HB 259 - GENERAL GRANT LAND ENTITLEMENT REPRESENTATIVE CARL MOSES, CHAIRMAN OF THE RULES COMMITTEE, SPONSOR OF HB 259 said, "House bill 259 amends AS 29.65.010, the land entitlement section, to statutorily authorize 187,000 acres for the Lake and Peninsula Borough, and gives the Borough until October 1, 1996 to select those lands. This figure represents approximately three percent of the total state lands located within the Borough. By formula in statute, the Lake and Pen Borough would receive approximately 30,000 acres. Because the Lake and Pen Borough is attempting to promote economic development, become less dependent on the price of fish, and because the value of an acre of land in urban Alaska is much greater than an acre in southwest Alaska, the borough planning commission felt that an entitlement of 187,000 acres was more equitable than 30,000. The borough assembly and planning commission are developing a comprehensive borough plan, and have identified lands of interest to them. AS 29.65 currently provides a land selection process for newly formed boroughs. Within the boundaries of the Lake and Peninsula Borough, there is very little land available from Vacant, Unappropriated, and Unreserved inventories. Because other state lands would need reclassification before issuance to the borough, pursuing entitlements through the formula in AS 29.65.030 would be a more time consuming process. Because the land selection process would be very time consuming, House Bill 259 would raise the priority for processing grant land entitlements for the Lake and Peninsula Borough by simply adding their entitlement to the list of municipalities and boroughs currently in AS 29.65.010(a). HB 259 is a noncontroversial bill, and does not affect other boroughs or their grant allocations. I would ask that the Community and Regional Affairs Committee favorably consider the bill." Representative Bunde joined the committee at 1:09 p.m. REPRESENTATIVE JOHN DAVIES asked, "Would the Lake and Pen Borough be entitled to this much land without this, but it would just take longer? Is that the point here? REPRESENTATIVE MOSES replied, "Without this statute, they would only be entitled to 30,000 acres." REPRESENTATIVE DAVIES continued, "So it's more than just a timing issue, they want to speed the process up?" REPRESENTATIVE MOSES said yes. GLEN VERNON, BOROUGH MANAGER, LAKE AND PENINSULA BOROUGH, via teleconference, said, "...fish tax being the only real tax base that we have and what's needed is this land in order to diversify and bolster the tax base and support the activities in the borough. The process of selecting the acreage in this bill is a detailed one. The planning commission and the borough assembly have gone through and identified, parcel by parcel, the lands that they feel would be appropriate for the borough to select and the total number of acres in the bill reflects that process. Simply adding up the parcels they feel are essential to the borough. The total state lands involved here represent only three percent approximately, of the state lands within the borough, even though many of those lands are presently not classified." REPRESENTATIVE DAVIES asked, "Could you give us an overview of the resource values that you selected for when you were looking for this land?" MR. VERNON said, "The borough would only be able to gain surface estate on any selected lands, so the resource values that we're dealing with would be only those resource values that relate to surface use. Primarily, we had a number of selections that relate to the tourism, visitor, hunting, fishing, recreational industry that's in the borough. The resource value would come primarily from the location of the lands relative to the visitor industry." REPRESENTATIVE BILL WILLIAMS asked, "You talked about a tax base, what type of tax base are you talking about?" MR. VERNON said, "The only real revenue base or tax base that the borough presently has, is a tax that imposes on the sale of raw fish. We have imposed a permit fee requirement on lodges and guides that are involved in the recreation industry, however, it's very minimal. We are looking at the possibility...a room tax or bed tax type of arrangement. That would help to diversify." REPRESENTATIVE CYNTHIA TOOHEY asked, "Have you done any poling of the people that are going to be made part of this whole in the neighborhoods at all?" MR. VERNON replied, "We've had public hearings and meetings throughout the communities. We have 17 communities throughout the borough, and public hearings have been held in all of those communities." REPRESENTATIVE TOOHEY asked if it was only "positive feedback." MR. VERNON said, "We've had generally positive feedback throughout the borough from individuals living within the borough. We have had concerns expressed, not about the lands to be selected, but about the potential bed tax or sales tax that the borough might impose if we're successful in moving in the direction we'd like to." Number 268 REPRESENTATIVE CON BUNDE asked what Mayor Alsworth's position was on HB 259. MR. VERNON said, "Mayor Alsworth was indeed a part of the selection of going through and identifying the parcels; however, he did indicate the potential conflict and that was discussed and I think, full disclosure has been made of the interest that he has there." REPRESENTATIVE BUNDE said, "The question was not to question Glen's integrity, I