SENATE BILL NO. 28 "An Act relating to the general grant land entitlement for the Petersburg Borough; and providing for an effective date." 2:09:32 PM MARK JENSEN, MAYOR, PETERSBURG BOROUGH, PETERSBURG (via teleconference), testified in support of the legislation. He read from a prepared statement: I'm speaking to you today in support of SB 28, a bill that would set our general land grant entitlement at just over 14,500 acres. As the borough mayor, a small business owner and life- long Alaskan, I've witnessed many changes to our community. Most recently, our 103 year old city was dissolved in favor of a home-rule borough. Our decision to form a borough was not made in haste. Borough formation was not supported by all area residents. Nonetheless, the majority of us felt it was an important step for the future welfare of our community. Likewise, SB 28 is an important step in the future development of our borough. As you've heard in previous testimony, the Petersburg Borough's land base is dominated by public lands - 96 percent of the borough is in federal ownership. Public lands are not taxable by the local government; nor open for commercial development by local business; nor available for residential use. SB 28 makes a relatively small amount of land available to the borough for these important uses. These can contribute in very significant and positive ways to grow our local tax base, employment, and population. If you consider borough formation and SB 28 together, it demonstrates that our community is taking decisive steps toward the type of local self-government envisioned by the state constitution- and the type of self-reliance necessary for us to succeed for at least another 103 years. Thank you for the opportunity to speak to you today and I ask for your support to pass SB 28 out of House Finance this afternoon. 2:12:11 PM BOB LYNN, SELF, PETERSBURG (via teleconference), spoke in favor of the legislation. He read from a prepared statement: As a Borough Resident and Former Tongass National Forest Supervisor I support SB 28 transferring 14,666 acres of State of Alaska land to the Petersburg Borough. Over 96% of the land within the Petersburg Borough is in Tongass National Forest, State of Alaska and Goldbelt ownership. That ownership pattern significantly limits the Petersburg Borough's ability to diversity the local economy. The current economy is primarily related to the fishing industry. Any annual up turn or down turn is immediately felt locally, the same can be said for policy changes related to the National Forest since it is such a dominant owner of lands within the Borough. SB 28 would significantly help diversity and provide stability to the local economy in a number of ways. 1. It would provide for a larger tax base in the borough. 2. It would help diversify the economy by providing for other uses. 3. It would provide opportunities for the start of more small businesses. 4. It would help in the development of the Borough infrastructure. 5. It would help the Borough in the long term provide a better services and quality of life to its residents. As the committee is aware, the municipalities in Alaska as elsewhere are limited in the ways they can generate revenues. This bill helps the Petersburg Borough provide a long term, stable, sustainable local economy that can better serve the needs of the local residents. 2:14:14 PM MARA LUTOMSKI, ADMINISTRATOR, PETERSBURG CHAMBER OF COMMERCE, PETERSBURG (via teleconference), spoke in support of the legislation. She read from prepared remarks: I am testifying today in support of SB 28 to set the general land entitlement to the Borough of Petersburg so it will be more closely aligned with other Boroughs across the State of Alaska. According to ADNR, the Petersburg Borough's current land entitlement is 1,374 acres - approximately only .04 percent of the Borough's total land area. Through this same legislative process, other boroughs have received close to .8 percent of their total land area. Petersburg's request would not set a precedent as the 14,600 acres would be less than .79 percent of the total lands within the Borough. It would however move the Petersburg Borough towards more economic self- sufficiency. Petersburg right in the boundaries of the Tongass National Forest - 96 percent of the land within our borough is federal land - only 4 percent is left over for the State and borough use. In recent years, State land within our Borough has been designated to the Alaska Mental Health Trust, The University of Alaska, and Southeast State Forest; leaving very little for the Borough to select for future economic development and planning. The land entitlement was created for the purpose in which the Municipality is asking: the lands would be used to address the economic, cultural, and resource- based goals of the Borough and its residents. We understand that in the near future, Municipalities will be responsible to fund more of their own operations, relying less on state and Federal monies. The Borough's request is moving them toward being more self-sufficient and an increased land base is essential in moving the Borough in that direction. The Petersburg Chamber of Commerce fully supports SB 28 and we ask that you vote to pass this legislation forward today. 2:16:49 PM LIZ CABRERA, DIRECTOR, COMMUNITY DEVELOPMENT, PETERSBURG BOROUGH, PETERSBURG (via teleconference), was available for questions. Vice-Chair Gara discussed that when the state conveyed land to a municipality or borough easements to or along water bodies were retained. He asked for verification that the borough would maintain access. Ms. Cabrera replied in the affirmative and added that the borough did not restrict access to any of its land. Co-Chair Foster CLOSED public testimony. 2:18:25 PM RANDY RUARO, STAFF, SENATOR BERT STEDMAN, had no further comments. Representative Kawasaki mentioned that there had been no opposition to the bill. He asked whether a property owner adjacent to the municipal land selections would be notified of the entitlement. Mr. Ruaro deferred to the Department of Natural Resources (DNR). MARTY PARSONS, DEPUTY DIRECTOR, DIVISION OF MINING LAND AND WATER, DEPARTMENT OF NATURAL RESOURCES (via teleconference), responded that the conveyance process was public and included information specifying the land proposed for transfer. 