay for medical
licensing, the nurses pay for nurse licensing, and in this case the
mobile home dealers would be paying for the regulatory costs of
mobile home licensing. She said the Division sets those fees by
regulation and they are adjusted up and down every two years before
renewals. She said if the Division over collects, the fees are
lowered, if they under collect then the fees are raised. She said
it is difficult to know exactly how much the Division will have to
charge for this program because an estimate is made as to how many
people will need to be licensed, how many people will be paying in
fees and how much activity this program will generate. She said
when a new licensing program is proposed, it is an educated guess.
Number 0932
MS. REARDON said the fiscal note predicts that as many as 124
individuals may seek registration under CSHB 436. Therefore the
Division tried to predict how much the fees would need to be to
cover the fiscal note and the costs. If the Division is correct
about that number, and if the Division is correct about the costs
it generates, then the fee would be $494 every two years.
Number 0966
REPRESENTATIVE MASEK asked how much is being currently charged.
MS. REARDON said that currently the Division does not license
mobile home dealers.
Number 0978
REPRESENTATIVE BILL WILLIAMS made a motion to move CSHB 436 (TRA)
with accompanying fiscal notes and individual recommendations.
Hearing no objections CSHB 436 (TRA) was moved from the House
Standing Committee on Transportation.
SB 86 - COMMEMORATIVE GOLD RUSH LICENSE PLATES
Number 1022
CHAIRMAN GARY DAVIS announce the next item on the agenda was CSSB
86 (FIN), an act relating to issuance of commemorative gold rush
motor vehicle license plates.
SENATOR BERT SHARP, sponsor of CSSB 86 (FIN), said a similar bill
was proposed two years ago. The old bill, HB 407, was convoluted
into one plate and was vetoed by the Governor because of concerns
expressed by the Department of Public Safety. He said CSSB 86
(FIN) has moved through the Senate as a two plate bill. He said
CSSB 86 (FIN) is to commemorate the period from 1994 to 2004 which
the legislature proclaimed as the decade of the Gold Rush
Centennial for the state of Alaska. He said CSSB 86 (FIN) would
issue new motor vehicle license plates. He said the bill does not
uniformly mandate immediate transfer to new license plates for
everyone as that provision would create a fiscal note.
Number 1083
SENATOR SHARP said SB 86 authorizes the Commissioner of Public
Safety in consultation with the Gold Rush Task Force and in
cooperation with the designers of the state license plates to come
up with an acceptable Gold Rush Centennial license plate. He said
CSSB 86 (FIN) was requested by the Gold Rush Centennial Task Force
which consists of 25 members located throughout Alaska.
Number 1149
SENATOR SHARP referred to letters of support for CSSB 86 (FIN) from
all over the state and said he did not include all the letters of
support he had received. He said CSSB 86 (FIN) is a way in which
the state can promote Alaska and the importance of the Gold Rush to
all Alaskans as a heritage.
Number 1196
SENATOR SHARP said the license plates will be phased in gradually.
The new plate design will only be available after all current plate
stock is used. He said when the stock is gone, newly registered
vehicles will receive the new license plate design and any new cars
coming in from the lower 48 states would get the new plates at that
time. He said vehicles, who do not fit into those two categories,
have the option, at a nominal cost of $5.00 a set, to buy
replacement plates for their automobile and participate in the
Centennial atmosphere with the license plates on their car. He
said the state will make money, roughly $2.00 a set, on these
replacement plates. He said the fiscal note does not predict how
much profit will be made, but there are some estimates based on
other plate revenues that have been collected. He asked the
committee to consider CSSB 86 (FIN) and asked them not to get into
a consideration of one plate versus two plate discussion.
Number 1320
WENDY WOLF, Programs Manager, Division of Tourism, Department of
Commerce and Economic Development, was next to testify. She
referred to some aspects about the Gold Rush Centennial and said
the Division supported CSSB 86 (FIN).
