Legislature(2003 - 2004)
03/25/2003 01:39 PM Senate TRA
| Audio | Topic |
|---|
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
March 25, 2003
1:39 p.m.
MEMBERS PRESENT
Senator John Cowdery, Chair
Senator Thomas Wagoner, Vice Chair
Senator Gene Therriault
Senator Georgianna Lincoln
Senator Donny Olson
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 103
"An Act increasing certain motor vehicle registration fees; and
providing for an effective date."
MOVED SB 103 OUT OF COMMITTEE
SENATE BILL NO. 153
"An Act authorizing a long-term lease of certain Alaska Railroad
Corporation land at Anchorage; and providing for an effective
date."
MOVED SB 153 OUT OF COMMITTEE
PREVIOUS ACTION
SB 103 - See Transportation minutes dated 3/11/03 and 3/18/03.
SB 153 - No previous action to record.
WITNESS REGISTER
Mr. Dwayne Bannock
Division of Motor Vehicles
Department of Administration
PO Box 110200
Juneau, AK 99811-0200
POSITION STATEMENT: Answered questions about SB 103
Mr. Mark Marlow
Alaska Franchise Facilities
No address provided
POSITION STATEMENT: Explained the purpose of SB 153
Mr. Tom Pease
Government Hill Community Council
PO Box 100018
Anchorage, AK 99510-0018
POSITION STATEMENT: Opposed to SB 153
Ms. Wendy Lindskoog
Director of External Affairs
Alaska Railroad Corporation
PO Box 107500
Anchorage, AK 99510-7500
POSITION STATEMENT: Answered questions about SB 153
Ms. Phyllis Johnson
Counsel
Alaska Railroad Corporation
PO Box 107500
Anchorage, AK 99510-7500
POSITION STATEMENT: Answered questions about ARRC's lease
process
Mr. George Utermohle
Legislative Counsel
Legal and Research Services Division
Legislative Affairs Agency
Alaska State Capitol
Juneau, AK 99801-1182
POSITION STATEMENT: Answered questions on SB 153
ACTION NARRATIVE
TAPE 03-10, SIDE A
CHAIR JOHN COWDERY called the Senate Transportation Standing
Committee meeting to order at 1:39 p.m. All members were
present. The first order of business to come before the
committee was SB 103.
SB 103-MOTOR VEHICLE REGISTRATION FEES
CHAIR COWDERY told members that SB 103 was heard in committee
last week but was held over to provide time to get answers to
questions from Senators Lincoln and Olson. Those questions were
answered so it is his intention to pass this legislation out of
committee today.
SENATOR LINCOLN said she didn't receive one of the documents
other members received. She said she only received responses to
her individual questions and she was interested in the responses
to other members' questions. She asked for the response to
Senator Olson's question about whether the Anchorage School
District's school buses would be exempt from registration.
The committee took a brief at-ease.
CHAIR COWDERY noted that Mr. Dwayne Bannock was available to
answer questions via teleconference.
SENATOR OLSON asked Mr. Bannock whether school buses owned by
private schools must pay a registration fee and, if so, how much
that fee would increase.
MR. DWAYNE BANNOCK, Director of the Division of Motor Vehicles
(DMV), Department of Administration (DOA), told members that
school buses fall under a number of classifications. A school
district that owns school buses falls under Class 5G. The school
district pays a form of exempt registration fees. Private
schools or church schools that own buses fall under the "Exempt
Bus Charitable" classification. They pay $10. If a school
district contracts for bus service with a private company, the
private contractor pays traditional commercial fees.
SENATOR OLSON asked about the increase in fees.
MR. BANNOCK said there is no proposed increase in fees for the
exempt buses.
SENATOR LINCOLN noted that Senator Therriault asked whether the
Alaska State Constitution grants local governments the option of
charging a vehicle license fee.
MR. BANNOCK told members that DMV has a formula called MVRT
(Motor Vehicle Registration Tax). That tax can be exercised at
the option of a local municipality or borough. He provided a
list of communities that participate in the MVRT schedule. That
cost is added to the state registration fee and then returned to
the local government.
