HOUSE BILL NO. 273 "An Act relating to general grant land entitlements for the City and Borough of Wrangell; and providing for an effective date." 9:27:16 AM REPRESENTATIVE PEGGY WILSON, SPONSOR, spoke briefly to the legislation. 9:27:55 AM AT EASE 9:29:08 AM RECONVENED REID HARRIS, STAFF, REPRESENTATIVE WILSON, explained that the bill related to land entitlements for the City and Borough of Wrangell. Wrangell had originally received a smaller land entitlement of 1,952 acres from the state when the borough was set up. The formula used by the Department of Natural Resources (DNR) for giving land to boroughs deeds 10 percent of vacant, unappropriated, and unreserved (VUU) state land; Wrangell is comprised of 97 percent federal land. Wrangell negotiated with DNR to get 6,506 acres total. Later, the borough realized that the 2,500 acre Sunny Bay parcel shown on the map (copy on file) was slated for the University of Alaska. Mr. Harris referred to various parties who used the Sunny Bay parcel: Alaska Crossings, a statewide wilderness youth program; another individual with a guide business; and the inhabitants of Meyers Chuck. He explained that an amendment would allow the City and Borough of Wrangell to exercise control over the area to provide for the economic and recreational needs of its citizens. He pointed to a conflict with HB 295, the university land grant bill, and noted that Representative Wilson had passed an amendment in the House Resources Committee giving Wrangell precedence over the university related to the requested land. 9:32:28 AM Representative Fairclough asked whether Wrangell still has first choice over the university. Mr. Harris responded that the university bill was amended and would give Wrangell first choice over the university. Representative Fairclough thought there was already a statute stating the fact and wanted to know why an amendment was also needed. Mr. Harris responded that HB 273 had been amended in the Community and Regional Affairs Committee (CRA) to provide 6,506 acres; the amendment before the House Finance Committee seeks to add an additional 2,500 acres (the exact size of the Sunny Bay parcel). He detailed that the sponsor wanted to amend both bills: HB 295 to give Wrangell priority choice over the university, and HB 273 to increase Wrangell's land grant to allow them to select the parcel. Representative Wilson stated that the normal process allows a borough to select 10 percent; if the amendment passes the amount would only be one half of one percent. She added that the Sunny Bay parcel was not in the original bill because the boundaries of the borough were not known. Representative Fairclough understood that the preference of the borough's selection over the university was already in current statute (AS 14.40.365). She asked whether something had changed to necessitate changing statute. Mr. Harris responded that the statute does not list the particular parcel. Representative Fairclough wondered whether the intent was then further clarity. She asked if the statute allowing the borough first choice was still in place. Mr. Harris responded in the affirmative. 9:35:52 AM Vice-Chair Thomas MOVED Amendment 1, 26-LS1292\R.4 (Cook, 3/16/10): Page 2, line 6: Delete "6,505" Insert "9,006" Co-Chair Stoltze OBJECTED for discussion. Vice-Chair Thomas spoke in favor of encouraging the formation of boroughs, and opined that the state should give state land when a borough does not have enough. He hoped DNR would support the addition of the parcel. 9:37:27 AM DICK MYLIUS, DIRECTOR, DIVISION OF MINING, LAND and WATER, DEPARTMENT OF NATURAL RESOURCES (via teleconference), addressed Representative Fairclough's question, explaining that the university statute needed to be amended because it was ruled unconstitutional, which is why the university land bill is before the legislature again. He underlined the fact that there is no current statute giving the borough preference over the university. Mr. Mylius turned to the position of DNR on HB 273. He explained that the department agrees that the entitlement for the City and Borough of Wrangell was not sufficient. He detailed that the formula regarding how much land is allotted to municipalities is driven by AS 29.65 allowance of 10 percent of vacant, unappropriated, and unreserved state land. He noted that the City and Borough of Wrangell and Haines Borough entitlements are small because both are surrounded by national forest land. The department had agreed to work with both Wrangell and Haines to consider appropriate parcels of land in order to increase the entitlements. He reported that the number DNR proposed for the City and Borough of Wrangell was 6,506 acres. Mr. Mylius stated that the department did not support the amendment to increase the entitlement because it felt transfer of the [Sunny Bay] parcel to the university was more appropriate. In addition, commitments had been made to the university. He noted that the House version of the bill had been amended in the House Resources Committee to remove the parcel, although the parcel is still slated for the university in the Senate version of the bill. Mr. Mylius added that DNR supports the efforts of Wrangell and Haines to increase their entitlements. 