SENATE CS FOR CS FOR HOUSE BILL NO. 318(JUD) "An Act limiting the exercise of eminent domain." 9:12:47 AM This was the first hearing for this bill in the Senate Finance Committee. Senator Bunde moved to adopt committee substitute Version 24- LS1083\R as the working document. Co-Chair Green objected for explanation. Co-Chair Green explained that, at the request of the bill's sponsor, Representative Lesil McGuire, Version "R" would delete language adopted by the Senate Judiciary Committee. The language eliminated is located in Sec. 5, page 6 beginning on line 25 and continuing through page 7, line 11 of SCS CS HB 318(JUD), Version 24-LS1083\P, as follows. …However, a municipality may exercise the power of eminent domain to acquire private property from a private person for the purpose of transferring title to the property to another private person for economic development if (1) the municipality does not delegate the power of eminent domain to another person; (2) before issuing the notice in (3) of this subsection, the municipality makes a good faith effort to negotiate the purchase of the property; (3) written notice is provided at least 90 days before the public hearing to each owner of land that may be affected by the exercise of eminent domain; (4) the municipality holds a public hearing on the exercise of eminent domain after adequate public notice; (5) the governing body of the municipality approves the exercise of eminent domain by a two-thirds majority vote; and (6) in the case of a second class city, the governing body of the city adopts an ordinance by a two-thirds majority vote, the ordinance is submitted to the voters for approval at the next general election or at a special election called for that purpose, and the exercise of eminent domain is approved by a majority of the votes on the question. Co-Chair Green supported the elimination of this language, as its inclusion would negate the purpose of the bill. The adoption of Version "R" would return the bill to its original form. 9:14:03 AM CRAIG JOHNSON, Staff to Representative Lesil McGuire, the bill's sponsor, informed the Committee that this bill was developed in response to a recent United States (U.S.) Supreme Court ruling, Kelo v. City of New London, Connecticut, eminent domain case in which private property was condemned and "transferred to another private entity for private economic development". The public outcry to that Court's ruling spurred eminent domain legislation in 42 states. Representative McGuire researched Alaska Law and found that existing law "would allow this type of condemnation". Therefore this bill, which has been scrutinized by a variety of entities including the Department of Law, environmental groups, the Alaska Railroad Corporation, utility and oil companies, and realtors, was developed to address the issue. Mr. Johnson stated that one of the policies paramount in the development of the bill was "the appropriateness of transferring private property to another private individual", specifically the transfer of people's homes. Numerous homes were taken and transferred to a private developer in the Connecticut case. Thus, this bill contained language that would protect a person's primary residence. He clarified however, that the bill would not absolutely prohibit eminent domain of a person's home, as there are legitimate instances for its use. "The determination was that the ability of one person to recreate doesn't take priority over another person's dwelling space." This determination was further refined to protect approximately a four-acre plot around someone's home from eminent domain. Mr. Johnson stressed that while "this is a bill that no one loves", 90 percent of it is acceptable. It is a compromise between the stances of such entities as the American Association of Realtors who believe that "no private property should ever be taken" as opposed to the position of environmental groups that support widespread use of eminent domain. This bill would reserve the use of eminent domain "in traditional uses but strictly deals with those two narrow policy issues of private to private and protecting someone's home". 9:17:44 AM Mr. Johnson professed this legislation, which would not fiscally impact the State, was thoroughly reviewed, both in its development and during its 22 Legislative hearings. He urged the Committee to support the bill. Co-Chair Green asked for confirmation that the sponsor supported the Version "R" committee substitute. Mr. Johnson affirmed. Mr. Johnson noted that federal legislation is currently being considered that would restrict funding to states that "allow private to private transfers of any political subdivisions". In conclusion, this bill would reserve eminent domain policy decision authority to the Legislature rather than to local governing bodies. 9:18:49 AM LUKE HOPKINS, Assembly Member, Fairbanks North Star Borough, testified via teleconference from Fairbanks, in opposition to Version "R". The Borough considers eminent domain a local control issue and has established a process to best fit the needs of the community. The Municipality of Anchorage has also adopted an eminent domain policy. 