SENATE BILL NO. 6 "An Act relating to the disposal of state land." This was the third hearing for this bill before the Senate Finance Committee and the first held during the second session. A committee substitute, 1-LS007\H, was adopted as a Workdraft at the last meeting. Co-Chair Torgerson explained that this is an act creating a state land commission; reasonable land disposal advisory boards and provides for the disposal of 250,000 acres of state land annually. SENATOR TAYLOR, the bill's sponsor, testified this is a major decision and "a true policy call" to address the issue of land availability and to allow the people of Alaska to purchase and acquire a small portion of the 103 million acres received at statehood. Senator Taylor addressed what he called "housekeeping measures" contained in the bill. He noted there is approximately 50,000 acres of land that has been surveyed, platted, subdivided, appraised and even advertised for sale by the Department of Natural Resources, but not distributed. Some of the lots had been sold but were turned back to the state and some of the lots were never purchased, according to Senator Taylor. He stated that this legislation is to encourage the department to expedite the sale of that land. Senator Taylor spoke of his and others' efforts to find and convey lands to Alaskans. He noted that the state constitution requires that land can only be sold near the market value. He said this legislation attempts to meet that provision since many of the appraisals are outdated. Senator Taylor offered his comments in generalized terms saying there are general concepts that need to be discussed and then implemented. He qualified that the committee substitute is simply a working document. He spoke about the policy calls the legislature still must make, such as who would select the lands for distribution and how lands will be distributed. Currently, he told the Committee, interested purchasers stake the sites themselves. He said the question is whether to keep this system or require that the state complete surveying and appraisals before land can be advertised for sale. Another policy call Senator Taylor pointed out, is whether to institute a mechanism for the classification of the available lands. Will there be public input of a regional or local level and will the people of that area have an opportunity to address their concerns regarding what lands should or should not be sold, he posed. Senator Taylor stated that as a result of many of these questions, the current committee substitute establishes a State Land Commission to address land disposal decisions at the local levels. He said that part of the commission is to set up a local body to provide public input. Senator Taylor continued by saying that the land commission would designate those areas where land disposal would occur, how much land would be disposed and in what size lots. He said this is called the "land disposal bank" that appears on page three of the committee substitute. Senator Taylor noted that the "minimum of 250,000 acres each year" language in the same sentence is just a "ballpark" figure and would be subject to the different circumstances of each area. He agreed, 250,000 acres seemed like a lot of land, but countered that this was not very much considering the state has 103 million acres. Senator Taylor interjected saying that he believed the state's economy would be enhanced by this additional land disposal. Senator Taylor continued explaining the committee substitute referring to a provision that requires the Commissioner of the Department of Natural Resources to notify the legislature and the governor at the beginning of each session of what land is suitable for disposal. He noted this requirement is in existing statute and will not be changed by this version of the bill. Senator Taylor then addressed Section 9 on page six of the committee substitute that stipulates that the request of the commission must include an analysis and an assessment of the market demand for the land proposed for disposal. Existing statutes provide that the commissioner "shall" include the analysis and assessment. Senator Taylor hoped this would prevent problems between competing buyers. Senator Taylor raised the issue of funding, noting a one- time appropriation would probably be required, but that each subsequent year, the program would pay for itself off of land sales. He projected that land sales would far exceed any expenses of running the program. He suggested it could be a significant revenue "enhancer" for the state. Senator Taylor shared the existing land disposal finance system where a buyer makes a down payment of ten-percent of the purchase price and makes additional payments of ten percent each year for ten years. He added that the buyer also pays interest on the outstanding balance. He compared this revenue-generating program to having the land remain vacant, thus earning no revenue for the state. Senator Taylor estimated approximately ten-percent of the sales volume would be needed to keep the program running at a consistent level. He said the actual amount of funding needed would depend on the amount of work required of the state. If some of the surveying, appraisal and other presale steps were done at the expense of the private sector and/or the buyer, the cost to the state would be lower, according to Senator Taylor. Senator Taylor noted that either the legislature or the Department of Natural Resources have already designated much of the prime land in the state. He assured that it is not the intent of this legislation to take on additional controversy over the classifications already given by the state. He stated that the lands this program applies to is unclassified, undesignated lands estimating there is between three and five million acres of unclassified, undesignated lands in the State of Alaska. Senator Taylor next told the Committee the committee substitute includes procedures for a bidding process in the case of two parties interested in the same land. Options were provided for sealed bids and auctions, he stated. Co-Chair Torgerson stressed that the committee substitute will not be the final version that reports from Committee, noting that more work still needs to be done on the bill. He shared that his intent was to change the bill to an appropriation bill to cover the up front costs of the first sales. After that, he said, revenues from future sales would be deposited into a land disposal fund to be appropriated by the legislature for the continued sale of land. Co-Chair Torgerson did not anticipate that two