Number 1420
CHAIRMAN GARY DAVIS clarified that this proposed design would
replace the standard Alaska plates.
SENATOR SHARP said it would gradually replace the standard plates
and the new Gold Rush plates would be available by the year 1998.
Number 1446
JUANITA HENSLEY, Chief, Driver Services, Division of Motor
Vehicles, Department of Public Safety, was next to testify. She
said the design of this Gold Rush plate will be the new plate for
Alaska. She said it is DMV's plan, in order to save money, to
gradually issue these plates as the current stock is depleted. She
said DMV has a contractual obligation that it has to meet with the
current license plate stock. She said this contract is not with
the prisons, the contract is placed out for bid with the lowest bid
receiving the contract. She said the current contract is with
Irwin Hopson, Incorporated in Portland, Oregon which makes the
current plates. She said DMV anticipates that they would begin
issuing the new license plates in January of 1998. She said, as
Senator Sharp indicated, any new cars coming in for registration
and any cars of people who are moving up from the lower 48 states
as well as individuals who lose their plates then they would be
issued the new plate.
CHAIRMAN GARY DAVIS clarified that the earliest date would be
January of 1998.
MS. HENSLEY said the state would need to go through the design
process and approval of the design by state and national standards.
She said implementing a new license plate is not a small process.
Number 1552
REPRESENTATIVE BRICE asked why general funds were requested rather
than using program receipts.
Number 1557
MS. HENSLEY said that is the funding mechanisms for the Department
of Public Safety. She said all of the program receipts are
collected and deposited directly into the general fund. Any
allocations for DMV come directly out of the general fund.
Number 1610
REPRESENTATIVE BRICE made a motion to move SB 86 with accompanying
fiscal notes and individual recommendations. Hearing no objections
it was so moved from the House Standing Committee on
Transportation.
HB 543 - STATE AIRPORT LAND LEASE PREFERENCE
Number 1653
CHAIRMAN GARY DAVIS announce the next item on the agenda was HB
543, an act establishing a preference when entering into state
airport land leases. He said HB 543 was first heard last Wednesday
and said a couple of meetings have been held since then to try and
determine how the bill should be addressed. He said there have
been numerous problems in HB 543 as it tries to accommodate
industry and the Attorney General's Office (AG) in regard to
constitutional issues and agreeing to what should be included in
statute and what is addressed in regulation. He said he has
drafted a committee substitute for HB 543.
Number 1738
REPRESENTATIVE BRICE made a motion to adopt the work draft, CSHB
543 (TRA), version 9-LS1769\C, dated March 27, 1996. Hearing no
objection CSHB 543 (TRA) was now before the House Standing
Committee on Transportation.
CHAIRMAN GARY DAVIS said the wording that was sent over to
Legislative Legal in the work draft did not return to the committee
with quite the same language that was sent over.
Number 1778
KURT PARKAN, Deputy Commissioner, Office of the Commissioner,
Department of Transportation and Public Facilities (DOT/PF), was
next to testify. He said DOT/PF supports changes in the statutes
to promote stability by giving tenants an opportunity to remain at
their locations without forcing them into some sort of competitive
environment, either by right of first refusal or right of first
offer. He said the interest of DOT/PF is to make sure that the
state promotes aviation business and gives the existing tenants
some comfort in knowing that they will have an opportunity to stay
at their lease site.
Number 1816
MR. PARKAN said beyond that interest, the DOT/PF is interested in
making sure that whatever legislation is developed remains legally
defensible. He said the Department of Law will be the state's
attorneys if DOT/PF goes to court to defend challenges by this
proposed legislation. He said the committee and the
Administration's intent is similar with regard to offering existing
tenants an opportunity to continue to stay at their lease sites.
