SENATE BILL NO. 28 "An Act relating to the general grant land entitlement for the Petersburg Borough; and providing for an effective date." 4:55:22 PM SENATOR BERT STEDMAN, SPONSOR, introduced himself. He was going to turn it over to his trusted aide. REPRESENTATIVE JONATHAN KREISS-TOMKINS, introduced himself. MELISSA KOOKESH, STAFF, SENATOR BERT STEDMAN, introduced herself. She read the sponsor statement: Senate Bill 28 will set the total general land entitlement for the Petersburg Borough (Borough) at 14,666 acres. This is an increase of 12,770 acres from its current level of entitlement, and would bring the Borough's land entitlement to a level similar to the other organized boroughs in the state. SB 28 will address the long-term economic sustainability of a recently formed borough. When the Borough formed in 2013, it received a general land grant entitlement from the state of 1,896 acres. Of the 1,896 acres, 457.47 acres had already been given to the City of Petersburg. A substantial part of the 457.47 acres is restricted to public, charitable, or recreational use. After deducting the 457.47 acres that went to the City, the Borough's land entitlement is 1,438.53 acres which is an area roughly 1/3rd the size of the Anchorage International Airport. 1,438.53 acres simply does not provide enough land to support economic development such as rock and sand material sites for roads, airports, waterfront land for tourism development, or residential homes. The Borough would select the additional 12,770 acres from seven different areas around the Borough. All selections would be made from vacant, unappropriated, and unreserved state lands. No selections would interfere with existing State, University, or Alaska Mental Health Trust lands, including the Southeast State Forest, or private ownership. The Petersburg Borough recognizes we are in difficult budget times. An increased land base is critical for the Petersburg Borough to become more self-sufficient. 4:59:55 PM Representative Wilson asked who currently owned the land. Senator Stedman responded that "the state" owned the land. Representative Wilson asked if the state was selling the land to the borough. Senator Stedman explained that during the creation of the Statehood Act, it was decided that the state should be split into boroughs. He remarked that some of the larger areas were immediately "borough-ized", and other areas had not officially become boroughs in the state. He shared that the legislature had requested more flexibility in creating the boroughs, because initially Petersburg and Wrangell were one borough. He shared that the constraints had relaxed ten years prior, allowing the communities to adjust how they felt the boundaries should be drawn. He remarked that the subject of the legislation was the expansion of the Petersburg expansion. He remarked that in trying to meet the obligation of the constitution, no boroughs had been required to purchase the land from the state. He stressed that all boroughs were treated the same. He understood that there were some areas that would not be capable of supporting a borough. He felt that the proposed expansion would support the borough. He surmised that the communities would not create boroughs, if they were required to purchase the land. 5:02:29 PM Representative Wilson surmised that the bill would allow for the creation of "Petersburg services. Senator Stedman replied that Petersburg had platting authority. He stated that the Petersburg Borough would control the development through their zoning ordinances, to facilitate commercial or recreation development. He remarked that there was a parcel that had previously held a post office. Representative Wilson wondered whether the bill followed the model that granted other boroughs a certain number of acres that would be privatized, or whether the acreage fit the need in the specific area. Senator Stedman replied that the bill aligned the Petersburg Borough with other boroughs throughout the state. He shared that most of the land was federal forest. He stressed that the borough size might be large, but there was very little private property within the federal forest. 5:04:58 PM Representative Kawasaki asked whether it was a second-class borough. Senator Stedman responded that it was a full borough. Representative Kawasaki wondered whether the borough originally anticipating that they would ask for a future larger entitlement. Senator Stedman deferred to Ms. Cabrera. Representative Kawasaki asked whether there was a requirement that the land entitlements be contiguous or within a certain area centered on the current Petersburg Borough. He felt that there were selections that were far away from the actual core area. Senator Stedman replied that the selections were around Petersburg. He stressed that there was no community between Juneau and Petersburg, and the nearest southern community was Wrangell. He pointed out that much of the unselected space was the Juneau Borough. Representative Kawasaki noted that the Haines Borough had 3200 acres; the Fairbanks North Star Borough had 122,000 acres. He wondered whether 15,000 acres was a manageable size. Senator Stedman responded that it was the goal to have the entire Southeast region divided into boroughs. Representative Kawasaki hoped that the land become contiguous in the boroughs. He wondered how Alaska Mental Health Trust Authority (AMHTA) land, tribal land, and federal land would be incorporated in the borough. Senator Stedman replied that it was ideal to have contiguous borough boundaries. Representative Pruitt wondered how the initial entitlement amount was determined. Representative Kreiss-Tompkins thanked the committee and indicated his support of the bill. He had to return to House State Affairs. 5:11:46 PM LIZ CABRERA, COMMUNITY AND ECONOMIC DEVELOPMENT, PETERSBERG, introduced herself. Representative Pruitt wondered how the number of 12,770 acres was determined. He understood the initial formula. Ms. Cabrera responded that the number was a simple addition. She took the average of acreage of the existing boroughs and their selection process. Representative Pruitt asked if she was looking for total acreage. He wondered if the size of the borough or a parody in sheer acreage. Ms. Cabrera used Sitka as an example which was a ratio and the average of the ratio. Representative Guttenberg asked if Marty Parson's was online. He wondered about the original allocations and the constitutional allocations. 