9:19:57 AM Mr. Hopkins addressed Mr. Johnson's comments that Version "R" "would strike the best balance" between the various interests. One consideration omitted however, was a local municipality's right to take action on an issue involving eminent domain specifically relating to economic development concerns. He urged the Committee to consider the Senate Judiciary committee substitute, Version "P", as it is responsive to the needs of local governments. 9:21:23 AM Senator Stedman asked Mr. Hopkins whether this bill might "hinder" a municipality's ability to extend sewer and water lines or further utility infrastructure. Oftentimes, easements are necessary to support these efforts. 9:22:14 AM Mr. Hopkins understood that the bill would not restrict utility and infrastructure easements. Co-Chair Green concurred. 9:23:11 AM Senator Stedman stated that, oftentimes, in the effort to expand a utility trunk line, a utility must negotiate easements across private property. The question is whether this legislation might negatively impact municipality or utility's ability in that regard. Mr. Johnson assured the Committee these circumstances were "protected in the bill". Efforts were taken not to change existing uses of eminent domain. Language in Sec. 2(a)(10) page 3, line 10 specifically allows the continuance of eminent domain for community sewerage needs. Utility infrastructure, railroad, hospital, highway needs and other public good needs are also addressed in Sec. 2. Senator Stedman acknowledged. PETER PUTZIER, Senior Assistant Attorney General, Transportation Section, Department of Law, concurred with Mr. Johnson's remarks. 9:24:50 AM RUTH BLACKWELL, Realtor and Representative, Alaska Association of Realtors, shared that the Association is 99 percent supportive of Version "R". The Association is against changing private property to public use, as such action would negate that land's obligation to contribute to the community tax base. A person's private property should only transfer to another private entity through the free market enterprise system. The government should not become involved in that process. Currently, only one percent of the land in Alaska is privately owned; 99 percent of the land is owned by the State, federal, or lands claim entities. That amount should be sufficient to provide for a municipality or other public land use need for economic gain. 9:26:38 AM PEGGY ANN MACONNOCHIE, Representative, Alaska Association of Realtors, enthusiastically spoke in support of Version "R", as it would revert the bill to its original intent. "The Kelo case was a clear taking of private property … for private purposes." The Association understood municipalities' desire to have more local control, but that must not come at the expense of the owners' property rights. Version "R" would protect those private property rights. 9:28:13 AM Ms. McConnochie assured the Committee that "this is a very important issue to all of us as private property owners", and the Legislature's decision on this bill would be remembered for decades. People's homes should be sacred. A person's ability to own, use, and transfer property is "one of our basic rights". Legislative protection of that right would be appreciated. 9:28:46 AM KEVIN RITCHIE, Executive Director, Alaska Municipal League (AML) informed the Committee AML had "no position on eminent domain". However, he noted that three of AML's largest members have enacted eminent domain policies similar to those presented in the bill. The only issue of concern to AML is that of local control. Mr. Ritchie agreed with Mr. Hopkins that the policy adopted in the Senate Judiciary committee substitute, Version "P" established a process through which "the Legislature could absolutely guarantee" that "a very substantial and fair" eminent domain public hearing process would occur at the local level. Any decision made at the local level would require support from the majority of the local governing body. Mr. Ritchie concurred with the Alaska Association of Realtors position that this was a very important decision. However, he reemphasized AML's concern about local control. He stressed that one should be mindful that the Kelo case, which generated this legislation, occurred in Connecticut. Alaska is not Connecticut. None of the 10,000 eminent domain situations presented in the Kelo case pertained to a situation that occurred in Alaska. "We have been good stewards of eminent domain." 9:30:41 AM Co-Chair Green removed her objection to adopting Version "R". There being no further objection, Version "R" was ADOPTED as the working document. Senator Dyson was "delighted with both the bill" and Co-Chair Green's support of it. Senator Dyson moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. There being no objection, SCS CS HB 318 (FIN) was REPORTED from Committee with previous zero fiscal note #1 dated January 11, 2006 from the Department of Commerce, Community and Economic Development; previous zero fiscal note #2 dated January 11, 2006 from the Department of Environmental Conservation; previous indeterminate fiscal note #3 dated January 10, 2006 from Department of Law; previous indeterminate fiscal note #4 dated January 11, 2006 from the Department of Natural Resources; and previous indeterminate fiscal note #5 dated January 11, 2006 from the Department of Transportation and Public Facilities. 9:31:58 AM