was just wondering if he was in favor of the bill or not." MR. VERNON said, "He favors the bill." CHAIRMAN OLBERG asked, "Where did the 34,000 acre figure come from and where did the 187,000 acre figure come from?" MR. VERNON said, "The approximately 30,000 comes from the formula in the statute. The alternative that we would like to pursue is the one that sets forth 187...189,000 acres that is in the proposed bill, and that total comes from simply going through the borough selecting those lands we feel the borough should administer. So the figure is tied to specific parcels." REPRESENTATIVE DAVIES asked, "Would it be fair to characterize this as a wish list to some extent? Or was there some kind of competitive process that brought the list down to 187,000?" MR. VERNON said, "Yes there was a much larger number of parcels that were initially selected. The parcels that were finally settled upon actually resulted from two different meetings where paring down took place. Yes, I think it does still, to some extent, represent a wish list. We recognize that we may not be able to select everything that we've identified. We would still like to have the acreage identified in the bill and then go through the process with DNR (Department of Natural Resources) and other agencies as to which lands can be reclassified and be openly selected." Number 337 REPRESENTATIVE TOOHEY asked, "Have you communicated with the other boroughs? Are you stepping on anybody toes?" MR. VERNON said, "We believe that we're not stepping on anyone's toes. I'm not aware of any other boroughs that object to this. Indeed, there may be other boroughs who would like to follow this same procedure." CHAIRMAN OLBERG said, "The 34,000 acres comes from a formula that's based on the physical size of the borough?" RON SWANSON, DIRECTOR, DIVISION OF PARKS AND OUTDOOR RECREATION, DEPARTMENT OF NATURAL RESOURCES, said, "The formula that is used for figuring peninsula entitlement, that's both cities and boroughs, is based on 10 percent of the vacant, unappropriated, unreserved state land within the borough's or city's boundaries. So what we do is, we go through, we figure out how many acres of state land is within a given municipality and how many has a proper classification. The VUU (Vacant Unappropriate Unreserved) formula does not take into consideration, the unique or special circumstances of each municipality. For example, the Municipality of Anchorage has very little state land within its boundaries, but has a tremendous demand. Other cases, such as Lake and Pen, there's a substantial amount of state land there but because of the classification, not much is made available. We have not yet certified Lake and Pen's entitlement, we're not allowed to do that by law until after January 1st of this year and we're given two years to do it, but we do estimate we'll come up with about 29,000 acres." CHAIRMAN OLBERG reiterated, "How do we get from 34,000 to 187,000?" MR. SWANSON said, "That's exactly what this bill does. This municipality, like every other municipality kind of goes through it and looks at land that they think is appropriate for municipal ownership, and identifies it and flat argues for acreage. In this particular case, I certainly support conveying land to a municipality and I do think that 29,000 acres is low for a borough of that particular size, but if 187,000 is the right figure, that's a policy call for you to make." Number 393 CHAIRMAN OLBERG asked, "If we stipulate 187,000 acres in this legislation, is that an entitlement chiseled in stone that they will receive 187,000 acres or is that a maximum that they can receive?" MR. SWANSON said, "That is a maximum, but every municipality I've seen certainly achieves their maximum." CHAIRMAN OLBERG continued, "These figures are subject to legislative as well as formula computation." MR. SWANSON said, "The statutes now require the formula of computation which we will do in due time. But all boroughs, basically, at least the older ones, have come to the legislature and have established entitlement with them that reflects various formulas that they think meet their needs." Number 411 REPRESENTATIVE DAVIES said, "I would like to ask about the process that the Lake and Pen Borough would go through in selecting and specifically, I would like to know if essentially the same criteria would be applied to the state's interest in these lands as would apply elsewhere in the state." MR. SWANSON said, "Through this bill process through the legislature, I think it's very useful if the legislature gives us a type order of what kind of land they think is appropriate to convey to any given municipality. Even if that does not happen, we would go through what we call a best interest finding and see if the best interest of the state to convey any given parcel to a local government." REPRESENTATIVE BUNDE asked if DNR has taken an official position on HB 259. MR. SWANSON said, "The department supports in concept an increased entitlement. We have not had a chance to review the selections to see if they're appropriate. I think it's appropriate for the borough to, and Mr. Vernon has done that, identify the types of land that they're selecting." REPRESENTATIVE BUNDE continued, "This bill allows a maximum selection but it doesn't aberrate the state selection process where the borough has to make it's best case and the state may or may not agree