MR. PARKAN said there is a concern about Section (d), which is the
section that deals with the disposition of improvements. He said
this section brings in a new element that the DOT/PF had not
originally discussed and might be a troubling area. He suggested
that it would be better to keep the bill simple and address one
issue at a time. He said the option to continue a lease could be
the issue that is addressed, rather than addressing the
improvements issue as well. He asked for an explanation regarding
the section which talks about "limited circumstances clearly
defined by regulations the department may acquire ownership by
financing the improvements." He said he did not understand the
intent of this language and questioned whether the department would
acquire those improvements if they were willing to buy them.
MR. PARKAN said the language specifying financing is vague and that
the DOT/PF has various leases which have different clauses
regarding the disposition of the end of the term of the lease. He
said every lease has some language that references the disposition.
At the International Airport there is the FedEx existing lease
which has the clause that the improvements revert to the airport
and said that particular property was financed by the Alaska
Industrial Development and Export Authority (AIDEA) and said the
DOT/PF is in the process of negotiating a new lease for expansion
and said he was not aware that the lease is being financed by
AIDEA. He said DOT/PF is negotiating a lease which has similar
language regarding reversion. The United Parcel Service (UPS) site
which is a growing site, it is about five years old and that lease
was not funded by any instrument of the state, yet it too has
language which calls for the reversion of the improvements to the
state at the end of the lease. He said Section (d) which refers to
the improvements is unclear and suggested that it should not be
included.
Number 1991
CHAIRMAN GARY DAVIS said he retained the findings and statement of
purpose as opposed to a letter of intent in CSHB 543. He said his
decision was based on providing all the information, up front, when
and if CSHB 543 goes before the House and Senate.
Number 2027
ELIZABETH HICKERSON, Assistant Attorney General, Transportation
Section, Civil Division, Department of Law, was next to testify.
She said the charge or primary focus she was given, was to draft an
amendment to the statute which would provide a legally defensible
right for tenants, who are in good standing, to give a new lease
and avoid competition. She said the reason why the Governor wanted
the Attorney General's Office (AG) to draft something was because
he found that there was a public purpose in allowing tenants in
good standing to continue on their leases for a new term, if in
fact, continuation on that lease was consistent with the needs of
the airport. She said it is accepted that the airport has special
needs and that the state cannot tie all inches of land at an
airport and still provide the service that the aviation community
needs. She said, with that charge and based on the research that
had been done over the last couple of years and in new research
formed through discussions with groups of people, the AG's felt
that it was important to have a reasonable basis stated which is
located in the findings.
Number 2097
MS. HICKERSON complimented the Chairman on including the findings
in CSHB 543. She said keeping the findings will help the AG's if
they need to go to court and explain why this provision is in the
state's best interest. She said the findings are based on the
combined review and determination by airport personnel that being
able to offer a tenant in good standing a new lease without
competition promotes the interest of the local community, the
airports and the state and has ramifications beyond the lease. She
said the lease employs people, brings in money, promotes good
tourism, continued tourism and other commerce.
Number 2134
MS. HICKERSON said she is aware of the fact that the state needed
to be sure that they were staying within the public purpose and
avoid a constitutional challenge. She said, as Mr. Parkan pointed
out, the Department of Law (DOL) will be required to defend this
statute and the DOL needs to be able to defend this and succeed in
that defense. She said the last thing people need to do is to find
themselves tied up in litigation for years that the state does not
end up winning. She said, in order to address those concerns, the
Governor presented a bill that has been circulated with the AG's
amendment.
MS. HICKERSON said she had looked at the committee substitute and
had some general comments. She said the title has been changed on
CSHB 543 and it is a very broad title, "an act relating to state
airport land leases." She expressed concern about the broad
language, because she hoped that with all the work that is being
done on CSHB 543 there does not have to be a lot of work done on
the bill in the Senate. She said a broad title allows for
additional revisions.
Number 2199
CHAIRMAN GARY DAVIS also expressed concern with the title in CSHB
543. He said the title did not come back from Legislative Legal
Services in the manner in which it was written. He said the
original title was, "an act establishing renewal rights when
entering into state airport land leases."