and one-half million acres would actually be disbursed in ten years but wanted to set a reasonable number of acres for annual disbursement and keep to that number each year until all suitable land is disbursed. Co-Chair Torgerson told the Committee of three barriers to implementing the program: 1) the Best Interest Finding, 2) plotting requirements of local governments, and 3) appraisals. He explained the local plotting procedure, which required the registered owner of the land to appear before the local planning commission to get authority to subdivide and/or offer the land for sale. Co-Chair Torgerson directed the members' attention to an e- mail he received from a constituent suggesting that Alaskans be given the option of applying future permanent fund dividends toward the purchase of state land. He thought the matter should be considered, although he was unsure if it could be incorporated into this bill. Senator P. Kelly noted land disposal bank language on page three, "a minimum of 250,000 acres each year shall be disposed of by the state." He asked if the bill has a provision in case there is no interest in all 250,000 acres. Senator Taylor reminded the Committee that this number was selected as a starting point for discussion. He had no idea what the demand would be and would not know until the program began. He spoke about an option of requiring the land to be at least put into the land bank if not sold. He stated that this provision ensures that the specified amount of land is offered for sale. Senator P. Kelly then asked about the residency requirement for bidders and whether it is constitutional. Senator Taylor did not think it would be an issue based on the permanent fund dividend program and other programs' residency requirements. He said these requirements are legal provided they are objective, fair and reasonable. Senator P. Kelly spoke of a situation with a landowner near Fairbanks who operates a tourism business on her property. According to Senator P. Kelly, this landowner garners support from people outside the state to oppose any development on nearby land. While he supported the bill, he was concerned about nonresidents buying large chunks of land for conservation purposes and gave an example of Ted Turner and Jane Fonda. Senator Taylor shared this concern and noted a restriction already in statute and said that restrictions must be included in this bill as well. Senator Leman suggested removing "250,000 acres of" from the title, as he didn't think it is necessary. Senator Leman was uncertain about the language limiting the commission to meeting once a year. He suggested meetings could be held via teleconference if the need arose. Senator Taylor agreed that the number of meetings should be flexible as long as the commission meets at least annually. Senator Leman also questioned the interest rate provisions. He thought 10.5 percent was too high and might restrict people from being able to purchase land. He wanted to make the process fair to both buyers and to the state. Senator Taylor agreed the rate should "float with the market" but noted existing statutes, which he didn't clarify. He said he would leave these details up to the Committee to resolve. Senator Green spoke of an earlier suggestion to replace "disposal" with "offered" in the language pertaining to the amount of acres to be disposed of. However, she didn't know if this would accomplish the sponsor's and her goals for the program. She spoke of a commissioner who has publicly stated that the role of the Department of Natural Resources is not to dispose of land to private individuals. Senator Green did not know how strongly the language needed to be to ensure compliance. ED MARTIN, testified via teleconference from Cooper Landing about his e-mail message to the chair that suggested allowing permanent fund dividend recipients apply future dividends to the purchase of state land. He agreed with Senator Green's suggestion of replacing "offer" with "dispose", saying it would ensure competition. Tape: SFC - 00 #24, Side A 10:44 AM Mr. Martin spoke at length of his support for the bill. He concluded by saying he hoped it would be signed into law. LES GARA testified via teleconference from Anchorage about his involvement in fishing. He had concerns about the inability to freely travel up and down the banks of streams and lakeshores on private property. He requested a setback of 100 feet from streambeds. He predicted that if there is not a demand for 250,000 acres, the land would be sold for too low of a price. He also had concerns about damage done by development along the rivers. BOB LOEFFLER, Director, Division of Mining, Land and Water, Department of Natural Resources testified via teleconference from Anchorage that the state is not selling land in a manner he believed most Alaskans wish. He did not think the current version before the Committee addresses that problem, noting that money is needed in order to sell land. Given the state's budget gap, he recognized that the process needs to be done cheaper, but stressed that money is still needed. He looked forward to working with the Committee to develop a land disposal program. Co-Chair Torgerson asked for an estimate of the amount of land available for sale. Mr. Loeffer replied the state has approximately three million acres classified for settlement or agriculture and approximately 2.2 million acres within area plans, some of which is high value land along roads or in coastal areas of Southeast, but that about three-quarters or 1.6 acres is suitable for remote disposal. Of the 1.6 million acres, he noted that about one-quarter cannot be offered for new remote disposals because it has either already been subdivided or already offered. Mr. Loeffler stressed that in a remote disposal, or "stake- it-yourself", the gross acres offered is between four and ten times the amount of land actually sold. Co-Chair Torgerson asked how many acres are involved in the upcoming disposal. Mr. Loeffer qualified that the amount of land the department is able to offer is directly tied to the amount of funding granted by the legislature. He stated that in FY 01, the department plans to use funding from the last two years to offer 130 parcels of previously offered land, 100 parcels in a remote, "stake-it-yourself" program and 105 parcels of new subdivisions. Co-Chair Torgerson asked how many acres. Mr. Loeffer answered approximately 2000 acres. Co-Chair Torgerson thought that this was not enough and promised to assist in making more land sales possible. Co-Chair Torgerson ordered the bill HELD in Committee.