with them on that." MR. SWANSON said, "I agree, what you're saying is the Department of Natural Resources should convey up to 187,000 acres of state land to the municipality. The municipality would then make their selection, we would go through (indiscernible) to see if it's appropriate for that parcel or parcels to go to borough ownership." Number 457 REPRESENTATIVE TOOHEY asked, "Is there any Native land in there?" MR. SWANSON said, "There, of course, is Native land within the borough, but none of that is considered, only state land." CHAIRMAN OLBERG asked, "Does unencumbered mean not subject to mental health trust land's complications?" MR. SWANSON confirmed, "That is correct." Number 463 REPRESENTATIVE DAVIES said, "You had said that the department hasn't yet had a chance to evaluate whether they thought that this was a reasonable selection or amount. Do you have any sense of what the time frame for that would be?" MR. SWANSON said, "It's difficult to answer because I don't know what form the borough has their information in. Once it's given to me, I would try to give it real prompt review to help you in your deliberating process. I can't tell you whether it's days or weeks without seeing what they've got." Number 476 MR. VERNON responded, "We do have the land selected in the form that it could be submitted immediately to the division. We'd be happy to do that." MR. SWANSON said, "If Mr. Vernon can supply it immediately, I will also review it immediately." Number 485 REPRESENTATIVE DAVIES said, "I would appreciate that; if we could have the lands that the borough has selected, the maps be transmitted to DNR and have DNR respond to us on their observations on those particular selections." REPRESENTATIVE BUNDE said, "I'm reassured with the idea that you go through the normal land selection process and so I don't expect DNR to give away the farm and I don't feel particularly qualified to decide whether 187,000 or 180,000 or 190,000 acres is the appropriate amount of land." Number 497 CHAIRMAN OLBERG said, "It's obvious in looking at the other boroughs that there is no formula. You can base it on a lot of things. So what we're talking about is whether or not we should allow the Lake and Peninsula Borough to select no more than 187,000 acres with the concurrence of the Department of Natural Resources." REPRESENTATIVE DAVIES said, "I agree with that. Mr. Swanson had indicated that he thought it might be helpful if the committee would consider whether or not there should be any kind of committee guidance on the resource values to be selected for in the lands, and I don't think there's any way we could know whether or not there are any issues there that we should be concerned about or not unless we have some other people look at the range of lands that are being considered." CHAIRMAN OLBERG asked, "Is that a fair assessment of your remarks?" MR. SWANSON replied yes. CHAIRMAN OLBERG questioned, "Natural Resources would like to look at the selections prior to this legislation passing?" MR. SWANSON said, "That's the recommendation we're making to you, of course it's your call to make but we can give you a lot better assessment in a week. I think it's in the state's best interest to convey the types of land of a particular parcel the borough has identified." Number 520 REPRESENTATIVE WILLIAMS said, "It's going to the Resources Committee next. How about if Mr. Swanson's concerns (are addressed there)?" MR. SWANSON said, "I would be more than happy to provide that information to the Resources Committee." CHAIRMAN OLBERG said, "To me, it's more a matter of curiosity than concern. I'm not concerned about DNR giving away the farm or Lake and Peninsula Borough running off with our acres." REPRESENTATIVE TOOHEY agreed. Number 537 REPRESENTATIVE DAVIES said, "There are some state interest, we have some fiduciary responsibility." CHAIRMAN OLBERG said, "The legislature will not make the determination of which lands are selected and which lands are not. We will make the determination of what the maximum numbers of acres can be, according to this legislation. On the other side of the coin, the state seems very slow to get land into private ownership and maybe this is a way to advance this process." Number 545 REPRESENTATIVE MOSES said, "DNR is still going to protect the state as to what the borough can select, so I think you're covered on that basis. What's more important here is the state is starving with our budget crisis and whatnot for economic development and this is a step in the right direction to create economic development." REPRESENTATIVE DAVIES said, "I don't have any disagreement with any of that. I think that's all fine, I just think we have a certain responsibility to look over DNR's shoulders as the process goes along and make sure it's all in the state's best interest." Number 554 REPRESENTATIVE BUNDE said, "It seems like a reasonable compromise, moving it from here on to resources with those people at the DNR having a chance to provide more information there (in the House Resources Committee)." REPRESENTATIVE TOOHEY added, "That's DNR's job and they're much more qualified than we are." CHAIRMAN OLBERG said, "Who are we to quibble with the Chairman of Resources about this matter. He wants it, he gets it." Number 560 REPRESENTATIVE TOOHEY moved that HB 259 be moved from committee with individual recommendations. There were no objections.