Number 2219
MS. HICKERSON said she received that title change and expressed
concerns regarding it. She said establishing renewal rights is not
as specific as a right of first refusal, which is the direction the
original bill had been headed. She said it is important for the
committee to be careful in mixing terminology. She said terms such
as "renewal" versus "a new lease" versus an "extension" have been
misunderstood by courts, tenants, airports. She said "renewal and
extension are intended to make renewal a new lease extension an
extension of years onto the existing link, there has been
confusion." To avoid that confusion in the future, she asked her
clients to start using the term, expired, new lease, and to make
sure that every one knows what is being talked about in
discussions, whether we are talking about an extension or a new
lease. She said renewal means different things to different
people. She said she does not like the word renewal because of the
confusion it creates.
MS. HICKERSON said the other part of her concern is when entering
into an airport land leases and said there is less concern
regarding this language. She said the AG's understood the charge
to be, setting up a preference for an existing tenants in good
standing so that they could get a new lease under the various
circumstances without having to go through a competitive process.
Number 2302
REPRESENTATIVE BRICE referred to Section 2(a) and said the first
sentence refers to the length of the contract periods "not
exceeding 55 years with a person, municipality, or the United
States". He asked, when the state lists governmental, commercial
or other public purposes in context to this public space and asked
if this provision would preclude a private person from building a
private hangar which was not open to public use.
Number 2338
MS. HICKERSON said the intent is not to preclude those types of
operations. She said, in fact, if you have a copy of the
Governor's preferred amendment the AG's office has modified Section
2, line 18, where it says, "including private plane tie down," the
AG's office recommends that the language be modified to read,
"including private aviation use". She said other provisions in the
findings were also previously altered to address non-commercial
use. The AG's office believes there is a benefit not only for
commercial operations, but for non-commercial operations. She said
to distinguish between the two is very difficult when you are
talking about the public purpose and offering a tenant in good
standing a right for a new lease without competition because it
promotes the general welfare of the state.
Number 2383
MS. HICKERSON referred to the term, "the first offer, a right and
option to make a first offer this appears first in the findings,
paragraph six, on line three, and later on paragraph (b) on line 7
and line 8." She said this language is also picked up in Section
3, "right and option to make a first offer". She said this
language is unclear. She said in Alaska there is no developed law
on what a right of first refusal is. She said the AG's
understanding of what a right of first refusal is in order to
comply with all of the constitutional requirements, the AG would
have to notice new leases. At that time, if anyone else is
interested, the state would offer it first to the existing tenant
as long as they were in good standing and continued to use it
within the public interest. She said many call this a
"preference," and she cautioned about using this word. She said if
a "right of first refusal" is found to be acceptable in certain
circumstances by the court and once again stated that when she has
to go to court she wants to be able to best defend this particular
feature. She said she didn't know what the language means to have
a "right and option to make a first offer." She said, if she were
to speculate, the language is not creating anything other than a
right to make a first offer. This language does not address
whether or not the state is going to continue a lease.
TAPE 96-14, SIDE B
Number 0000
MS. HICKERSON, "as so, because right of first refusal has a lengthy
history and acceptance in our court, we know what those procedures
are, and because it is used in the statutes that we have used as a
model, AS 38.05.073Q." She said, since 1990, that has not been
challenged. She recommended that the language be kept as "a right
of first refusal."
Number 0022
CHAIRMAN GARY DAVIS said his impression of this language is that
the right of first refusal did not seem to be acceptable to some
because of the requirement that a third party be involved in the
proceedings. He referred to Representative Rokeberg's suggestion
of "right of first offer" and said both terms were mentioned as,
hopefully, having some legal base. He said he tried to stay away
from any legal term in an attempt to use plain language, but said
from a legal standpoint this did not appear to work.
Number 0065
REPRESENTATIVE NORMAN ROKEBERG said by using, "right and offer to
make the first offer" it established a clear, and fundamental right
on the part of the lessee to do so. He said the word, "option," is
a basic, fundamental concept in common law. He said this concept
is a simplified, elementary methodology in which to implement a
lease extension as opposed to a renewal.