2:20:24 PM Representative Kawasaki asked for more clarity regarding what information was conveyed to residents. He exemplified a potential land conveyance in the Fairbanks North Star Borough that was closely aligned with the Fort Knox mine. Residents of the borough involved in a running club were concerned that if the land was annexed within the mining claim the mine would prevent access. He requested the specific types of information the Department of Natural Resources (DNR) conveyed to the public. Mr. Parsons replied that DNR was statutorily mandated to relay the information to the public via newspapers, websites, and post office notices. The public would be alerted via email of any out - of - state ownership conveyance. Representative Kawasaki asked whether the department would be statutorily required to contact adjacent property owners of any type of conveyance. Mr. Parsons believed that through the public process the department would not necessarily contact every nearby owner, but they would publish notifications in newspapers and online. Vice-Chair Gara asked for assurance that DNR maintained easements along and to a water body in order for the public to access it for recreational purposes and whether easement locations were shared with the public. He spoke specifically to the conveyance in SB 28. Mr. Parsons answered that all of the statutory required easements were maintained as part of the conveyance process and were identified in conjunction with the borough. 2:24:12 PM Representative Pruitt queried whether there was a precedent for conveying additional land to a borough or municipality. Mr. Parsons responded that Southeast Alaska's situation was unique due to the fact that so much land was part of the Tongass National Forest. He explained that the amount of "vacant unappropriated unreserved land" (VUU) was relatively small. The Petersburg Borough requested 95 percent of the state's VUU land, similar to a Wrangell Borough request for an additional conveyance of 9,600 acres or approximately 48 percent VUU land, subsequent to its first relatively small entitlement. The Petersburg conveyance encompassed almost all of the state's VUU land inside of the borough boundaries. Representative Pruitt wondered whether requesting a second land conveyance after an initial conveyance had happened before. Mr. Parsons replied in the affirmative but he would not characterize the situation as commonplace. He related that in the recent past the Haines Borough requested an additional entitlement subsequent to the formation of the Wrangell Borough. Representative Pruitt asked whether the state was comfortable with the amount of VUU land the Petersburg Borough had requested. He appreciated that Petersburg was trying to find a way to be self-sustaining and was supportive but wondered whether a large conveyance of VUU land set a precedent that concerned the department. 2:28:21 PM Mr. Parsons responded that a large conveyance was a concern when the state received revenue from land, timber, and or material sales, easements, and right-of-ways. He noted that the department's ability to generate revenues from program receipts versus unrestricted general funds (UGF) would be diminished if the state conveyed a large amount of revenue producing VUU land to boroughs. Representative Pruitt recognized the concern. He asked whether the department was satisfied with the particular allotment for the Petersburg Borough. Mr. Parsons replied that the administration had not taken a position; it relied on the legislature to determine the best course of action for the state. Representative Guttenberg referred to the maps in members' packets (copy on file) of the Petersburg area. He described the type of land in the borough and asked what percentage of state VUU land remained available after the conveyance. Mr. Parsons responded that approximately 700 acres of VUU state land inside the borough remained. Representative Guttenberg remarked that when he had been previously involved in land selection conveyances a hierarchy of entitlement existed among federal, state, municipal, and tribal parties. He stated that when land selection processes were undertaken conflicts arose between involved parties. He wondered whether the scenario applied to the Petersburg entitlement. Mr. Parsons was unaware of any conflicts associated with the land selection. Representative Guttenberg wanted clarification that 700 acres of state VUU land remained within the borough. Mr. Parsons confirmed that approximately 700 to 750 acres of state VUU land remained. 2:33:48 PM Vice-Chair Gara reviewed the two previously published zero fiscal notes from the Department of Commerce, Community and Economic Development FN 1 (CED) and the Department of Natural Resources FN 2 (DNR). He noted that the DNR fiscal note analysis on page 2 reported the value of the land at $68 million. Representative Wilson asked why the amount was not shown as a loss to the state on the fiscal note. Vice-Chair Gara offered that he recently had the same question. He answered that fiscal notes reflected state funds and fund sources and not assets. Representative Wilson asked whether non- reporting the value of assets as a loss was standard practice. Mr. Parsons replied that Vice-Chair Gara was correct and the general practice was to report funding gains, losses, or expenses. He delineated that the land value was added at the request of Senator Anna MacKinnon to show the potential lost revenue from the sale or development of the land if retained. 2:36:51 PM Representative Wilson wondered whether the value was based on selling the land outright or from mineral rights. Mr. Parsons answered that the value was based on a combination of many factors. The department assessed the land for land sale offerings, potential timber or other material harvest, right-of-ways or easements use. Co-Chair Seaton MOVED to REPORT SB 28 out of committee with individual recommendations and the accompanying fiscal notes. Representative Kawasaki OBJECTED for the purpose of discussion. He appreciated the bill and the "maximum local self-government" opportunity the entitlement offered Petersburg. He spoke about private owners adjacent to the land that he characterized as "non-contiguous." He wanted to ensure that private landowners understood the possible ramifications of the conveyance in terms of negative impacts like timber sales or blocked views. Representative Kawasaki WITHDREW his OBJECTION. Representative Pruitt recognized that much of the Petersburg Borough was located within the Tongass National Forest and was out of the borough's control. He understood the borough's effort for self-sufficiency and supported the bill. He worried about the precedent set by the state granting 95 percent of its land to a municipality, but maintained his support for the Petersburg conveyance due to the unique situation caused by its location in a National Forest. There being NO OBJECTION, SB 28 was REPORTED out of committee with a "no recommendation" recommendation and with two previously published zero fiscal notes: FN1 (CED) and FN2 (DNR).