CS FOR SPONSOR SUBSTITUTE FOR HOUSE BILL NO. 57(FIN) "An Act relating to the sale of certain state land to adjacent landowners." This was the first hearing for this bill in the Senate Finance Committee. 9:58:50 AM TERRY HARVEY, Staff to Representative Bruce Weyhrauch, the bill's sponsor, explained the bill would revise State Statute to allow the Department of Natural Resources to negotiate with a private landowner the sale of a parcel of State land, 20 acres or smaller, which was surrounded by land held by that private landowner. These land parcels are unique in that the only access to these parcels would be through the private landowners property. This negatively impacts the ability of the State to sell the land to another entity. Mr. Harvey noted that Representative Weyhrauch has been working with Representative Bill Thomas in regards to such a parcel of land in Haines, which is in Representative Thomas's election district. A person in Haines has been working for 30 years on developing his land for a mining operation, which would be open to the public. That individual's property completely surrounds a pre-Statehood mining claim that has reverted to State ownership. The individual in this situation "should be allowed to work directly with the State," as it would remove the burden of advertising and survey work he would be required to pay for were he to attempt to purchase the land through the typical State land disposal process. 10:00:27 AM Mr. Harvey noted that Dick Mylius, Director, Division of Mining, Land and Water, Department of Natural Resources, was available to answer technical questions about the bill. Sarah Gilbertson with the Department of Fish and Game was also available to address public access issues that might arise were the State to engage in such a sale. The Haines landowner, John Schnabel, was also available to discuss his situation. 10:01:03 AM Senator Bunde asked whether a survey would be required on such parcels. Mr. Harvey assumed a survey would be required. However, the direct negotiation sale process would forego the advertising and other requirements for someone in Mr. Schnabel's position. Senator Bunde, agreeing to the uniqueness of there being State land surrounded by privately held land, asked whether other private landowners were seeking to acquire such land. Mr. Harvey understood there were other cases, however, Mr. Schnabel was the only one seeking to purchase such land at this time. That being the case, Senator Bunde declared this "seems to be kinda pushing the edge of special interest legislation". Co-Chair Green asked whether this situation might be referred to as "an in-holding". Mr. Harvey responded in the affirmative. Co-Chair Green characterized this situation as "a reverse in- holding". There are numerous parcels of "in-holding" land in the State with access issues. 10:02:40 AM DICK MYLIUS, Director, Division of Mining, Land and Water, Department of Natural Resources, testified via teleconference from an offnet location. This legislation would change the State's "preference rights" statutes. Typically State land is sold through a competitive process through which any Alaskan could participate. However, "preference rights are the exception" as they allow the State to negotiate a sale with one individual. Typically this process is utilized when an individual legally occupies the land and has made significant investments on the property. Mr. Mylius stated that the preference rights process could be expanded to allow State land, which is surrounded by privately held land, such as the aforementioned land in Haines, to be sold. Such land would be unattractive to others, as it is inaccessible. Mr. Mylius stated that this legislation would include such land in an existing "remnant" preference rights statute that allows the State to negotiate the sale of a small parcel of land within a municipality to an individual. A best use interest finding, land survey, and appraisal would be required, and the land would be sold at fair market value. He noted that the Haines land exceeds the parcel size currently specified in the statute. A survey has already been conducted on the parcel. Mr. Mylius noted that, while the land in Haines is the only known parcel, there could be others, considering the size of the State and the amount of land the State owns. Senator Bunde questioned the claim that such land would be inaccessible, as he understood an existing State law would require granting right-of-way access to land. 10:06:32 AM Mr. Mylius clarified that the law was specific to land sold by the State; the State would be required to insure there was legal access to any land it sold. A private landowner would not be required to provide legal access to land sold by the State; the purchaser would be required to negotiate directly with the private landowner for access. He was unsure whether the access requirement was required by State law, as the Department of Natural Resources provides access to land it sells as a matter of policy. Senator Bunde asked whether the land might qualify for access under the provisions of the State's RS 2477 rights-of-way project. Mr. Mylius understood there was a RS 2477 route near or on the Haines parcel. Its exact location has not been confirmed, as it has not been surveyed. While RS 2477 "would provide trail access, one of the problems with RS 2477 is it's not unlimited access" and there are other [unspecified] RS 2477 restrictions. Thus, it is unclear as to whether the RS 2477 access would be sufficient to allow development of the land. While the route is recognized under State law, it has not been recognized by the court system and thus, at this point, could not be relied upon to provide legal access to the land. Senator Bunde appreciated Mr. Schnabel's situation, however, suggested the bill be referred to the Senate Judiciary Committee so his concern about whether this was special interest legislation could be addressed. 