Number 0138
JACK BIRMINGHAM, President, ERA Aviation, testified via
teleconference from Anchorage. He expressed some frustration over
the fact that in a technical reading, standing alone the way this
bill does, it doesn't give the existing tenant anything. He said
the biggest concern is that CSHB 543 implies that there is some
kind of third party bidding thing going on here. He said it would
be a whole lot simpler if terms were used such as "renewal of the
existing lease" or "extending the existing lease." He said it
would be clearer as to what is being granted to people.
MR. BIRMINGHAM said the problem with the right of first refusal is
that it implied a third party bidding game. He said both, the
airmen for the non-commercial enterprises and the air carriers for
the commercial enterprises, want an extension of the existing lease
on all the same terms, except for an extension of years. He said
prices should not be increased or more onerous provisions be added
to the lease. He said this type of language is what the group,
that he represents, is seeking.
Number 0223
CHARLES COLE, Attorney, Representing Fairbanks Air Taxi Charters,
testified via teleconference from Fairbanks. He referred to
Section 3(c), and he proposed that the language be simplified,
"that the expiration of a land lease entered into (a) of this
section, the department shall first offer the holder of the
existing lease, including a holdover lease the right to extend the
term of the existing lease for a reasonable amount of time." He
said it would be a mistake to start this "right of first refusal"
because then one gets into the offer of a third party who knows all
the terms and conditions that the third party may offer, then the
existing lessee maybe matches those or makes alternative
provisions, terms and conditions and requires the state to evaluate
these various conditions. He said this creates a horrible mess and
that the state would tie themselves in. He said the existing
leaseholders should be granted the right to renew the term of the
existing lease and that CSHB 543 should be simplified to make
everyone, including the state, best off.
Number 0304
MS. HICKERSON said there are two differences of opinion, one is
that CSHB 543 is talking about offering a new lease. As Mr.
Birmingham pointed out, there is a distinction between a new lease
and an extension. She said you need to be very clear with the
language that you are dealing with. She said an extension of a
year would have to be noticed. She said the charge given to the AG
was to try to provide a preference for existing tenants to give a
new lease without competition.
Number 0357
MS. HICKERSON said the other difference is in regards to the "right
of first refusal" as compared to "right of first offer" which does
have any case law within the state of Alaska. This position has
been discussed with the legislative attorney, Deborah Bair (ph.),
who is concerned that the state will find themselves in court if
the language, "right of first offer" is used. She said if you were
going to move away from a well defined procedure, such as "right of
first refusal" she requested that the committee specify what that
procedure is going to be to avoid an argument of what that
procedure would be.
Number 0375
CHAIRMAN GARY DAVIS asked her if she disagreed with the wording
that Mr. Cole recommended.
Number 0380
MS. HICKERSON said no, not for the reasons that the AG is trying to
support a bill that is going to withstand judicial scrutiny, so
that the state will not tie up further leases at state airports.
Number 0395
REPRESENTATIVE ROKEBERG referred to the addition in CSHB 543 of a
"first offer on a new lease" which was different language from the
working language. He said this changes the concept. He said he
would be comfortable with the language that Mr. Cole suggested. He
said that perhaps there is no case law on general business
practices because court cases have not gone to the supreme court in
the state of Alaska. He said these are terms of commercial
currency and legal understanding and said he used these terms for
25 years.
Number 0466
MR. COLE upon request gave the proposed language to CSHB 543,
"after the end of the line six, lease, (indiscernible-possibly
lessee) and then on line seven, right strike and option, so that it
reads, right to. Then strike make the first offer on a new lease
or and, so that it would then read, right to extend the term of the
existing lease." He then said, it should be, "for, rather than
within." He said you might say, "for an extended period of time,
reasonable is such a mushy word."
Number 0528
REPRESENTATIVE ROKEBERG said the extending of the time is essential
because it cannot be an open-ended thing. He said the use of the
word, "reasonable" was included to allow the department to draft
regulations to implement this section.