SENATOR THERRIAULT noted the list on pages 2 and 3 contains the
names of all the communities that require no vehicle licensure
or insurance.
MR. BANNOCK replied, "I can't speak to the insurance side of it
Senator, but I can only tell you that those are exempt from the
registration portions."
SENATOR OLSON asked Mr. Bannock if he is familiar with AS
28.10.011(a) and (b), which address vehicles exempt from
registration.
MR. BANNOCK said he is.
SENATOR OLSON said a number of communities within his district
are listed in that statute. He asked if those communities do not
have roads that were built or are maintained by the state.
MR. BANNOCK apologized for not having good information about the
compilation of that list. Its effective date was July 1, 2001
and he is not aware of what was involved in making that list.
SENATOR THERRIAULT referred to item 10 on page 1 of the memo -
vehicles operated on the roadway not connected to the land
highway system or to a highway with an average daily traffic
volume greater than 499 - and said he believes that is where the
list originated.
SENATOR OLSON pointed out neither Nome nor Kotzebue is on that
list and they are not connected to the land highway system.
SENATOR THERRIAULT said Nome is not connected to the land
highway system, but would fall under a highway with an average
daily traffic volume greater than 499.
SENATOR OLSON asked Mr. Bannock if it is restricted to state
built or maintained roads.
MR. BANNOCK said Senator Olson is correct in that the list
contains things that allow a community to file for that
exemption. Nome would be greater than 499 units.
SENATOR OLSON asked about Barrow.
MR. BANNOCK said he believes the registration records will
reflect that Barrow has more than 499 vehicles.
There being no further questions, Senator Therriault moved SB
103 from committee with individual recommendations and attached
zero fiscal note. He then asked for unanimous consent.
CHAIR COWDERY announced that without objection, the motion
carried.
2:00 p.m.
SB 153-LONG-TERM LEASES OF ALASKA RR LAND
CHAIR COWDERY informed members that HB 97 is the companion bill
to SB 153 and that staff from the House was available to answer
questions. He asked Mr. Marlow to testify.
MR. MARK MARLOW, Alaska Enfranchise Facilities (AEF), told
members that SB 153 is about AEF's desire to apply for next
fiscal year's 202 grant from the Department of Housing and Urban
Development (HUD). To obtain 202 grant funds, the land leased
for a building must have a lease duration of at least 75 years.
CHAIR COWDERY asked Mr. Marlow to explain why SB 153 is
necessary.
MR. MARLOW explained that the Section 202 grant program is
designed to serve the housing needs of very low income and
independent-living elderly people of at least 62 years of age.
CHAIR COWDERY added that SB 153 would extend the Alaska Railroad
Corporation (ARRC) lease for this project.
MR. MARLOW said that is correct and noted the piece of property
in question is approximately 2 acres on Government Hill. He said
at least a portion of that acreage is the former site of the
Hollywood Vista Apartments. That building was razed some years
ago and the property is in ARRC's inventory.
CHAIR COWDERY asked how long a lease extension AEF would need in
order to get the 202 funds.
MR. MARLOW said last year the Legislature extended ARRC's
ability to lease its land for duration of 55 years. The statute
allows ARRC to lease land for longer duration with legislative
approval. The 202 grant funds require the lease to be at least
75 years so AEF needs a 20 year extension.
CHAIR COWDERY asked if the proposed building would last 75
years.
MR. MARLOW said he believes modern buildings that are well
maintained should last at least 75 years. The HUD contract
requires that the building be kept available for senior housing
for at least 40 years.
SENATOR LINCOLN said she was asked whether SB 153 violates the
constitutional prohibition against local or special acts in art.
11, sec. 19 of the Alaska Constitution, which says the
Legislature shall pass no local or special act if a general act
can be made applicable. She questioned why not pass legislation
that increases all ARRC leases to 75 years.
MR. MARLOW said he could not answer that question. He simply
read the statute that allows ARRC to lease its land and found
that legislative approval is required for leases longer than 55
years.
CHAIR COWDERY said if the legislature passes SB 153, AEF would
still need ARRC board approval.
