SB 382-EMINENT DOMAIN/REPLAT OF BOUNDARY CHANGES  CHAIR BERT STEDMAN announced SB 382 to be up for consideration and noted that there was a committee substitute. SENATOR THOMAS WAGONER made a motion to adopt CSSB 382, \H version as the working document. There being no objection, it was so ordered. RICHARD SCHMITZ, aide to Senator John Cowdery, stated that the representatives from the Department of Law and the Department of Transportation and Public Facilities (DOT/PF) were better able to explain the bill. PETER PUTZIER, assistant attorney general representing the Department of Transportation & Public Facilities, explained that the bill is the result of Anchorage court cases regarding eminent domain. One case concerned the Kenai River Bridge and the other the C Street Project in Anchorage. The court challenges suggested that DOT didn't have condemnation authority based on an interpretation of the eminent domain statute, AS 09.55.275. The argument is that: In 1975 when the statute was passed, it was the legislative intent back then to require DOT or municipalities when they acquire right-of-way to go through the exact same subdivision approval process that a developer would have to go through even though the two processes are, as you can imagine, quite distinct. On the one hand you've got a developer who is going to be putting interior streets, lighting, sewer and so on. On the other hand you've got this right-of-way process that involves odd shaped parcels where you don't have any of those same considerations. Kenai, Municipality of Anchorage, Matanuska-Susitna Borough, I believe the City and Borough of Juneau although I'm not sure, most of these communities have a specific ordinance particular to the right-of-way acquisition process and it says to DOT or the municipality 'If you want preliminary replat approval follow this process particular to the right-of-way acquisition.' And the argument that's being made in court is that that process set up in these different towns is unconstitutional and contrary to legislative intent back in 1975 in AS 09.55.275. This bill is meant to correct that. Sitka, the City and Borough of Juneau, Ketchikan, Kodiak, the Matanuska Susitna Borough, and the Municipality of Anchorage have been contacted regarding their views on the issue. The City and Borough of Juneau raised a concern that the initial draft was ambiguous regarding the scope of regulatory power given to DOT for drafting regulations to address this issue. As a result, they clarified that DOT's intent is specifically to eminent domain and the right-of-way acquisition process. There is no intent for DOT to venture into general zoning and subdivision lines. The \H version is meant to restrict what DOT may do by regulation and all but Anchorage have responded and agreed with the changes. The Municipality of Anchorage is still circulating the draft, "but they are keenly aware of this issue because they've been litigating it now for many months." CHAIR STEDMAN referred to the two lawsuits and commented that if the plaintiffs prevail, then: The state would be forced to go through a replat like at a regular municipality or city, which would be going through the planning and zoning commission - having hearings and then going on up to the city council or the assembly for final approval - subject to all appeals in that process. Is that correct? MR. PUTZIER said that's true, but DOT is already required to go through whatever process the municipality has. The real issue is the allegation that the process that these different municipalities have is unconstitutional in that they deviate from the normal subdivision process, which entails a lengthy hearing process that is subject to appeal rights as they apply to local zoning standards. Typically, the process for right-of- way acquisition is a bit more streamlined. SENATOR ELTON said it's clear that this gets to some of the statutory issues, but he didn't think it was a fix for the remnant constitutional issue. The bill has a retroactive effective date, but if the constitutional issues aren't addressed then the points raised by the lawsuits are still out there. MR. PUTZIER thought that the intent section, combined with deleting the last sentence of AS 09.55.275, would address the points raised in court. I think striking that last sentence is a clear indication from the Legislature that it was never intended to have an identity of process put in place such as being suggested. Back in '75 when the statute was put in passed, the concern was that DOT was doing these projects without consulting with municipalities. I think the Legislature meant, the intent was to make DOT consult and submit their plans to municipalities for comment and DOT has been doing that and it's been working out relatively harmoniously with municipalities across the state. The arguments in court, I think, just take the intent too far when you say the Legislature was trying to demand a particular process. It's that problem that we're trying to correct right now. SENATOR ELTON asked if that means that the constitutional problem goes away with the change in statute. MR. PUTZIER hesitated and said he wasn't sure there was a constitutional issue. And I'm sorry if I misspoke earlier. There's an argument being made that the ordinances violate the statute because the statute, the allegation is being made, is a demand for a particular process. If we change the statute, I think that would solve the problem or the argument of the ordinances being in conflict with the statute. DOT can only conduct its eminent domain proceedings if it strictly abides by the requirements of the statutes. SENATOR ELTON acknowledged that he might have misheard, but earlier in the presentation he though that he heard mention of unconstitutional and contrary to statute. He then said he would like to hear from the Department of Law about making this retroactive, which would wipe out the lawsuits. MR. PUTZIER replied: There could be challenges made to that. There is significant case law on it and as long as the Legislature - the general law is - as long as the Legislature clearly expresses its intent to make it retroactive, and if there is no improper purpose behind it, that retroactive legislation has been upheld under a number of circumstances. There are, theoretically, challenges that could be leveled, but what this bill does is good. [It should not only] address the existing litigation, but also has benefits obviously five, ten years down the road by clarifying it now. SENATOR LINCOLN asked where the last, [\H version], committee substitute originated. CHAIR STEDMAN said it came from the sponsor's office [Transportation Committee]. SENATOR LINCOLN said she asked because the changes address some of the concerns she expressed in the Transportation Committee. "Changing the municipal authority from a may to a shall on page 3, line 7, I think is a great addition and the other two parts as well where it includes the rights of municipalities to regulate the remnant parcels and the other whole new section that was added in Section 3" SENATOR WAGONER asked that John MacKinnon with DOT come forward and tell him what the fiscal impact would be if these projects were delayed by at least a year. JOHN MACKINNON, deputy commissioner of transportation with the Department of Transportation and Public Facilities, said there would be considerable additional expenses if the projects were delayed. "Every time a project comes up, if somebody wants to delay the project there is the cost of litigation and whenever we hire the AG's office - they don't come cheap." SENATOR WAGONER asked what the cost is in the Kenai River Bridge in Soldotna and guesstimated that it would between $28 and $30 million. MR. MACKINNON said that is a $28 million project and it's ready to advertise in the middle of May. "A delay of a year could easily be a couple of hundred thousand dollars, easily." SENATOR WAGONER said he wanted that on the record. SENATOR LINCOLN asked if Fairbanks had been given the opportunity to review and state their views on the bill. MR. MACKINNON told her that Fairbanks hadn't responded. SENATOR ELTON commented that Anchorage and Fairbanks have over half the state's population and because of that, he would hope that they would submit their comments to the committee before the bill goes to the floor. MR. PUTZIER added that the City and Borough of Juneau also wanted him to state the following for the record: That DOT prior to enacting any regulations would coordinate with and afford the opportunity to all affected platting authorities to provide comments on the regulations. DOT certainly has no objection to that and, in fact, welcomes the opportunity to work together with the platting authorities in drafting those regulations. There was no further testimony. SENATOR WAGONER made a motion to move CSSB 382(CRA) from committee with individual recommendations and attached fiscal note. There being no objection, it was so ordered.