Number 0533
REPRESENTATIVE DON LONG asked if the language could be faxed down
and was told it could be.
CHAIRMAN GARY DAVIS said it was his intent to get CSHB 543 out of
committee and said he didn't think there was any way that something
could be moved that everyone would agree to, but wanted it to be
legally defensible. He said it could be revised when it got to the
House floor.
Number 0595
RICHARD WIEN, Representing 30 Fairbanks International Airport Users
and Tenants, testified via teleconference from Fairbanks. He said
prior to 1989 or 1990, the system under the current laws and
regulations was working quite nicely. He said, as came out of the
Blue Ribbon Commission through testimony from leasing people, there
was a concerted change of policy and interpretation of the
regulations, the act and the constitution which has cause
consternation throughout the industry including economic
instability. He said it is encouraging to see people interested in
resolving these issues.
Number 0697
MR. WIEN said that one of the things that came out of the Blue
Ribbon Commission is that the current leasing staff in particular
and some management people are against the renewal concept. He
said it would take specific wording in the legislation so that
there is no misunderstanding that when the rules are adopted the
philosophy outlined is carried out.
Number 0754
REPRESENTATIVE ROKEBERG asked how important it was for the
legislature to address the issue of disposition of improvements.
MR. WIEN said it is one of the core issues. He said the two issues
are the renewal of the leases and the disposition of the assets.
He said if you have a true right to renew a lease or extend that
lease, part of it is resolved, and you are probably in the
position, at some point in time, as has been the rule of the past,
that you can sell those assets at market value because the lease
under the property is not under jeopardy, as it is now. He said,
currently, if you cannot extend the lease or the leases are up and
nothing is being done with them, than you have nothing to sell. He
said this has been a misconception within the Administration. He
said the key is the right to renew and a clear understanding of the
disposition of the assets.
Number 0811
MR. COLE said he was aware of someone who is planning on a several
million dollar investment in the Anchorage International Airport.
He said this person will not make that investment, if at the end of
the term especially if it is a short term of less than 35 years,
he is going to lose that investment and the related businesses.
Number 0848
CHAIRMAN GARY DAVIS asked how long that individual had a lease.
MR. COLE said the person did not have an existing lease, he is
acquiring by way of assignment, mostly vacant, unimproved ground.
Number 0868
REPRESENTATIVE ROKEBERG asked if the leasing policy was having a
negative effect on the development of both the Anchorage and
Fairbanks International Airports as well as the rural airports in
the state. He said, in the real estate industry, further
development at the airports is going to be curtailed because of the
existing lease policies.
Number 0890
MR. WIEN said that statement was true. He said, in Fairbanks,
there was a lease granted, under the proposed owner's provisions,
and said that business is not developing until the leasing policy
is resolved. He said no one is going to develop on these airports.
He said there are many cases where hangars cannot be sold. He
referred to Mr. Cole's testimony. He said the current lease policy
has the "downstream effect of gutting the equity of the aviation
community." He said airplanes come and go, they wear out and
depreciate and the balance sheet often appears as zero. He said
the equity that is valued, from a banks perspective, is the
facilities. He said if you lose that ability to keep these
facilities, the banks will not fund these improvements and said
there is not enough infrastructure in the state as it exists to
provide the capital to expand and develop.
Number 0998
CHAIRMAN GARY DAVIS asked for comment on Section(d).
MS. HICKERSON said Section 3 has now become an "extension of an
existing contract" versus "offering a new lease" and said this
creates some additional legal concerns relating to time and the
preference to limit any new terms and conditions over an extended
period of time. She said, from a policy point of view, there are
operational issues that are contained in new leases that spoke to
the ability to sufficiently run airports. She said, from a legal
point of view, it is unclear what the time period would be. She
asked if the total time available for the existing lease and the
extension would be limited to 55 years or would this lease continue
indefinitely. She said if it continues in perpetuity, then there
are legal problems.