9:40:15 AM Representative Gara pointed out that the bill does not identify the parcels; he wanted to know whether the acreage discussed corresponded to the parcels. Mr. Mylius responded that the department had a "gentleman's agreement" with the City and Borough of Wrangell as to what lands would be selected. He noted there were limits to the land that could be selected, as the statutory definition of what lands municipalities can get is still "vacant, unappropriated, unreserved (VUU) state lands." He stressed that all the lands that have been discussed with the City and Borough of Wrangell qualify as VUU lands; a subsequent decision-making process will have to take place to determine whether it is in the state's best interests to transfer the specific parcels of land. He added that one of the big issues was impact on the state's timber program in Southeast; the department wanted to minimize the valuable timber lands that would be transferred. Representative Gara voiced concerns regarding the Crittenden Creek watershed and asked whether the watershed was part of the proposed land transfer. Mr. Mylius responded that the borough had indicated an interest in a portion of the parcel, not the entire parcel. Representative Gara pointed to statute that requires the state to maintain a public access easement to water bodies (including streams) when it transfers land. He asked whether the "to and along easement" would be automatically reserved if the parcel was transferred to the borough. Mr. Mylius responded that providing for the easement is a requirement of any land transfer. Public and navigable waters are identified and then easements along and to the water bodies are reserved. Representative Gara asked whether the easement language was required in the bill or if current statute was sufficient. Mr. Mylius replied that all land transfers routinely require the easement and that there is no need to reference it specifically. 9:43:37 AM Vice-Chair Thomas asked whether the university parcel was part of the allowable timber cut in Southeast. Mr. Mylius responded that the university parcels were not, but the parcels Wrangell is interested in were. Most of the parcels the borough wanted prior to the Sunny Cove parcel were not targeted by the university. Representative Fairclough asked the estimated value of the 6,506 acres of land. Mr. Mylius replied that he did not know; municipal entitlements are strictly acreage driven and DNR does not calculate the value. Representative Fairclough wondered whether the 9,006 acres requested by the sponsor should be incorporated. Mr. Mylius responded in the affirmative. He explained that although municipal entitlements are formula driven, there have been times when the legislature has chosen to change the purview. He gave the examples of Yakutat and the Lake and Peninsula Boroughs. Representative Fairclough asked whether the constitutional challenge to the university land grant was the only reason the parcels were available. Mr. Mylius responded that the Sunny Bay parcel would have remained deeded to the university if the university land bill had not been challenged or if the state had prevailed. He added that the university would have to deed the parcel back to the state by May 1 if the university land bill did not pass. 9:47:00 AM Representative Kelly queried the history of the changing acreage requested. Representative Wilson explained that Wrangell had originally asked for 19,000 acres; the amount has gone progressively down to 6,500. The amendment would add a parcel already used by residents and bring the total up to half of the original request. Mr. Mylius added that the original entitlement for the City and Borough of Wrangell was about 1,900 acres, the formula- driven 10 percent of the VUU state land. The original HB 273 asked for 19,000 acres; DNR felt that amount was unacceptable as it would significantly affect university lands and allowable timber cut calculations for Southeast. Discussions with the city and borough resulted in agreement regarding the 6,500 acre figure. The Sunny Bay parcel was added still later; DNR still felt it was more appropriate for the parcel to go to the university. Representative Kelly asked whether the parcel the amendment would add would violate the original university bill. Mr. Mylius responded in the affirmative. 