MR. MARLOW said that is correct. SB 153 will give ARRC the
authority to extend the lease but does not require ARRC to do
so. Once the legislation becomes law, it will become incumbent
upon him to petition the ARRC board of directors to write a
lease of long enough duration to qualify for the 202 grant.
SENATOR LINCOLN asked if the Government Hill Community Council
is opposed to SB 153.
MR. MARLOW said the council has not directly communicated that
to him but it would not surprise him, although he could not say
why.
SENATOR LINCOLN read from a letter dated March 21 from the
Government Hill Community Council:
The community voted ... unanimously to oppose this
bill because they believe that the bill is focusing on
a single piece of real property, is narrow, special
interest legislation, is unsound public policy and is
not in the best interest of our neighborhood, the
Alaska Railroad [Corporation] or the State of Alaska.
MR. MARLOW said he has not seen that letter but it is hard for
him to imagine how this type of project could be detrimental to
the community.
CHAIR COWDERY asked Mr. Marlow if AEF plans to move forward with
another project if SB 153 does not pass.
MR. MARLOW said that is correct. He has already leased the land
with the intent of positioning the property on behalf of AEF to
be able to apply for this year's 202 grant. If that is not
possible, he will build a different multi-family type property
on that land with the 55-year lease. He said the land lease
would be transferred to the non-profit organization at the
appropriate time. Therefore, in any event, a multi-family
property will be built on that land. It is zoned R-4 and comes
under the direct oversight of the Municipality of Anchorage
(MOA) planning department. He said his first objective is to
position the property on behalf of AEF so that 202 housing could
be built there.
CHAIR COWDERY asked Mr. Marlow about property taxes.
MR. MARLOW said he began paying the taxes when he leased the
property late last year.
CHAIR COWDERY asked the estimated value of the completed
project.
MR. MARLOW said he believes that 202 projects are exempt from
local property taxes because of the population served.
SENATOR THERRIAULT asked Chair Cowdery, as prime sponsor of SB
153, if legal counsel produced a memo advising that this
legislation violates the single subject rule.
CHAIR COWDERY said he did not receive such a memo. He pointed
out that SB 153 is identical to the House companion bill. He
assumed the legal drafter would have alerted him of any
constitutional problems.
SENATOR OLSON asked if anyone was available from the Government
Hill Community Council to testify.
CHAIR COWDERY said he has never been convinced that a community
council actually represents the community.
MR. TOM PEASE, Government Hill Community Council, told members
the council unanimously opposed SB 153 at its last meeting. The
council views SB 153 as special interest legislation that
extends a railroad lease to a single individual on a single
parcel of land in the heart of the Government Hill neighborhood.
He pointed out that no legislator representing Government Hill
has signed on to this legislation. He also noted that ARRC has
remained neutral on this legislation.
MR. PEASE said last May, the community met with the leaseholder
to discuss development plans on this parcel. The community asked
about the design, use, and size of the footprint, financing,
etcetera. The developer had no answers to those questions at
that time, other than to report that he planned to build low-
income housing on the parcel. The community was assured that he
would maintain an open line of communication but no one has
heard from the developer in nearly a year. The developer
declined an invitation to attend the Council's February meeting,
at which time the Council planned to discuss HB 97. He said last
year the Legislature enacted legislation extending the lease on
the same ARRC property from 35 to 55 years to meet HUD financing
requirements. HUD then extended its leasing requirements to 75
years. At the time, two applicants were vying for the ARRC lease
and the playing field was level. One applicant withdrew knowing
that HUD funding would not be available because of the duration
of the lease. The current developer pursued the lease anyway.
Now that same leaseholder is pursuing a second extension after
the fact. He offered to answer questions.
CHAIR COWDERY asked if the community council supported the 20
year lease extension last year.
MR. PEASE believed the council took no position but voiced some
concerns to the ARRC board.
CHAIR COWDERY said that even if SB 153 is enacted, the ARRC
Board must still approve the project.
MR. PEASE agreed the ARRC Board has the final word.
SENATOR THERRIAULT asked if ARRC or the developer had to go to
the MOA to get a waiver from zoning requirements or whether this
land was already zoned for this type of activity.
