HB 3-STATE LAND SALE; PFD VOUCHER AND ASSIGN.  1:03:20 PM CO-CHAIR TARR announced that the first order of business would be SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 3, "An Act relating to the purchase and sale of state land; relating to discounts for veterans on state land purchases; and relating to the assignment of permanent fund dividends to purchase state land." 1:04:03 PM REPRESENTATIVE RAUSCHER, sponsor, specified SSHB 3 would provide for [Alaska residents] to utilize their permanent fund dividend (PFD) for the purchase of [state] land. Additionally, he said, SSHB 3 would provide a 33 percent [discount] to veterans who are bidding for land in state land disposal sales. He said he would be proposing an amendment that addresses some of the questions brought up during prior hearings of the bill. 1:04:56 PM REPRESENTATIVE TUCK offered his understanding that [SSHB 3] would provide for a veteran to receive a 25 percent discount on his/her first purchase of land and a 33 percent discount on a second purchase. He asked whether [SSHB 3] would also provide a 33 percent discount on any additional land purchases beyond the second purchase. REPRESENTATIVE RAUSCHER offered his belief that after looking over the original bill it was decided that "the first purchase was still going to be 25 or vice versa and the second purchase could have been 33 percent." The problem, he said, was that use of the 33 percent [by a veteran] was tied to [assigning his/her] PFD. "But they both were in existence," he continued, "giving a veteran two chances with a big percentage advantage on each one of the parcels he was bidding on instead of once in a lifetime, which is where each program tried to be to begin with." 1:06:02 PM REPRESENTATIVE TUCK offered his understanding that it would be two purchases at discounts. He said he supports the forthcoming amendment as a great fix, but suggested the committee discuss whether there should be a limit of two purchases or an indefinite number of purchases for the 33 percent discount. CO-CHAIR TARR directed attention to Section 3, which states, "A veteran is entitled to [ONLY] one discount under (a) of this section and one discount under (f) of this section during the veteran's lifetime." She said she therefore thought the part about being able to use it once had been addressed. 1:07:21 PM REPRESENTATIVE RAUSCHER deferred to Mr. Darrell Breese to answer the question. CO-CHAIR TARR offered her understanding that the interest is in ensuring that the language be clear that [a veteran] only gets to use either the 25 percent or the 33 percent, and that both can be used but [a veteran] only gets to use each of them once. DARRELL BREESE, Staff, Representative George Rauscher, Alaska State Legislature, on behalf of Representative Rauscher, sponsor, responded that under the bill as currently written without the amendment [SSHB 3], an individual can get the 25 percent discount on purchases before August 1, 2019, only one time. If the bill were passed, he explained, then [a veteran] could get the 33 percent discount after August 1 only one time. A third purchase is not available with the discount, he continued, the third sale would be at the full price of the property. 1:08:27 PM REPRESENTATIVE TUCK offered his understanding of what he heard: "From this day forward you get a one chance at 33 percent, but, however, if you had been able to take advantage of the 25 percent before August 1, 2019, then you get a second stab with the 33 percent." MR. BREESE answered that [SSHB 3] would allow [a veteran] to get both: 25 percent on land purchased beforehand and then 33 percent on land purchased after August 1. However, he noted, the [forthcoming] amendment would change things a bit and he doesn't want members to confuse the two. 1:09:43 PM REPRESENTATIVE RAUSCHER moved to adopt Amendment 1, labeled 31- LS0028\M.1, Fisher, 4/6/19, which read: Page 1, line 2: Delete "and" Page 1, line 3, following "land": Insert "; and providing for an effective date" Page 1, line 6: Delete "25 percent on" Insert "one-third of [25 PERCENT ON]" Page 2, lines 9 - 11: Delete all material. Renumber the following bill sections accordingly. Page 2, line 12: Delete "new subsections" Insert "a new subsection" Page 2, lines 13 - 19: Delete all material. Page 2, line 20: Delete "(g)" Insert "(f)" Following "another": Insert "veterans'" Page 3, following line 12: Insert new bill sections to read: "* Sec. 6. The uncodified law of the State of Alaska is amended by adding a new section to read: VETERANS' DISCOUNT; APPLICABILITY. Notwithstanding the amendment of AS 38.05.940(a) by sec. 1 of this Act, AS 38.05.940(a), as it read on July 31, 2019, applies to discounted land sales to eligible veterans under AS 38.05 that occurred on or before July 31, 2019.  * Sec. 7. This Act takes effect August 1, 2019." 1:10:56 PM REPRESENTATIVE RASMUSSEN objected for discussion purposes. REPRESENTATIVE RAUSCHER explained Amendment 1 would provide that going forward there would be only one choice. From listening to Representative Tuck at the last hearing, he continued, [SSHB 3] is too confusing. He offered his belief that Representative Tuck was "looking for one option here and getting rid of the 25 and increasing the only option now and letting it be 33 percent," which is what Amendment 1 is chasing. CO-CHAIR TARR offered her understanding that if Amendment 1 were incorporated into the bill, the 25 percent [discount] would be eliminated after August 1, and after August 1 the only option would be the 33 percent discount and [the veteran] could assign his/her PFD to make the payment. MR. BREESE replied correct. First in Amendment 1, he explained, the 25 percent would be changed to 33 percent and later in the amendment the 33 percent section would be deleted from the bill totally so that only a 33 percent discount is offered. He further explained that Amendment 1 would add a new section to the bill, Section 6, which would provide that if a veteran had taken the 25 percent discount before the bill's effective date, August 1, 2019, the veteran would be ineligible for the 33 percent discount. A veteran would be eligible for only one discount, he added, the 25 percent if it has already been taken or the 33 percent moving forward. 