SB 209-LEGISLATIVE APPROVAL OF RAILROAD LEASES    SENATOR LEMAN, sponsor of SSSB 209, said he represented District G in the Senate, which includes the reserve area. The legislation was precipitated by of desires to lease some railroad property. The existing 35-year lease is insufficient to get long term financing for larger projects. This bill extends the length of time that the railroad can lease lands within 4 terminal reserves at Anchorage, Fairbanks, Seward and Healy from the current 35 years to 55 years. He explained it would help cultivate economic development. There are projects that are being proposed that will make commercial and residential property more valuable. The scenario where the railroad could step in and take away leased property after 35 years is unlikely but it is of sufficient risk that long-term lenders are not comfortable with it. Anchorage Neighborhood Housing is working on development of a 20- unit senior housing complex on railroad property in Government Hill. The legislature was involved in part of the funding of that project and this is a continuation. Housing would be developed using Housing Urban Development (HUD) Senior Housing Funds but HUD requires a 50-year lease period. This bill will promote economic development and job opportunities with greater flexibility. He said it was supported by a number of people and organizations and he was not aware of any opposition. The Municipality of Anchorage supported it and he believed there were support groups in Fairbanks and elsewhere. He commended it to the committee and asked for their positive action. CHAIRMAN COWDERY asked if on page 1 line 7, the word "sell" would restrict a buyer from coming in and buying the railroad at a later time. SENATOR LEMAN answered that the intent of the legislation was not to affect any ability to sell or deal with transfer of the railroad. It would likely enhance the value of the railroad's sale price if it were to be sold. He said that was existing language, which the bill did not change. SENATOR TAYLOR asked why the legislation restricted the period within which the railroad might lease its land to only those terminal reserve areas found in Anchorage, Fairbanks, Seward or Healy. SENATOR LEMAN answered that was considered originally but they concluded to remove some of the challenges along the way or limit some of the possible objections to those areas where there has been expressed interest in some major long-term finance projects. He said someone from the railroad that had dealt with some of the negotiations was available to speak as to why the restriction but it was part of the compromise to get this through. WENDY LINDSKOOG said it would be great if they could have the 55- year lease potential on all of their reserve lands. There were reserve lands that had not been targeted by large commercial development but someday they might be and then the railroad would be before the legislature asking again to extend to 55 years. She explained that their right-of-way land is limited to an 18- year lease due to the Federal Transfer Act. SENATOR TAYLOR said it was a good investment policy to go from a restriction of 35 years to a restriction of 55 years. He didn't think anybody objected to that especially with financing modes the way they are today. He asked her if she was aware of any specific opposition or group that would oppose that. MS. LINDSKOOG answered no adding that Representative Rokeberg expressed the same opinion for including all reserve lands. SENATOR TAYLOR moved they amend by deleting lines 13, 14 on page 1 and lines 1, 2, 3 and the word "paragraph" on line 4, page 2 and delete the numeral 3 and insert the numeral 5 on line 4, page 2. It would then read (line 5 page 1) Legislative approval required. (line 12 page 1)(4) lease land for a period in excess of 55 years unless the corporation reserves the right to terminate the lease. He said it was existing law. Changing the number 35 to 55 would grant the railroad the right to go for 55 years on all of its lands. JIM KUBITS, Alaska Railroad Corporation, said Bill Hupprich, their associate counselor, was listening and reviewing the amendment. He thought Ms. Lindskoog characterized their feeling that it would be desirable to include all the land. He thought Senator Taylor's motion appeared to be very appropriate and accurate. SENATOR ELTON said he did not have a problem with what they were trying to get to but it seemed to him they were not just changing the term of the lease but were striking the words "terminal reserve". SENATOR TAYLOR said it was. SENATOR WARD asked him to read it again. SENATOR TAYLOR read, starting on line 12, "(4) lease land for a period in excess of 55 years." This covered all their land both the land inside a terminal reserve and the land that is outside a terminal reserve. SENATOR ELTON said they were not only extending the period of time they were extending the land over which they can give a lease over 55 years to all their land, corridor land also. MS. LINDSKOOG said that within their corridor they are limited to 18 years. SENATOR TAYLOR said that was what they called right-of-way lands. They were limited to 18 years because of federal conveyance language. BILL HUPPRICH, Alaska Railroad Corporation, said the amendment language was perfect. SENATOR TAYLOR said the question from Senator Elton was a very good one. Would that allow the railroad to lease right-of-way lands for up to 55 years. MR. HUPPRICH said their current policy was they do not lease any of the right-of-way land. They periodically issue permit agreements, which are license agreements. They are terminable at will for particular types of uses within the right-of-way. According to the Federal Transfer Act if they were not to use their right-of-way for railroad purposes for a period in excess of 18 years that land could revert back to the federal government. CHAIRMAN COWDERY called for any objection to the motion. There being no objection, the amendment passed. SENATOR LEMAN asked if the bill would need a title change. SENATOR TAYLOR said he did not think so but he would have title people check before it went to Resources. He moved the bill with individual recommendations from committee as amended. CHAIRMAN COWDERY asked for any objections. There being no objection, the motion passed. The meeting was adjourned at 3:05 p.m.