9:51:43 AM Representative Fairclough asked whether the university would be adversely affected by the 6,506 acre request. Mr. Mylius answered that the university would not be adversely affected. In 2005, Wrangell was not a borough and had no municipal entitlement. Wrangell formed a borough between the time the university land legislation originally passed and the present. The assumption was that the borough could trump the university on three of the parcels if Wrangell formed a borough. The Sunny Cove parcel was never discussed in 2005. Representative Fairclough summarized that the university as well as Wrangell had expectations of receiving the parcel. She thought the measure before the committee represented additional growth inside Wrangell's new boundaries. She was looking for value in dollars. She thought the question was what the university would do with the property and wanted to balance that against benefit to Wrangell. She believed the university would probably sell the parcel for a profit. She wondered whether Wrangell was concerned that the community would be harmed if the land was clearcut or developed in a way that adversely affected employment. She noted that the state had other options available for the university that were outside Wrangell's boundaries. 9:56:02 AM Representative Austerman questioned DNR's stance on the additional 2,500 acre request. Mr. Mylius responded that DNR did not agree with the additional increase. Representative Austerman asked whether the department's position was related to making sure the university got its land selections. Mr. Mylius replied that DNR supported the governor's bills in both bodies to give the land to the university. He noted that the pool of land in the current university bill was the same as that approved in 2005. Representative Austerman asked whether any part of the 6,500 acres was included in the original university land. Mr. Mylius replied that the land was included but an earlier provision (the 2005 legislation and the current version of the bill moving through the legislature) allows the borough to trump the university on certain parcels. 9:58:11 AM Vice-Chair Thomas asked how many parcels in Southeast and how many in northern Alaska had been taken out of the university land grant. Mr. Mylius explained that of the original list submitted in 2005, amendments took out nine parcels, eight in Southeast and one in Kodiak. The current bill started with the nine parcels already out and he believed five Southeast parcels have been removed in the committee process on the House bill; the Senate bill has not moved yet. One additional parcel has restrictions and part of the Pelican parcel was taken out. Vice-Chair Thomas emphasized that Southeast municipalities are trying to keep land. He did not believe giving the land to the university and the Mental Health Trust would provide incentive to struggling Southeast communities to grow and form boroughs. He thought the parcel being considered by Wrangell was necessary for the community to grow. He stated the communities should have preference over the university. Representative Kelly thought the entitlement percentage would have resulted in 1,900 acres. He supported the fact that Wrangell's entitlement was met and now tripled. However, he pointed to the "tough fight" related to the university. Mr. Mylius agreed that the present legislation would triple Wrangell's entitlement. 10:03:50 AM Representative Wilson noted that the 15 boroughs that had gone through the process had each received an average of 1.13 percent, the amount that Wrangell was asking for. She acknowledged that 97 percent of the borough is Tongass National Forest, along with some state land. The Department of Natural Resources did not want to give that state land to Wrangell, which left only the university land. She underlined that Wrangell would have received 19,000 acres if it had received the 1.13 percent average. She felt that the extra 2,500 acres requested in the amendment was fair since Wrangell had received only one third of 19,000 acres. Representative Wilson asserted that the parcel is important to one of Wrangell's largest employers, Alaska Crossings, and that the community had already lost 50 jobs since last October due to mill closure. She did not want to lose another 85 jobs by giving the parcel to the university. 10:06:42 AM Representative Gara needed more information about the university land bill. He asked whether Wrangell would have jurisdiction over the parcel if it were given to the university. Mr. Mylius responded that the land is already within the borough boundaries and would be subject to borough regulations; if the university received the land and developed it, the university would be subject to taxation. Mr. Harris noted that Alaska Crossings had already developed the parcel and intended to continue to use it as they have. Representative Gara asked what would be different if the university had the land. Mr. Harris answered that the university land grant bill contains a privacy clause; the university does not have to tell the communities about its negotiations with sellers or land use plans. Wrangell is concerned that the land would be sold or developed. The borough intends to keep the parcel as it is for the use of Alaska Crossings and hunting guides. 