SB 98 CONVEY LAND TO MUNICIPALITIES/BOROUGHS  CHAIRMAN MACKIE called the Senate Community & Regional Affairs Committee meeting to order at 1:35 p.m. He noted the presence of Senators Hoffman, Phillips, Wilken and Mackie. He then brought SB 98 before the committee as the first order of business. ANNETTE KREITZER , staff to Senator Loren Leman, who is the prime sponsor of SB 98, said the legislation was introduced at the request of the Municipality of Anchorage. SB 98 would allow the director of the Division of Lands to convey isolated tracts of lands within boundaries of a borough to the municipality. The director is given direction in the bill to give special consideration to a conveyance of a tract that is contiguous or in proximity to other municipal land. Ms. Kreitzer explained the purpose of the that is to simplify some of these land management problems that the Municipality of Anchorage has had; however, in doing so, and to meet the criteria of best interest of the state, this conveyance would have to: (1) consolidate land ownership patterns; (2) result in more cost-effective and efficient land management; and (3) achieve the land use planning objectives of the state and the municipality in which the tract is located. Ms. Kreitzer further explained that these tracts of land, if they are conveyed under this subsection, would not be considered in fulfilling the general grant land entitlement of a borough or a unified municipality under Title 29. Number 065 CHAIRMAN MACKIE asked if this legislation would apply strictly to Anchorage, and MS. KREITZER responded that the way the bill is written now it is for unified municipalities. Number 090 GARY GUSTAFSON , Director of the Heritage Land Bank for the Municipality of Anchorage, stated SB 98 will help solve a problem of what to do with isolated tracts of state land. These are state parcels that are left over following years of municipal selection, conveyance, and other land transfers. These isolated tracts are often adjacent to, or, in many cases, entirely surrounded by municipal lands and may therefore be managed more efficiently and cost-effectively by the local government. Mr. Gustafson said the legislation also avoids the major pitfalls that have too often affected other land transfer bills because: (1) it is short and simple; (2) there is no amendment to the existing statutory land entitlement of boroughs and municipalities; (3) it applies only to vacant, unappropriated and unreserved state lands; and (4) it does not require the state to convey, instead it merely allows the municipalities to make application for land and allows DNR to transfer it. Mr. Gustafson said the bill does not provide a definition of "isolated tract" and that's because an isolated tract could be a fraction of an acre in an urban setting, or it could be several hundred acres in a rural area. The overriding consideration is that the proposed conveyance be cost-effective and efficient so that local government has access to utilized lands that perhaps the state of Alaska would not be prepared or find cost-effective to manage. Mr. Gustafson pointed out that the bill would not apply until a borough or municipality has already reached or is about to reach their statutory entitlement under AS 29.65. The bill then could be used for jurisdictions that are close to receiving their entitlement. That would include Anchorage, the Fairbanks North Star Borough, the Matanuska-Susitna Borough, the Kenai Borough, and as time goes on, all unified municipalities and boroughs would be eligible. Mr. Gustafson voiced the municipality's strong support for SB 98, and he encouraged its favorable consideration. Number 142 SENATOR PHILLIPS asked what was motivating the need for this legislation. MR. GUSTAFSON responded that there are still have a few isolated tracts of state land in the Anchorage Bowl, but Girdwood is probably the area where this would most directly apply. The municipality owns most of the bottom of the Girdwood Valley, the Forest Service owns the mountain tops, and in between is a layer of state land. The municipality has plans to develop ski resort expansion for Alyeska in this area and they will be doing the majority of that development on municipal land. He said it only makes sense to obtain the state land in between their land and the Forest Service land so that they don't have to have three layers of jurisdictions and authorities to get authorizations to develop the land. CHAIRMAN MACKIE commented that the legislation refers to the director, and in statute "director" means the director of lands in DNR. He said he was a little uneasy about giving a division director the ability to convey land to municipalities. He questioned why the sponsor didn't introduce a bill that just limits it to those tracts the Municipality of Anchorage is interested in. MS. KREITZER responded that Senator Leman agreed to introduce this bill on behalf of the Municipality of Anchorage, as it is written, with the understanding that these questions would come up. He believes that through the committee process, if a bill that's going to move forward and move out of this committee is going to happen, then those questions are going to have to be dealt with in this committee. She said Senator Leman has the same concerns, and he is prepared to deal with those questions. CHAIRMAN MACKIE said he wouldn't have a problem with a situation like the Alyeska Ski Resort expansion or another municipality that was in a similar type of situation, but he is concerned with conveying broad authority like SB 98 provides. MR. GUSTAFSON related that the provision giving the director the authority to make the decision was included in the legislation because AS 29.65 already provides the director with the authority to make decisions on municipal selections. CHAIRMAN MACKIE said that was a different story than conveying actual parcels of land out of municipalities. Number 225 KEVIN RITCHIE , Executive Director, Alaska Municipal League, directed attention to a letter of support and a resolution that was passed by the Alaska Municipal League in November in support of SB 98. He expressed the Municipal League's willingness to work with the committee on the bill. Mr. Ritchie said a number of municipalities are members of the Municipal League's lands committee. That committee met recently and they all thought that SB 98 would be a very reasonable tool to provide some additional ability for the state to convey land that was meaningful to municipalities. Number 250 SENATOR HOFFMAN asked which unified municipalities in the state would gain from this legislation. MR. RITCHIE replied that the Municipal League's lands committee has never discussed the language "boroughs and unified municipalities," but he didn't think there would be an objection to simply