MR. PEASE said he believes it falls within the zoning for that
area.
MR. MARLOW added the property is zoned multiple family. He then
asked to make one correction to Mr. Pease's testimony. He
explained that last year's bill had nothing to do with this
project. That was a general piece of legislation to update
ARRC's policies to be in step with the needs of the people
seeking to lease any of ARRC's lands.
MR. PEASE said he believes this project was probably the impetus
for introducing that legislation.
MR. MARLOW said that is incorrect.
CHAIR COWDERY agreed that is incorrect because lessees in the
railroad yards raised the lease extension issue at least two
years ago. The Coca-Cola Company had a building partly located
on leased land and wanted to straighten up that situation.
SENATOR OLSON asked Mr. Pease if he participated in the ongoing
discussion between ARRC and AEF.
MR. PEASE said the other co-president of the Community Council
went to the ARRC Board with certain concerns and requests but at
no time were council members invited to any meetings between
those two entities.
SENATOR OLSON said that one does not need an invitation to
attend a public meeting.
MR. PEASE said it is hard to attend a meeting you don't know
about.
2:17 p.m.
SENATOR OLSON asked what ARRC's response was to the community
council's concerns.
MR. PEASE said he was told that two members of the ARRC Board
opposed the action; the remainder of the board was in favor.
However, several members acknowledged that ARRC's leasing
practices, particularly on land within high-density
neighborhoods, needs to be addressed. Currently, ARRC has one
leasing policy that it applies to all of its lands, whether
those lands are remote or urban. ARRC members realized the need
to take neighborhood plans and concerns into account.
SENATOR OLSON asked which legislators represent Government Hill.
MR. PEASE replied, "Representative Les Gara, Representative
Nancy Dahlstrom, Senator Johnny Ellis - and I believe Senator
Fred Dyson represents a very small piece of the neighborhood."
CHAIR COWDERY asked how many residents live in the Government
Hill area.
MR. PEASE said maybe 3,000.
CHAIR COWDERY asked how many people attended the meeting during
which the letter was written to the committee.
MR. PEASE said about 25, which is a relatively high number. He
pointed out the Government Hill Community Council is one of the
most active and well attended of the community councils in
Anchorage.
SENATOR THERRIAULT asked if the council's position on extending
the lease to 55 years for this project last year was mixed so
the council decided not to take a stand for or against the
project.
MR. PEASE said the council did not take a position on the
legislation itself.
MR. MARLOW said that he had applied to ARRC to lease the
property through its real estate department before it was known
that HUD extended its lease requirement to 75 years. ARRC had
its real estate committee take up the issue. The committee
recommended to the ARRC Board of Directors that the lease be
granted. The board took up the issue and the Government Hill
Community Council opposed the lease. ARRC approved the lease by
a 7 to 1 vote.
SENATOR THERRIAULT said what he was trying to get at is that the
community council decided not to take a position on last year's
decision to extend the lease to 55 years, but now it opposes an
additional 20 years for the same project in the same
neighborhood on a piece of property that is currently zoned for
multifamily housing. He said he does not understand why the
community council is now viewing it differently.
MR. PEASE explained that from one perspective, the lease
extension does not seem like a significant difference. However,
from another perspective, what began as a 35 year lease is now
being doubled in one year. Although the footprint remains the
same, the community does not know what that footprint is. The
council asked the developer for specific information about the
plans but all of those questions have gone unanswered. That is
after he agreed to maintain communication.
SENATOR THERRIAULT said if he owned the property and Mr. Marlow
was leasing it from him, Mr. Marlow would not be required to
meet with the council. He would only have to meet the local
zoning requirements and building codes. He questioned why, if
the project meets all codes, the council should direct what does
or does not take place on his piece of property.
MR. PEASE said if it were privately owned, the council would
hope that the developer would act responsibly and be a good
neighbor. However, this is railroad land, which is essentially
public land and the time it will be locked up for a single use
is now being doubled.