10:08:50 AM Senator Stedman furthered Senator Bunde's access question, by asking whether "prescriptive easements", which are used to acquire access across property that is privately owned, could be utilized in these cases. 10:09:27 AM Mr. Mylius, noting he was not proficient in the subject of prescriptive easements (PEs), explained that the court must approve PEs. The Court would require seven to ten years of actual documented use as well as documentation proclaiming that no one had attempted to block the access. Nothing like that has been filed in the Haines case. The Department could attempt to establish a PE, however, it would be "a time consuming and expensive process" with an unforeseeable outcome. Senator Stedman informed the Committee that, while the Department felt there could be other similar parcels like the Haines land, no inventory of parcels had been provided when the bill was heard in the Senate Resources Committee. Co-Chair Green assumed there could be other parcels of land to which this bill would apply, particularly in areas where road construction has occurred. Senator Olson understood that the bill's previous committee of referral had considered an amendment sponsored by Senator Ralph Seekins. Mr. Harvey communicated that it was not until after the bill reported from the Senate Resources Committee, that the sponsor became aware Senator Seekins had some legal concerns pertaining to the differences between a direct preference sale to an individual and the State's typical land disposal process. Representative Weyhrauch understood that the Senator's concerns arose because he did not have the benefit of hearing Mr. Mylius' testimony. No amendments have been requested. Co-Chair Green opined that the key language in the bill is that "the director 'may' allow the land" in question to be sold to the adjoining landowner through the direct preference sale option. This language is located in Section 1(7) page 3 lines 1 though 11 of the bill. In other words, the director would determine whether to allow this process to transpire. Mr. Harvey noted that Sarah Gilbertson with the Department of Fish and Game would explain the efforts taken to address public access concerns. 10:13:25 AM SARAH GILBERTSON, Special Assistant to the Commissioner, Department of Fish and Game, announced that the Department is aware of numerous parcels of land in the State to which this legislation could apply. Some of these parcels "are State owned land that is adjacent to a waterway" such as a stream or river. The surrounding land is either privately or federally owned in these cases. The Department's primary concern with these parcels of land was to preserve Alaskans' ability to access the water. Ms. Gilbertson stated that the Department's concerns were addressed by adding the requirement that a best interests finding be determined, as specified in Section 1(7)(b)(A) on page 3 line 5 of the bill. The inclusion of the best interest findings would ensure that the access to waterways issue would be addressed. Co-Chair Green asked for confirmation that the addition of that language appeased the concerns of the Department. Ms. Gilbertson affirmed. AT EASE 10:14:54 AM / 10:15:58 AM Co-Chair Green appreciated the work that has been conducted on the issue. 10:16:26 AM JOHN SCHNABEL, the owner of 84 acres of land surrounding the State parcel in Haines, testified via teleconference from an offnet location. His attempts to purchase the State parcel began in 1980, and the effort has been very challenging. He pointed out that in separate efforts to purchase other State land via the public outcry auction, he was held financially responsible for the land surveys and advertising notices. Even though he had paid those expenses, other people had the right to bid against him without any financial obligation. Mr. Schnabel said he planned to develop the 84 acres into a wilderness and gold panning experience for tourists. His concern is that a conflicting activity might present itself on the 13- acres parcel of land within his development, were it sold to another individual at an outcry auction. This bill would assist in making his development plans "secure". Co-Chair Wilken moved to report the bill from Committee with individual recommendations and accompanying fiscal notes. Without objection, CS SS HB 57(FIN) was REPORTED from Committee with previous indeterminate fiscal note #1 dated April 4, 2006 from the Department of Natural Resources. 10:18:30 AM