delete "boroughs and unified" which would then cover all municipalities in the state. Number 265 SENATOR WILKEN said there is no consideration of the value of the land that's being transferred from one entity to another, and he questioned if that is something that should be considered. DICK MYLIUS , Chief of the Resource Assessment & Development Section, Division of Land, Department of Natural Resources, testifying from Anchorage, said the current municipal entitlement program was set up in 1978. The total amount of land the state has given municipalities is about 1.3 million acres, and of that, about 600,000 acres have not yet been transferred. He explained that is partly because some of the large land grants to boroughs came on line a few years ago with the formation of boroughs like the Northwest Arctic Borough and such, but the department is in the process of conveying those lands. There are a few municipalities that have received all of their land, and, in the case of Anchorage, there was actually an out-of-court settlement that resolved their entitlement by giving them a combination of land and cash because there was not enough land to meet their entitlement. Anchorage is one of only four municipalities that fall under this Act which have full entitlement or close to their full entitlement. The other 12 municipalities that qualify under this Act either as boroughs or home rule municipalities still are owed land under the existing program. However, most of the cities, with the exception of one or two, are only owed, at the most, a few hundred acres. There are about five boroughs that have large outstanding debts and then small amounts to a whole lot of municipalities. Mr. Mylius related that one of DNR's concerns about this bill is that most municipalities can hardly get isolated tracts of state land through their existing entitlement. There is also concern that with the way the language is written, any borough or municipality that's still owed land under AS 29.65 could also come in and file for selections, and it is kind of like writing a blank check in terms of how much land they might end up with. In the case of Anchorage, there are very few tracts that they can get because there isn't a whole lot of state land available in that area. Number 400 SENATOR WILKEN asked if when Anchorage got their entitlement, as well as a cash settlement because there was inadequate land available, did that complete the commitment from the state. MR. MYLIUS answered that there is a 1986 agreement with Anchorage which basically outlines what needs to be done to complete the commitment. There are some parcels of land that still have not been conveyed to the municipality, some of which they only get if the state doesn't need them. So it is still kind of an ongoing commitment to the municipality to convey them certain specific tracts of lands, but to the large part, their commitments to Anchorage have been met. SENATOR WILKEN said his concern is that the land belonging to the state belongs to all the people of the state, and if it does have value to the people of the state, that is not recognized in this bill. MR. GUSTAFSON said Senator Wilken raises an excellent issue that the state always has to weigh when it conveys property. He said the bill does not require the state to convey anything, but in many cases, there will be isolated tracts of state land that are remote, difficult to manage, and not very cost effective for the state to manage, and in those cases, it might be better to transfer them to the municipality so that they can be used and perhaps go into a local tax base. Number 415 JANE ANGVIK , Director, Division of Land, Department of Natural Resources, testifying from Anchorage, stated the department is concerned about how this legislation will affect the amount of work that is already being done with municipal entitlements within the Department of Natural Resources, as well as efforts on the part of the Legislature to try to encourage the disposal of lands that belong to the state. She pointed out that the House Finance Committee has slated the division for a $218,000 reduction in their operating budget which will affect their capacity to fulfill their existing requirements under the municipal entitlement program, so there is some concern about taking on additional responsibilities and responding to municipalities who are requesting them to make a best interest finding with respect to allocations of land. Ms. Angvik said the division is interested in working with the Legislature on trying to find ways to make lands available to Alaskans. There has been discussion on whether or not there should be some triggering mechanism for municipalities to be required to dispose of some of the lands that they have received from the state to make them available to the public. So as a policy question, they are interested in exploring the possibility of encouraging additional disposal of lands by municipal governments. Ms. Angvik pointed out that the legislation does not contain a definition of "isolated tract," and since it is not defined, it is not clear if there is any size consideration in the proposal to dispose of a piece of land. In conclusion, Ms. Angvik said the department looks forward to working with the committee on ways to improve the bill. Number 492 SENATOR WILKEN directed attention to page 1, line 7, and suggested deleting the words "may not be" and replacing with the words "shall be" so that if the land being selected is not going to be counted as part of a municipality's entitlement, then he would expect that they would pay the people of the state for the value of that land. When a municipal entitlement has been fulfilled, then it would strictly be a fair market value as all other programs in the state. Number 510 SAM KITO , Special Assistant to Commissioner Perkins, Department of Transportation & Public Facilities, said the department owns tracts of lands, specifically around airports, and it can specifically be located within a municipality or borough. DOT's concern is that in a borough or municipality with a finite land base that these isolated state tracts will increase in value over time and could potentially prove valuable for land exchanges and transportation improvements as well. The department believes these tracts have value and should not be given away to a municipality. If the state determines that there is no long term need for a piece of property, then that property can be purchased at fair market value from the state, or considered as part of a municipal entitlement. There being no further testimony, CHAIRMAN MACKIE stated SB 98 would be held, and he invited all the interested parties to work with his staff and the sponsor's staff to address the concerns that had been raised during the meeting. Number 565