CS FOR HOUSE BILL NO. 77(RES) "An Act relating to the Alaska Land Act, including certain authorizations, contracts, leases, permits, or other disposals of state land, resources, property, or interests; relating to authorization for the use of state land by general permit; relating to exchange of state land; relating to procedures for certain administrative appeals and requests for reconsideration to the commissioner of natural resources; relating to the Alaska Water Use Act; and providing for an effective date." 9:08:19 AM Co-Chair Meyer noted letters in the committee member's packet from various corporations, support letters, and paperwork related to the bill. 9:08:54 AM Co-Chair Kelly MOVED to ADOPT the proposed committee substitute for SCS CS HB 77 (FIN), Work Draft 28-GH1524\P (Bullock 4/7/13). Co-Chair Meyer OBJECTED for purpose of discussion. 9:09:57 AM CHRISTINE MARASIGAN, STAFF, SENATOR KEVIN MEYER, noted the title change on the first page of the CS, which pertained to material stated on page 18, section 30. The section allowed for the performance of a feasibility study at Chikuminuk Lake. Language pertaining to the same subject was found on page 6 in the transition language. She mentioned 2 additional substantive changes to the bill, the first on page 6, section 4 addressed leases. The final change on page 23, section 47 addressed language related to transition, pending applications. 9:11:43 AM Co-Chair Meyer noted that the change in access to the Wood- Tikchik State Park was previously included in Senator McGuire's bill, which was the reason for the title change. He stated that long-term lease sales allowed first purchasing opportunity to the lessee. Ms. Marasigan concurred. 9:12:55 AM Co-Chair Meyer understood that transition language in the bill required correction in collaboration with the Department of Natural Resources (DNR). Ms. Marasigan replied that there had been some discussion regarding Section 4 pertaining to preference rites. 9:13:17 AM Ms. Marasigan pointed out that the transition language at the end of the bill should result in a zero fiscal note. She stated that DNR representatives were available to discuss the fiscal note. 9:14:08 AM Senator Olson objected that the finance CS was considerably different from the original and he hoped for ample time for committee consideration. Co-Chair Meyer explained that the bill's changes were minor and he did not feel the need to hold the bill. Senator Olson remarked that the citizens affected by the changes in the bill did not consider the issues minor. 9:15:08 AM Co-Chair Kelly queried the page number for Tikchick State Park and Chikuminuk Lake. Ms. Marasigan replied that the title change was noted on page one. Another change noted on page 18, section 30 addressed Chikuminuk Lake. She continued that page 23 had transition language which also addressed Chikuminuk Lake. 9:15:59 AM Co-Chair Kelly remarked that the CS would not grant access to the park, but rather enable a feasibility study. Co-Chair Meyer agreed, but remarked that funding was acquired in the FY 13 capital budget for a hydro project, but access to the park was necessary to perform the feasibility study. 9:16:46 AM Co-Chair Kelly reiterated that access would be granted for the feasibility study alone. 9:17:01 AM Vice-Chair Fairclough looked at page 6, and noted that Section 4 was new. Ms. Marasigan replied that the section was new and related to preference rights to purchaser lease without competitive bid for up to five acres of state land. She pointed out that the change added time for an applicant to purchase the lease land. The federal permit requirement was also removed. 9:18:08 AM Senator Hoffman noted that section 40 from the previous version was now listed as section 42. Ms. Marasigan replied that the bill remained the same minus the three discussed changes. 9:18:42 AM Co-Chair Meyer addressed Senator Olson's concerns. He understood that any time bills were combined, public input was minimized. He noted that the process of combining bills was expected at the end of a legislative session. He believed that the bill's impact was similar and that testimony for HB 77 would remain consistent. He judged the CS as an appropriate vehicle for the changes. 9:19:31 AM Senator Olson felt that the bill was deemed controversial prior to the introduction of the Senate Finance Committee version. He opined that the judgment of the chairman was clouded by end-of-session pressure. He suggested holding the bill in committee for further work in a subcommittee or special session. He requested testimony from DNR and the Water Resources Board. 9:20:44 AM Co-Chair Meyer shared that DNR was available to discuss the changes. He opined that HB 77 was well vetted between the two bodies. Senator Olson felt that the CS was much different than the version passed to the committee. Co-Chair Meyer agreed that changes were made, which was common practice at the end of session. 9:21:20 AM Senator Olson suggested that bad legislation was often passed when time was short and legislators were rushed. 9:21:25 AM AT EASE 9:24:23 AM RECONVENED 9:24:33 AM Senator Bishop pointed to Section 4 and requested clarification from the department. 9:24:54 AM ED FOGELS, DEPUTY COMMISSIONER, DEPARTMENT OF NATURAL RESOURCES, introduced himself. 9:25:37 AM Senator Bishop noted that section 4 stated that "a director shall grant a preference to right-to-purchase or lease without competitive bid up to 5 acres...who has erected a building on the land and use the land for a bona fide business purposes." He asked if the section would apply to traditional fish camps on the Yukon River. Mr. Fogels replied that the intent of the preference was to provide Alaskans with federal permits on federal land. The permits allowed Alaskans the opportunity to purchase the land. 9:26:32 AM Senator Bishop asked if an Alaskan with a fish camp could apply for the preference to purchase or lease federal land. Mr. Fogels pointed out that the amendment stated that an Alaskan with a state permit or lease who met the requirements of 10 years and 25 percent would have the option to purchase the property. 9:27:26 AM Co-Chair Meyer clarified that the proposed amendment would not be addressed until the CS was adopted. 9:27:42 AM Co-Chair Kelly remarked that the changes in the CS were not significant and were present to protect Alaskans. He did not think that the subject of a feasibility study was especially controversial. 