Number 1081
MS. HICKERSON said, in the Governor's recommended bill, there is a
paragraph (d) which says any lease term offered under (c) of this
section may not exceed a total of 55 years when combined with a
prior lease term. She said this would give more definition. She
said, she understood the charge to be, how to provide a good tenant
an opportunity for a new lease without facing competition. She
said if the committee wishes to change the new lease into an
extension, then the time period for the total term be stated. She
referred to paragraph (d) and said the disposition of improvements
is not a legal issue in concept, it is more of a policy issue and
the use of the airport and the flexibility which may be needed to
operate it. She said there is less flexibility, if the airports
find their land tied up for extended periods of time. She said
whether you own the improvements or you have the ability to have
a greater return on your money are policy issues, not legal issues.
She echoed the concern over the financing terms and what that
implies.
Number 1186
CHAIRMAN GARY DAVIS said it is not the intention to have leases in
perpetuity. He said it is the intention to keep the 55 years
intact unless there are some extenuating circumstances.
Number 1210
REPRESENTATIVE BRICE asked for an explanation of the 55 year time
period.
Number 1226
MR. PARKAN said 55 years is the length in statute now and added
that he did not know why that length was chosen.
REPRESENTATIVE BRICE said that this 55 year period could be changed
prospectively.
Number 1280
CHAIRMAN GARY DAVIS agreed that this could be done.
MS. HICKERSON said there are other statutes which limit lease terms
to 55 years.
Number 1339
CHAIRMAN GARY DAVIS referred to Section (d) which tries to
delineate what will happen to the assets at the end of a lease. He
said this is addressed in regulation and he was told it should not
be addressed in statute. He asked if it was felt that this
provision was addressed properly in regulations.
Number 1364
DIANE BARTH, Chief of Leasing, Anchorage International Airport,
Department of Transportation and Public Facilities, testified via
teleconference from Anchorage. She said, in response to the
question, it is a legal question and that DOT/PF has been using the
existing regulations for a number of years to address the issue of
disposition of improvements. She said the regulations give the
DOT/PF a number of options.
Number 1372
CHAIRMAN GARY DAVIS clarified that there had been no major problems
with those regulations.
Number 1382
MS. BARTH said there had been no major legal problems, but there
have been some policy issues as to how the DOT/PF should be using
those regulations. She repeated that the regulations give the
Department a number of options.
REPRESENTATIVE ROKEBERG (indiscernible due to papers over the
microphone) "existing lease language that disposition of
improvements says it's to the Departments discretion and the nature
of the disposition would include a reversion to the state in the
first interest and then the regulations give the state the right to
reversionary interest."
MS. BARTH said yes, the existing lease suit gives the airport the
right to decide if they want title to the improvements. She said
the existing regulations gives us that ability, the option to
include that in the language.
CHAIRMAN GARY DAVIS expressed frustration over the inability for
the parties to agree on the language.
Number 1483
REPRESENTATIVE ROKEBERG said, the suggested changes that Mr. Cole
offered, are so elementary that it creates good language. He
expressed concern over whether a revisionary interest should go
back to the state by clear agreement in terms of the Section (d)
language. He expressed concern over current policy. He said from
his experience, as a representative whose district encompasses the
Anchorage Airport and someone with real estate experience he feels
CSHB 543 is a good bill. He said, "I have never participated in my
business in an airport lease and I do not have now or don't intend
to have any relationship businesswise with the state of Alaska as
relates to this."
Number 1608
REPRESENTATIVE BRICE said that Mr. Cole's language appears to meet
the intent of CSHB 543. He suggested that private aviation
language be included. He questioned the magic of 55 years.
Number 1656
CHAIRMAN GARY DAVIS said he, somewhat, agreed with the DOL in the
language of "extension of a lease," so there needs to be some time
element in the language. He said there had been "two years or
more" language included in the original version.