1:12:16 PM REPRESENTATIVE SPOHNHOLZ observed Amendment 1 would delete all material on page 2, lines 9-11, of the bill, which is Section 3. She noted Section 3 is the limit on the number of times that a veteran is eligible to use these discounts. She requested the section of law be pointed out that allows any limitation on the number of times this can be used. MR. BREESE drew attention to the language that is underlined and bold within Section 3 of the bill, and explained that that is what the bill is proposing to add to existing statute. By not adding that language to existing statute, he continued, it is basically deleting this [proposed new language] from the bill. He said Section 3 looks at AS 38.05.940(c), which states: "A veteran is entitled to only one discount under this section during the veteran's lifetime." CO-CHAIR TARR observed Amendment 1 would eliminate Section 4 as well, because the amendment would delete [page 2] lines 13-19, in the bill that add the 33 percent discount, thereby making the existing Section 1 the default discount section that gets updated to 33 percent. MR. BREESE answered correct and noted Amendment 1 would not delete all of Section 4, only subsection (f). He explained Section 4 is the establishment of the 33 percent discount if [the veteran] uses his/her PFD, and under Amendment 1 this would go away. Subsection (g) of Section 4, he further explained, would remain under Amendment 1 and would be re-lettered to subsection (f), so Section 4 would state, "A discount under this section may not be combined with another discount under this section." He said this provision would prevent three veterans from getting together and purchasing a parcel of land for free. 1:14:29 PM REPRESENTATIVE RASMUSSEN removed her objection to Amendment 1. There being no further objection, Amendment 1 was adopted. CO-CHAIR TARR noted the bill, as amended, was now before the committee for discussion. 1:14:56 PM REPRESENTATIVE HANNAN inquired about the length of residency for a veteran to qualify. She posed a scenario in which [a veteran] comes to Alaska for one year, gets the discount, buys the land, and then doesn't remain an Alaska resident. REPRESENTATIVE RAUSCHER replied that, constitutionally, he doesn't think this could be stopped. He deferred to Mr. Breese or Mr. Marty Parsons to answer further. MARTY PARSONS, Director, Central Office, Division of Mining, Land and Water, Department of Natural Resources (DNR), confirmed Representative Rauscher is correct. He said, constitutionally, [a veteran] must be a resident to qualify to purchase the land. If [the veteran] then left the state, he continued, it would be no different than someone purchasing land through the regular auction which requires that the person be a resident of the state, and if that person left Alaska the next year, he/she would still have the land. The bill doesn't change that, he said. 1:16:41 PM REPRESENTATIVE RASMUSSEN asked whether there is a clause in statute or regulation that if a person chooses to purchase the land with his/her PFD, and then leaves the state and no longer qualifies for the PFD, that a payment arrangement would be made when the person no longer qualifies for a PFD. MR. BREESE replied that the bill, as restructured with the adoption of Amendment 1, now says a person can assign his/her PFD to make the payments. If the person leaves the state and is no longer eligible for the PFD, the person would have to make the payments out-of-pocket separately from any PFD funds that would have been received had the person remained in the state. REPRESENTATIVE RASMUSSEN asked whether it says that in the bill. MR. BREESE responded that the way the bill is now amended, the PFD is the only thing assigned to making the payment. While not addressed in the bill anywhere, he said, a purchaser loses the eligibility for PFD payment if he/she is no longer eligible for the PFD. The purchaser, he continued, is still on the hook for payment to fulfill his/her contractual obligations with DNR for the land purchase. REPRESENTATIVE RAUSCHER added that [assignment of] the PFD is no longer tied to [a veteran receiving the 33 percent discount] for the land purchase. An Alaska resident, he said, would be able to purchase land regardless of whether he/she is a veteran and if the purchaser wants to put his/her PFD toward the purchase of this land, it can now be done at any time, even for [previously purchased land]. 1:19:24 PM CO-CHAIR TARR asked whether it would be a difficulty for DNR to have a purchaser switch from assignment of his/her PFD to another form of payment. MR. PARSONS answered that under DNR's reading of the bill it wouldn't be any more of a burden. He said the purchaser would need to notify DNR that he/she is no longer pledging his/her PFD to make a payment and DNR would continue to process the purchaser's contractual payments as the department normally would. If the purchaser failed to notify DNR and payment didn't come through, he stated, the purchaser would become in arrears and DNR would have to potentially start default proceedings. 1:20:40 PM REPRESENTATIVE TUCK inquired where in the bill [the discount] is limited to a one-time use, given Section 3 is now eliminated. MR. BREESE replied it is in the current statute, AS 38.05940(c), which states, "A veteran is entitled to only one discount under this section during the veteran's lifetime. REPRESENTATIVE RAUSCHER stated he hopes he took everyone's concerns into account. He offered his belief that Amendment 1 fixed everyone's concerns, that everyone thought it was a good bill, and that the bill has been smoothed out for DNR. He asked for the committee's support of the bill. 1:22:52 PM REPRESENTATIVE HOPKINS moved to report SSHB 3, as amended, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSSSHB 3(RES) was reported out of the House Resources Standing Committee.