HB 318-LIMITATION ON EMINENT DOMAIN  9:54:28 AM CHAIR RALPH SEEKINS announced CSHB 318(FIN) am to be up for consideration. CRAIG JOHNSON, Staff to Representative Lesil McGuire, introduced the bill and said it resolved around a policy call of whether the state should allow private property to be transferred to a private individual for economic gain. Also, should eminent domain be allowed to take someone's private home so that others might recreate, he asked. He referred to Kelo versus City of New London where the city captured forty homes and transferred them to an economical development project and the property ended up being a parking lot. This created outrage across the country and to date more than forty pieces of legislation has entered the federal system regarding eminent domain. The bill that has the most support says that any state or municipality that uses eminent domain to take private property for private gain will lose their economic development money for a period of two years. More than thirty states are in the process of addressing the issue through legislation and the sponsor of the bill would like to ensure the same thing could not happen in Alaska. 9:57:02 AM MR. JOHNSON said he has discovered through research that some of the properties taken through eminent domain were second- generation homes that were in a viable neighborhood. The bill creates a definition for the word "home." The sponsor of HB 318 intends to protect Alaskan's homes as much as possible. He prepared the committee that the testimony they would hear would not be totally supportive and he conceded that it was not a "perfect bill." 9:59:34 AM MR. JOHNSON stated that many attorneys have looked at the bill as well as state departments, the Realtors Association, utility companies, the railroads, and some oil companies. The current version represents a balance from the suggestions and concerns of many different entities. 10:02:26 AM SENATOR CHARLIE HUGGINS asked Mr. Johnson the type of feedback they are receiving regarding the trail system in Anchorage. MR. JOHNSON said they have heard a lot of support regarding the trail system, mainly from the city assembly who passed an ordinance against the taking of personal property. The basic premise of the bill is that a person's home is their castle and that the least the government can do is protect it. 10:05:56 AM SENATOR HUGGINS asked for clarification whether the bill would impact traditional trails. MR. JOHNSON said access to hunting and fishing trails is specifically protected in the bill. SENATOR HOLLIS FRENCH said most projects have many aspects and as an example, someday there will be a large development on the south side of Mount McKinley to allow people more access to Denali National Park. That will have a huge economic impact on the area. He asked Mr. Johnson how he proposes to separate the recreational aspect of a new hotel and road from the economic development aspects. He said property could be taken to build a railroad because that would fall into economic development but some projects are large-scale and are mixed. MR. JOHNSON said that example wouldn't come under consideration because that is federal land and the bill only addresses private property. SENATOR FRENCH countered there was a lot of private land on the south side of Denali off of the Petersville Road that would fall under the restriction if the bill were too tightly crafted. MR. JOHNSON said the bill allows for access to trails and roads and does not affect a developed road system. If a borough or munipality wants to take private land and sell it to another private individual it would be prohibited. If they want to keep it for their own use, such as infrastructure, then it would not be protected under the bill. If they want to sell private land to a developer of a lodge, they would have trouble doing so under the bill. 10:09:52 AM SENATOR FRENCH said ultimately the judge would make the call of whether the eminent domain taking of someone's private land was for economic development or not. He felt that it would be a difficult process and subject to interpretation. MR. JOHNSON agreed that the judge would make the determination because by definition, eminent domain is a court action. He noted that only one percent of the land in Alaska is held in private hands. SENATOR GUESS asked Mr. Johnson to explain the instances where local government could impose local control. She questioned the reason he said that the bill would not affect the Municipality of Anchorage. 