10:09:53 AM Representative Kelly asked whether there is other land available to the borough that is not university land. Mr. Mylius responded generally no; any non-university land is timber land that DNR wants retained by the state. Representative Wilson highlighted the fact that state land is available, but DNR wants to use it as timber land. Representative Fairclough queried the availability of other lands in the state that could be used by the university. Mr. Mylius responded that DNR had spent considerable time in 2005 putting the list together for the university. He stated that there is a limited amount of state land that can be used for revenue without major problems. For example, oil and gas land is specifically off limits to the university. There are other lands, but those could be equally contentious. The university land bill does not have provision for substitute lands. 10:12:35 AM Representative Fairclough queried the reasons for the original 10 percent calculation. Mr. Mylius replied that the number is from AS 29.65, the municipal land grant statute. The statute specifies 10 percent of VUU state land, determined by a combination of land classification and whether the legislature has set aside any land. For example, in Haines, the VUU calculation comes out low because a large percentage of the state land in Haines has been set aside by the legislature in the Haines State Forest and the Chilkat Bald Eagle Preserve. In Wrangell the 10 percent was low because there is so little state land. He did not think any of the state land in Wrangell was set aside by the legislature, and only a limited amount was VUU. The Department of Natural Resources determines VUU through land use plans; for example, settlement or public recreation lands by statute become part of the 10 percent and are available for the boroughs. Lands that are classified as forestry, oil and gas, or wildlife habitat are off limits by statute. 10:14:12 AM Representative Fairclough listed the reasons she supported Amendment 1: · There are other lands available to the university. · The land was not available to Wrangell, but Wrangell needs land to start a borough. · Not all lands are equal; DNR and state law does not put a value on the property, and does not distinguish between swamp land and beach front. · There is limited access to land to the region, which is why the calculation for the borough of Wrangell is so low. · The reason the parcels are available to the university is to turn them into revenue, which means the local community will not have control over the use of the land. Representative Kelly asked whether the university was available to comment. Co-Chair Stoltze replied that they were not. A roll call vote was taken on the motion. IN FAVOR: Thomas, Austerman, Doogan, Fairclough, Foster, Gara, Joule, Hawker, Stoltze OPPOSED: Kelly The MOTION PASSED (9-1). Amendment 1 was adopted. 10:17:21 AM Vice-Chair Thomas MOVED Amendment 2, 26-LS1292\R.5, Cook, 3/17/10: Page 1, line 2, following "Wrangell": Insert "and for the Haines Borough" Page 2, line 6: Delete "." Insert "; (15) Haines Borough - 3,167 acres." Page 2, line 18, following "AS 29.65.010(a)(14)": Insert "or (15)" Page 2, line 31: Delete "or (14)" Insert ", (14), or (15)" Co-Chair Stoltze OBJECTED for discussion. Vice-Chair Thomas explained that the Haines Borough had only 2,800 acres left after the eagle preserve and the state forest were taken. CASEY SCHROEDER, STAFF, REPRESENTATIVE BILL THOMAS, detailed that the amendment would make some technical changes and specifies the acreage amount as 3,167. The amendment would also put Haines on the same selection schedule as Wrangell. Mr. Mylius commented that DNR worked with Haines on the issue and agreed that the original entitlement was low as so much of the land was in the forest and eagle preserve. He thought Haines would propose a larger number of acres as a larger number had been agreed to. Vice-Chair Thomas stated that the borough was asking for an additional 1,367 acres to the original entitlement. Mr. Mylius thought 1,809 acres had been agreed to. He referred to disagreement over one parcel. Vice-Chair Thomas explained that the Lynn Canal/Lynn Sisters acreage was around 1,300 and the parcel had been removed from the university land bill. He noted that DNR did not want to give the parcel to the Haines Borough but wanted to use it for a marine park. He stated that he was not a fan of additional parks and had made a policy call: if the committee accepts the amendment, Haines will accept the amount; if not, he would go back to the original amount. He viewed Lynn Sisters as one of the best parcels and thought it could be used as an exchange. Vice-Chair Thomas argued that the eagle preserve and the state forest lands have automatic expansion rights to any lands that the state selects, while the borough cannot expand its boundaries unless it takes land elsewhere and forces DNR to exchange land. He spoke to land that will not be available to the borough because it will automatically go to the eagle preserve and state forest when it has been relinquished by the federal government. His tactic was to get the requested parcel and exchange it later for land nearer Haines. 