SENATOR THERRIAULT agreed that makes a big difference, but in
that case, everyone owns the land. The Legislature has made a
policy call that directs the railroad to develop those lands to
develop a revenue stream from them. He asked if Mr. Pease feels
there is anything suspect about the project regarding the rate
of return that ARRC will receive. ARRC is trying to get its land
into active use and on the tax roles.
MR. PEASE responded by saying that ARRC is not pursuing the
highest and best use of this piece of property. He stated if
pursuing the highest and best use, ARRC would try to generate
more interest before awarding the lease. Regarding the tax role,
this project will not generate tax revenue if it is a HUD 202
project.
SENATOR THERRIAULT asked a representative from ARRC to tell
members whether this project will be leased at the market rate.
CHAIR COWDERY interjected to ask Mr. Pease whether he believes
it is fair to expect Mr. Marlow to provide anything other than a
conceptual design until he is assured the project is approved.
He pointed out that detailed plans are expensive.
MR. PEASE said he does not believe expecting detailed plans
would be reasonable, but he does believe someone entering into a
55 year lease should be able to answer questions about what will
be put on that property. He added that good business practice
dictates that one maintain good communication with the
neighborhood after offering to do so.
MR. MARLOW said the fact of the matter is that there has been no
activity with this project during the last year because the
nature of 202 projects is to hurry up and wait. He said there
simply has not been any information to convey.
CHAIR COWDERY noted that he spoke with Mr. Gamble of ARRC last
week and he said this issue was basically in the Legislature's
hands at this time. The project would then have to be approved
and there is no guarantee the board would approve it.
MS. WENDY LINDSKOOG, Director of External Affairs, ARRC, asked
Senator Therriault to repeat his question.
SENATOR THERRIAULT said he was wondering, in terms of the lease,
whether it is at market rate or, because it is longer term, it
falls in the "middle of the pack." He said he wanted to make
sure that ARRC is granting no special favors to Mr. Marlow and
that ARRC is getting good value for the long-term use of this
property.
MS. PHYLLIS JOHNSON, Chief General Counsel for ARRC, told
members that this lease is being handled like any other
commercial lease under the terms of the statute and the board's
long-term lease policy. She noted that lease value is set using
an appraisal of the property. The appraiser is required to use
standards, which include highest and best use. She said she
could not say whether the length of the lease would make a
difference in the appraisal. She did not believe so because
appraisers appraise the full fee simple interest in the property
at the time of the appraisal. Then ARRC applies what is known as
the capitalization rate each year, which she guessed to be eight
percent. She said that rate is determined by a periodic survey
of rental properties in the area. She pointed out that whether
or not competition is involved, highest and best use is what
appraisers consider when determining value. She said the across
the board fair market rental rate is being charged.
SENATOR THERRIAULT indicated the City of Fairbanks negotiated a
lease on a piece of property in the 1940s or 1950s and is
currently getting a pittance for it. He asked if ARRC has
something that protects the state down the line.
MS. JOHNSON said typically, ARRC does a reappraisal every five
years and so the value is subject to new fair market value but
is also subject to caps and floors. The ARRC board instituted
the cap and floor provision in its long-term lease policy rule
in 1988 in response to testimony from long-term leaseholders in
Anchorage. Those leaseholders felt it was fair to have an
increase but also needed stability to run their businesses so
asked for a cap. She said the cap is usually 135 percent for the
five-year increase while the floor is the prior period rent.
TAPE 03-10, SIDE B
SENATOR THERRIAULT asked Mr. Marlow if he has entered into a
lease on this property and is currently paying taxes on it so
the issue before the Legislature today is whether it allows
modification of the lease to get the HUD 202 financing.
MR. MARLOW replied, "That is absolutely correct."
SENATOR THERRIAULT said Mr. Marlow's intent is to put a multi-
family dwelling on that piece of property and the question is
what financing package he can apply.
MR. MARLOW said that is correct.
CHAIR COWDERY informed members that he requested Mr. Utermohle,
legal counsel, to answer questions. He should arrive
momentarily.
