HB 344-HARDROCK LAND EXCHANGE/HEALY RR LEASE CHAIRMAN HALFORD announced that a Senate version of HB 344 has been discussed by the Committee. The House amended HB 344, which was similar to the Senate bill, and added the Alaska Railroad Corporation (ARRC) land in Healy. MS. CAROL CARROLL, Director of the Division of Support Services of the Department of Natural Resources (DNR), explained that the intent of the House amendment is to fix a problem the community of Healy has with leased land. It allows ARRC to extend the lease so that community members can get mortgages on homes on that land. Number 1070 SENATOR GREEN asked if that subdivision is already established. MS. CARROLL said it is. MR. CHARLIE GREEN, representing Usibelli Coal, concurred with Ms. Carroll's statement and explained that the original lease with the ARRC, when it was under federal management, was for 55 years. About 25 years have passed. The subdivision homeowners are buying and building homes on subleased land. Most banks require a minimum 10 year cushion on mortgages on leased land. At this time, two families have moved from the subdivision and are unable to sell their homes because of the duration of the lease. Additionally, a number of houses in the subdivision are available for rent primarily because the owners have been unable to sell them. HB 344 will give legislative approval for an extension of the lease. It does not require language to be placed in statute giving ARRC unilateral approval to terminate the lease. In addition, the owner will not be able to unilaterally terminate the lease, as banks would not give mortgages in that case. The subdivision is in the heart of the community of Healy. It contains about 120 residences, as well as the community center and volunteer fire department. CHAIRMAN HALFORD asked if the benefit of this extension and any value that is accrued will go to the subleasees. MR. GREEN replied that it would certainly be a benefit because subleases could be extended, satisfying requirements of bankers and other lenders. CHAIRMAN HALFORD asked if a profit is being made by anyone in this process. MR. GREEN answered, "No, this is definitely a non-profit enterprise." He explained the ARRC lease held by Usibelli Coal requires that Usibelli sublease to homeowners and commercial businesses that locate within the subdivision. Usibelli is only allowed to recover its original development fees and the rent it pays to ARRC, which is calculated on a per acre basis. From Usibelli's perspective, it is a non-profit project. SENATOR TAYLOR asked why ARRC does not sell the homeowners the land instead of continuing to lease. CHARLIE BODDY, Vice President of Government Relations with Usibelli Coal, explained that Usibelli has been working with the Denali Borough, ARRC, and the homeowners to find a better solution. Usibelli considers CSHB 344(FIN) to be an interim, stop-gap measure to allow people who want to sell and build homes to be freed up from the current problem. The parties involved anticipate that within the next year they will find a way to get that land into private hands. Usibelli got involved in developing the subdivision because it had the equipment needed to lay out the entire subdivision and lay a trunk line. It then moved all of the "folks" out of the Usibelli and Sun Trana mining communities into this new area however it was never Usibelli's intention to be a landlord. With the creation of the Borough, he believes private ownership can be achieved. SENATOR GREEN moved CSHB 344(FIN) from committee with individual recommendations. There being no objection, the motion carried.