10:23:05 AM Representative Kelly asked whether the 1,809 acres could be transferred without taking from the original university allocation. Mr. Mylius replied that the parcel would take from the university land; with the exception of a few hundred acres in Excursion Inlet, the parcel was in the 2005 agreement. Representative Kelly queried DNR's position, which appeared to be positive [related to Haines' request]; he wondered why the department responded negatively to what seemed a similar situation in Wrangell. Mr. Mylius acknowledged DNR's positions were different regarding the two municipalities. He stated that there was no other land in Haines and the department felt Haines had made a good argument for the specific parcels. He explained that one of the issues DNR had with the Sunny Bay parcel was that Wrangell did not want to develop it, while Haines had identified parcels for potential development. The issues were the intended use of the land and the impact to the university. Representative Kelly summarized that the governor's bill and therefore the administration would not support the additional acreage request in Wrangell but would support the additional request in Haines. Mr. Mylius agreed. Representative Kelly asked why DNR did not want to go to the original 3,167 amount. Mr. Mylius responded that the department originally wanted the parcel to go to the university. He stressed that when looking at municipal entitlements, DNR has to make a determination whether the entitlement is in the state's best interests. Part of the best interest determination is looking at land use plans. The northern Southeast area plan specifically calls for retaining the parcel in state ownership, possibly for future park use or because of its recreation value. The department cannot be sure the state's best interests would be protected if the parcel is transferred to the borough. The legislature is deciding to give more acreage, not giving specific parcels. Mr. Mylius added that the reason the state could give the land to the university despite the land use plan is that the university legislation actually transfers specific parcels of land; in that case the legislature is the one making the best interest determination. With university transfers, DNR only needs to issue the deeds; there is no additional best interest finding or public process. Representative Kelly commented that the development option proposed by Vice-Chair Thomas was more attractive to him than some "lock up" for a few people in Wrangell. He wished the university was present to speak, and maintained his concern. 10:28:43 AM Representative Gara asked whether there was road access to the Lynn Sisters parcel. He also wondered how the community of Haines felt about the addition of the 1,300 acres. MARK EARNEST, HAINES BOROUGH MANAGER (via teleconference), replied that much of land comprising the current Haines borough was placed into various reserve classifications by the state, primarily for resource development and other management designations. He added that when the third-class borough formed, it received 2,800 acres, the smallest entitlement; this resulted in Haines not receiving its entitlement under state law. Haines had worked with DNR to identify VUU lands that would be available. Originally, the Lynn Sisters parcel was identified. The borough and the community are very interested in acquiring the parcel. Subsequently, the property was dropped from the request. Mr. Ernest emphasized that the community supported the amendment. 10:32:16 AM Vice-Chair Thomas summarized that the parcels had been taken out of the university lands and he did not support giving them back to DNR to be put into park status. He wanted the land for the borough of Haines. Co-Chair Stoltze clarified that the amendment was version R.5, 3/17/10. Representative Kelly MAINTAINED his OBJECTION. A roll call vote was taken on the motion. IN FAVOR: Thomas, Austerman, Doogan, Fairclough, Foster, Gara, Joule, Hawker, Stoltze OPPOSED: Kelly The MOTION PASSED (9-1). Amendment 2 was ADOPTED. Co-Chair Stoltze referred to the zero fiscal note by DNR. 10:34:31 AM Vice-Chair Thomas MOVED to report CSHB 273 (FIN) out of Committee with individual recommendations and the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CSHB 273 (FIN) was REPORTED out of Committee with a "do pass" recommendation and the previously published fiscal note: FN 1 (DNR). 10:35:02 AM AT EASE 10:48:06 AM RECONVENED