SENATOR WAGONER said, regarding the 5-year lease, the City of
Kenai operates in the same way as ARRC. At the end of 5 years,
the property value is reappraised and the interest rate is
adjusted. He pointed out the property is always appraised
without improvements. Therefore, an improvement that may not be
the highest and best use may not have anything to do with the
property value.
SENATOR LINCOLN indicated that Senator Therriault succinctly
stated the committee mission. She then noted that Mr. Marlow
listed one of AEF's seven goals as involving local and regional
leadership in the entire process. She asked Mr. Marlow how he
interprets local, and whether that means ARRC and the MOA or the
community council.
MR. MARLOW said he is not a board member of AEF but, on all of
the buildings that AEF has successfully constructed in
Anchorage, AEF has worked with the community planning department
at the MOA to achieve an outcome so that anyone would say it is
a good neighbor to the pre-existing properties. He said in
response to Senator Lincoln's question, he would say local means
Anchorage, but his experience with the AEF Board is that it
would consider any thoughts the Government Hill Community
Council wanted to share.
SENATOR LINCOLN asked Mr. Marlow if the proposed facility is for
seniors only and, if the lease extension does not pan out, he
could build a McDonald's restaurant on the property.
MR. MARLOW said the property is zoned R-4 so, if this
legislation does not pass, it is his intent to utilize the
property to build a different multifamily project. His goal is
to facilitate this legislation so that AEF can build on this
property with 202 funds.
SENATOR LINCOLN asked Mr. Pease to define the Government Hill
Community Council objection to building a senior housing
facility on that property if it meets all government
requirements.
MR. PEASE said the council has no objection to development of
that land. In fact, the neighborhood has been listed in MOA's
2020 plan for increased density so it is not an issue of whether
the land gets developed. The issue is how it gets developed and
whether the developer will take the community's concerns into
consideration. So far, the council has not seen that occur.
CHAIR COWDERY asked if the senior housing project would be for
all Alaskans, not just Anchorage seniors.
MR. MARLOW said that is correct provided those seniors meet the
income qualifications.
SENATOR LINCOLN asked if it is common language to extend the
lease beyond 55 years without including a provision that
reserves ARRC's right to terminate the lease.
MS. JOHNSON answered that by statute, ARRC must get legislative
approval if it wants to lease land for more than 55 years,
unless ARRC reserves the right to terminate. She said the same
rule applied when the maximum lease term was 35 years. ARRC has
rarely leased for longer than the statutory maximum term and,
when it has, it includes the right to terminate. About two or
three years ago, ARRC requested legislative approval for a lease
longer than the maximum term for the Tri-Valley subdivision near
Healey because of individual mortgage requirements. She noted
this is the second time that a lease has come up for legislative
approval.
SENATOR THERRIAULT noted, in response to the charge that SB 153
is special legislation, this kind of legislative approval is
exactly what the statute requires. Passage of legislation is the
only means for legislative approval.
MS. JOHNSON said that is correct.
CHAIR COWDERY noted his intent to move the legislation out of
committee.
SENATOR LINCOLN asked Mr. Utermohle if SB 153 violates the
provision that prohibits local or special acts in art. II, sec.
19 of the Alaska Constitution.
MR. GEORGE UTERMOHLE, legal counsel, Legislative Legal and
Research Division, explained that a statute does provide that
ARRC may enter into certain kinds of land transactions only with
the prior approval of the Legislature. That creates a situation
whereby there is no other general law that's applicable. This is
also a case where the standard applied to determine whether
legislation prohibits local or special acts is whether a
legitimate public purpose is being pursued. If the state has a
reasonable reason for dealing with site or lease specific
legislation, the legislation would be upheld under the
prohibition against local and special acts.
SENATOR THERRIAULT said a generic piece of legislation would
give ARRC the power to lease all of its properties for up to 75
years and that is not a public policy call the Legislature wants
to make.
MR. UTERMOHLE said that is correct.
SENATOR WAGONER motioned to move SB 153 from committee with the
zero fiscal note and asked for unanimous consent.
CHAIR COWDERY announced that without objection, the motion
carried. He then adjourned the meeting at 2:49 p.m.
| Document Name | Date/Time | Subjects |
|---|