9:29:13 AM Co-Chair Meyer remarked that combining the bills seemed logical. He noted that access to the park also seemed logical since the money for the project was appropriated in the FY 13 capital budget. Co-Chair Kelly furthered that there were two separate pieces that the feasibility study could be applied to and the most applicable option was propagated in the CS. 9:30:09 AM Co-Chair Kelly restated his original motion, and MOVED to ADOPT the proposed committee substitute for SCS CS HB 77 (FIN), Work Draft 28-GH1524\P (Bullock 4/7/13). Senator Olson OBJECTED for discussion. Senator Olson wondered if Mr. Fogels would explain the forthcoming amendment upon proposal. Co-Chair Meyer replied in the affirmative. 9:30:36 AM Senator Olson removed his objection. There being NO OBJECTION it was so ordered. Version P was adopted. 9:31:29 AM AT EASE 9:32:04 AM RECONVENED 9:32:08 AM Co-Chair Kelly moved Amendment 1. DELETE Sec.4 Create a new preference right under AS 38.05.035 (o) Where there is an active municipal entitlement selection on state land under AS 29.65.010 - 29.65.030 that has a state issued lease and before the decision to approve the municipal entitlement, the director shall grant a preference right to purchase without competitive bid of up to five acres of the state land to an individual who has erected a building approved by a lease on the state land and used the land for bona fide business purposes for 10 or more years under a state lease, if the business produced no less than 25 percent of the total income of the applicant for the 10 years preceding the application to purchase the land. The director shall sell the land at a price determined by the director to represent the current fair market value of the unimproved land determined by appraisal and survey, if not already completed, at the cost of the applicant. If the director determines in a written finding that the purchase of the land would interfere with public use by residents of the area, the director may condition the purchase to mitigate the adverse effects on the public or may reject the application if those effects can not be mitigated. The revenue from the purchase of the parcel will be given to the municipality if the municipal entitlement is approved for that acreage. In this subsection, "business purposes" means a purpose consistent with the classification of the land at the time the land was entered. In this subsection, "building" means a permanent type of structure with solid walls, foundation, and roof. Co-Chair Meyer OBJECTED for discussion. 9:32:27 AM Ms. Marasigan explained that Amendment 1 deleted Section 4, and created a new preference right under AS 38.05.035. She invited the department to discuss the amendment. 9:33:00 AM Mr. Fogels explained that DNR observed problems with Section 4 as stated in the finance version. The first issue was that the CS deleted a preference right deemed necessary to the department. He proposed focus on the preference right allowing a leaseholder the option of purchasing that lease. Co-Chair Meyer wondered if the department's testimony addressed Senator Bishop's concerns. 9:33:53 AM Senator Bishop clarified that a leaseholder could apply for the lease if the land would revert to a municipality. Mr. Fogels responded that the option would exist for the lease holder when the land was given to the municipality through the municipal entitlements program. 9:34:14 AM Vice-Chair Fairclough queried the impact of the five years versus ten years and how the time frame either hurt or helped an individual or municipality. Mr. Fogels responded that the intent of the extended time period ensured that a person invested more in their piece of land indicating seriousness about their presence. He stated that the department's leases were typically for commercial purposes. The provision showed that a commercial lease was viable and that 25 percent of income was derived from the commercial venture. 9:35:10 AM Vice-Chair Fairclough wondered if there was a particular title holder that would be adversely affected by the legislation. Mr. Fogels did not know. Senator Hoffman wondered how the amendment would be viewed in light of individuals with long-term fish camp sites on the Yukon River. Mr. Fogels responded that the preference right was only for state leases. If the person with the fish camp had a state lease then they would qualify, otherwise the provision would not apply. 9:36:18 AM Senator Olson felt that there was no protection for Alaskans with long-term fish racks if they did not have leases. Mr. Fogels responded that a person holding a fish camp with a state lease was able to purchase the land. He added that many of the fish camps were on private land, which would not be affected. 9:37:11 AM Senator Olson wondered about the Water Resources Board as established under Alaska statute. Mr. Fogels responded that the Water Resources Board was dormant without funding or membership. Senator Olson found the information troublesome. 9:37:57 AM Co-Chair Meyer removed his objection. There being NO OBJECTION, Amendment 1 was ADOPTED. 9:38:26 AM Co-Chair Meyer asked about fiscal note changes. Ms. Marasigan responded that a forthcoming new indeterminate fiscal note would be attached to the bill. She asked the department to address the fiscal note. 9:38:52 AM Mr. Fogels responded that the changes to the bill were without fiscal impact. Co-Chair Meyer concurred. He understood that both fiscal notes were without fiscal impact. 9:39:20 AM Co-Chair Kelly MOVED to REPORT SCS CS HB 77 (FIN) as amended out of committee with individual recommendations and the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. Co-Chair Meyer stated that a separate title change resolution would accompany the bill. 9:41:00 AM AT EASE 9:41:24 AM RECONVENED 9:41:30 AM Co-Chair Kelly REMOVED his PREVIOUS MOTION, for the purpose of correcting the motion. There being NO OBJECTION, it was so ordered. 9:41:47 AM Co-Chair Meyer MOVED to REPORT SCS CS HB 77 (FIN) as amended out of committee with individual recommendations, attached SCR Title Change, the accompanying fiscal notes. There being NO OBJECTION, it was so ordered. SCS CS HB 77(FIN) was REPORTED out of committee with a "do pass" recommendation and a new zero fiscal note from Department of Natural Resources, and previously published zero fiscal note: FN2 (DFG). 9:42:51 AM Senator Hoffman stressed grave concern about testimony regarding section 42. He intended to allow the bill to move from committee, but would sign the report "amend." 9:43:37 AM AT EASE 9:46:08 AM RECONVENED