5:15:19 PM MARTY PARSONS, DEPUTY DIRECTOR - MINING, LAND, AND WATER DIVISION, DEPARTMENT OF NATURAL RESOURCES, ANCHORAGE (via teleconference), responded that the legislature would identify the number of acres and provide the number to the borough for selection. He stated that it had been changed under AS 29.65.020, a formula was generated to take 10 percent of the vacant unappropriated unreserved land within the borough. Representative Wilson wondered whether there was a requirement to put into private land. Mr. Parson responded that once the land was conveyed to the borough, the land use was at the borough's discretion. Representative Wilson wondered whether the borough determined the private investment. Mr. Parsons replied that there was not requirement to convey the land into private ownership. Representative Kawasaki wondered whether the state could keep the land. Mr. Parsons informed the committee that the statute required the state to show that the land was of significance importance to the state, before it would convey it to the borough. Representative Kawasaki wondered there was an allowance for boroughs to pick their land. Mr. Parsons answered that there was not a restriction on making the selections contiguous. 5:20:03 PM Representative Ortiz wondered whether other boroughs in Southeast had a home rule status. Ms. Cabrera indicated Wrangell was home rule status. She did not know about Ketchikan. Representative Ortiz queried the differences between the types of boroughs. Ms. Cabrera replied that home rule boroughs could do anything that was not prohibited by state law. There was a charter to establish the borough's powers and authorities. Representative Wilson thought Ms. Cabrera had more to say. Ms. Cabrera indicated she did. She read a prepared statement: Co-Chair Foster and members of the committee. Thank you for the opportunity to address you today regarding SB 28 an act related to the general land entitlement of the Petersburg Borough. SB 28 sets the general land entitlement of Alaska's newest borough, Petersburg, to be comparable to the land entitlement received by all other boroughs in the state. An amount equal to approximately .79 percent of a borough's land mass, which in Petersburg's case is 14,666 acres. For those of you who are unfamiliar with our community, the Petersburg Borough is located in central Southeast Alaska and encompasses an area of 3,800 square miles of land and sea. The borough's population center is located on the northern tip of Mitkof Island, which is home to a diverse and prolific commercial fishing fleet and three major seafood- processing facilities. In 2013, the residents of Petersburg voted to form a borough - for a number of reasons, including having a greater say on land use decisions in our surrounding area, having an opportunity to Increase our municipal land base, and many also felt it was Important for all area residents to support our school system through local taxes. About 12 months after borough formation, Petersburg received a general land grant entitlement certification from the state indicating we were entitled to 1,896 acres under AS 29.65.010. However, this amount was reduced by the 457 .47 acres already received by the City of Petersburg, even though certain tracts of the City's 457.47 acres is restricted from development and only available for public, charitable, or recreational use. After deducting the 457.47 acres, the Borough's land entitlement was 1,438.53 acres. To put this into context, this is approximately an area roughly 1/3rd the size of the Anchorage International Airport. In making this calculation, DNR uses a statutory formula - a municipality is entitled to 10 percent of VUU land within its boundaries. The lands available for selection are designated as VUU or "vacant, unappropriated and unreserved" land by the State of Alaska. These lands are either "unclassified" or classified as "agricultural, grazing, materials, public recreation, settlement, and resource management'' but for the most part no development has occurred on any of the VUU lands. You may wonder why we received such a small land entitlement to begin with. The majority of land within the borough, over 96 percent, is managed by the federal government as the Tongass National Forest. Of the non-federal lands within the borough, 1.73 percent is owned by the Goldbelt Corporation, 1.34 percent by the State of Alaska, and .4 percent by the Alaska Mental Health Trust and University of Alaska. Only .3 percent is in private ownership and a mere .04 percent is owned by the municipality. When DNR applied the land entitlement formula to the Petersburg Borough, only a very small amount of land remained in VUU status. As we began to evaluate our potential selection, we realized that our entitlement was not adequate for what we were hoping to accomplish and that other boroughs also received small land entitlements initially and then were able to increase these through the legislature. The most recent example was in 2010 when both Wrangell and Haines received additional acreage, and in the late 1990's the Lake and Peninsula Borough and Yakutat Borough also had their land entitlement set through legislation. Why is this Important to Petersburg specifically? As I mentioned previously, just over 96 percent of our land base is federally managed and of our non-federal lands the major landholder are Goldbelt Corporation and the State of Alaska. In short, while the borough itself is relatively large, the majority of land is not and will never be Included In the local tax base and most is not available to generate economic return for our residents or the State of Alaska. The Petersburg Borough would like the opportunity to move some these lands into private ownership and add them to our tax base as residential or commercial developments. We would like the opportunity to secure new sources of rock for construction and maintenance of our roads and other projects. In general, we would like the opportunity to be more economically self- sufficient. 1,400 acres simply does not provide sufficient developable land to support these goals. In our discussions with the Department of Natural Resources, they explained that the agency generally does not voice support for this type of legislation, but neither does the agency oppose Petersburg's request. We provided a general outline of the lands we would select under SB 28 and DNR did not express any concerns about these potential selections. Lastly, the members of this committee know better than most that these are difficult times. In our own small way, we, in Petersburg, want to be part of the solution, not a casualty of crisis. An Increased land base is a key component to the long-term sustainability of our municipality. We respectfully ask for your support to move SB 28 out of Senate Resources. Thank you for the opportunity to speak to you today and I would be happy to answer any questions you may have. Representative Wilson indicated that by becoming a borough they would be able to provide local police and other community programs. Representative Pruitt wondered if the money came directly to Petersburg. Ms. Cabrera replied that it was a payment that the federal government gave to the borough. The payment was received directly, and was calculated in a formula. Acting Chair Guttenberg reported that amendments for the bill were due by 5:00 p.m., Wednesday, May 10, 2017. He reviewed the agenda for the following meeting. SB 28 was HEARD and HELD in committee for further consideration.