Number 1691
REPRESENTATIVE ROKEBERG said the language should be, "in a
reasonable period of time", and disagreed with Mr. Cole in the
sense that the intention of the draft was that the arrangements be
concluded in a reasonable amount of time.
CHAIRMAN GARY DAVIS said the length of time is what needs to be
addressed.
Number 1724
REPRESENTATIVE ROKEBERG said the length of lease is something that
should be bargained for between the tenant and the state. He said
the bargaining length is limited by the statutory limitation of 55
years. He said this is a common business practice and not
something that needs to be addressed because the committee is not
delimitating the shortness or length of term here. He said the
reason for the two year provision was that the term from the
drafter used long term lease and a definition needed to be included
as a result. He said this long term lease provision is not
included and so it does not need to be included in CSHB 543.
Number 1794
CHAIRMAN GARY DAVIS asked Ms. Hickerson if she considered Mr.
Cole's wording an "extension" and said that the amount of time of
the extension needs to be specifically addressed.
MS. HICKERSON said this was what she was referring to in the
Governor's draft amendment, paragraph (b). She said it could be
modified, but any lease term offered under (c) of this section may
not exceed a total of 55 years when combined with a prior lease
term. She said if the bill is going to use language of an
"extension" rather than a "new lease" any lease extension or
extension to a lease, so that the language is understood to be
working within the 55 year maximum period.
CHAIRMAN GARY DAVIS asked if the language would be acceptable in
subsection (c) with Mr. Cole's language.
MS. HICKERSON said the Department would prefer a "new lease" versus
an extension of something (indiscernible due to styrofoam cup being
run across the table) "definition as to the total time we are
looking at versus having extensions pancaked on so that they extend
into perpetuity, which I urge you to stay away from that challenge,
that is a problem area." In regards to the wording, "offer an
extension to an existing lessee" she said she would like to see
them in writing, especially in lieu of Representative Rokeberg's
concern about "within a reasonable time." She said that is clearer
than an offer or an option of a "first offer" and said she would
appreciate the opportunity to look at the language to see if it
would be legally defensible.
Number 1955
MR. PARKAN said, generally, drafting legislation is the art of
compromise. He said whether it is an extension or a new lease
isn't so much the issue as the issue of the 55 year total length.
He said the DOT/PF could probably live with an extension, but that
there could be problems with having leases in perpetuity.
Number 2007
CHAIRMAN GARY DAVIS said there did not appear to be disagreement on
that point.
Number 2014
REPRESENTATIVE ROKEBERG said the recommendation made by Ms.
Hickerson is a valid one if the cumulative 55 years were included
for the length. He said the intention of the draft was to say the
act of extension would have to be done within a reasonable period
of time and did not refer to the length of term. He said this is
why the additional language as suggested by Ms. Hickerson would
clear that up.
Number 2062
CHAIRMAN GARY DAVIS said more work will be done on CSHB 543.
Number 2107
MR. COLE suggested that at the beginning of subsection (c) language
be included, "not less than 30 days prior to the expiration of the
land lease".
Number 2135
REPRESENTATIVE ROKEBERG said 30 days is a tight time frame.
Number 2162
MR. COLE suggested that 60 or 90 days could be used instead.
Number 2168
REPRESENTATIVE ROKEBERG said that the time frame varies with the
length of term. He said it is common in business to have 6 months
or one year for a long term lease.
MR. COLE said that maybe the "reasonable period of time" language
could be eliminated.
REPRESENTATIVE ROKEBERG said the reasonable period of time is
needed to conclude the transaction.
MR. COLE said that if a sentence were started in that fashion then
it would set the standard or procedure, in effect. He said he
agreed with Ms. Hickerson on putting in the subsection (e) and said
that would clear up a lot of the problems and be beneficial. He
added a lease extension offered under (c) would solve a lot of
problems.
ADJOURNMENT
As there was no further business to come before the House
Transportation Standing Committee, Chairman Gary Davis adjourned
the meeting at 3:00 p.m.
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