10:12:22 AM MR. JOHNSON responded ordinances that are more restrictive tend to trump state laws. SENATOR GUESS asked the reason for adding "fiber optic lines" on page 3 line 8. MR. JOHNSON said it was done at the request of a House Judiciary Standing Committee member as an attempt to plan for the future. If a cable company has a right-of-way and they need to use the land for fiber optics infrastructure, they wanted to make sure that scenario was covered. SENATOR GUESS asked Mr. Johnson to explain the third exemption on page 4. MR. JOHNSON said that is directly out of the Alaska State Constitution that guarantees the right to access of resources. He asked to have a representative from the Department of Law explain the reason. PETER PUTZIER, Senior Assistant Attorney General, Department of Law (DOL), said the language comes from Article 8, Section 18 of the Alaska State Constitution. The reason for the exception is to avoid any argument that the bill in some way conflicts with the Constitution. 10:14:43 AM SENATOR GUESS asked whether she reads it correctly that a private home could be taken to access resources. MR. PUTZIER explained the way the Constitution reads is proceedings in eminent domain may be undertaken for private ways of necessity to permit essential access for extraction or utilization of resources. The bill uses the exact same language. SENATOR THERRIAULT asked Mr. Putzier to speak about the fifth exemption. MR. JOHNSON said it was brought as a concern that in a case such as an oil lease, the state could take back the lease if absolutely necessary. That was put in as a request from the Department of Natural Resources. SENATOR GENE THERRIAULT asked whether the state, through eminent domain would actually take back the lease or whether the state would take the resource under the lease and pay fair market value for it. CHAIR SEEKINS said it would appear that the state would take back the surface use of the land. MR. PUTZIER said he understood the idea was to preserve the right to take back the property. There would be interplay with existing lease rights and, he said, it would be an interesting exercise of eminent domain. It is theoretically possible that the property could be taken back if the consensus was that the property wasn't used productively. 10:18:47 AM CHAIR SEEKINS asked whether the property would include a subsurface estate. MR. PUTZIER said that was his understanding. SENATOR THERRIAULT asked whether the definition of "property" was the acreage or the resource. He also asked whether anyone could potentially take the resource without taking the acreage. MR. PUTZIER said he did not think the state could take the resource without paying for the value of the resource. SENATOR GUESS referred to page 4 line 8 and asked the reason for the phrase "common carrier." 10:20:31 AM MR. PUTZIER said the language was in response to similar federal legislation so that Alaska would be in conformity. The intent is to cover something like public bus systems, for example. SENATOR GUESS clarified that under the definition of economic development, it means "for profit." 10:21:48 AM SENATOR FRENCH observed there was nothing in the bill prohibiting the state from offering large amounts of money to entice landowners to sell. MR. PUTZIER said that is absolutely correct. MR. JOHNSON added there was also an escape clause in the case of a "hold out" that would allow the Legislature to step in and determine whether a situation was an appropriate use of eminent domain. SENATOR FRENCH referred to page 5 and the definition of "recreational facility or project." He posed a hypothetical situation of a small community where thousands of people use the small boat harbor and the city determined the harbor must expand. He asked how that situation would be handled if the harbor expansion would be within 250 feet of a residence. 10:24:17 AM MR. JOHNSON said the city would probably offer the resident owner additional money for the property although if it were identified to be a large economic project, a judge could justify the taking of the property. SENATOR FRENCH asked Mr. Johnson the reason for not identifying "boat launch" in the bill. He speculated there would be more incidences of that occurring than any issue with small boat harbors. MR. JOHNSON said there was no reason. The language came from the Department of Natural Resources (DNR) and the Department of Fish and Game (DFG). 10:28:46 AM CHAIR SEEKINS asked Mr. Putzier the reason the bill uses the words "personal property" instead of "private property." MR. PUTZIER said "personal property" is generally considered an automobile or something like a swing set. "Private property" restricts the language to "real property" that could be taken with eminent domain. CHAIR SEEKINS asked the reason for using the word "personal residence" versus "private residence." MR. PUTZIER responded either phrase could be used. The definition of residence is difficult and there is no model even in other states. CHAIR SEEKINS asked how the residence is considered in the case of someone owning a home in a family trust. MR. PUTZIER said it would depend on how it flows through the definitions in Section 3 subparagraphs (A-C). 10:31:30 AM CHAIR SEEKINS held the bill in committee.