SB 28-MUNICIPAL LAND SELECTIONS: PETERSBURG  3:37:07 PM CHAIR GIESSEL announced consideration of SB 28. She said it authorizes a land conveyance to the Petersburg Borough of 14,666 acres from unallotted state land. SENATOR BERT STEDMAN, sponsor of SB 28, Alaska State Legislature, Juneau, Alaska, stated that this is a simple borough expansion bill to align the Borough of Petersburg with land expansions in other boroughs as required by the Alaska Constitution. MELISSA KOOKESH, staff to Senator Stedman, Alaska State Legislature, Juneau, Alaska, said this bill would give the Petersburg Borough a chance to grow, generate revenue, and increase economic development from nearby lands. Over the last several months, Senator Stedman's office and representatives from the Petersburg Borough have reviewed the bill with the Department of Natural Resources (DNR) and discussed where the borough selections would occur, and they have no objection to the bill. CHAIR GIESSEL asked for a sectional analysis. 3:39:14 PM MS. KOOKESH said section 1 adds subparagraph 16 to AS.29.65010(a), setting a general land grand entitlement to the Petersburg Borough of 14,666 acres, an increase from 12,770 acres above what the borough would otherwise receive. Section 2 is a conforming amendment to allow the borough time to make its additional selections. Section 3 is also a conforming amendment to allow the land selection process at DNR to apply to the new Petersburg land selections. Section 4 is an immediate effective date. 3:40:10 PM LIZ CABRERA, Director, Community and Economic Development, Petersburg, Alaska, supported SB 28. She said it sets the general land entitlement of Alaska's newest borough to be comparable to the land entitlement received by all other boroughs in the state, an amount equal to approximately .70 percent of a borough's land mass, which, in Petersburg's case, is 14,666 acres. She explained that the Petersburg Borough is located in central Southeast Alaska and encompasses an area of 3,800 square miles of land and sea. The borough's population center is located on the northern tip of Mitkof Island, which is home to a diverse and prolific commercial fishing fleet and three major seafood processing facilities. In 2013, the residents of Petersburg voted to form a borough for a number of reasons, which included having a greater say on land-use decisions in the surrounding area and having an opportunity to increase their municipal land base, and many also felt it was very important for all area residents to support their school system through local taxes. 3:41:40 PM SENATOR VON IMHOF joined the committee. MS. CABRERA continued that about 12 months after borough formation, Petersburg received a general land grant entitlement certification from the state indicating it was entitled to 1,896 acres under AS 29.65.010. However, this amount was reduced by 457 acres that was already received by the City of Petersburg, even though certain tracts of the city's 457 acres is restricted from development and only available for public, charitable, or recreational uses. After deducting the 457 acres, the borough's land entitlement was set at 1,438 acres. Putting this into context, this is approximately one-third the size of Anchorage International Airport. She explained how the DNR used a statutory formula in the calculation. A municipality is entitled to 10 percent of vacant unappropriated and unreserved (VUU) land within its boundaries. The lands available for selection are designated as VUU by the State of Alaska. These lands were unclassified or classified as agricultural, grazing, materials, public recreation, settlement, and resource management. But, for the most part, no development has occurred on any of the state's VUU land. Why so small? She said the majority of land within the borough, over 96 percent, is managed by the federal government as the Tongass National Forest. Of the non-federal lands within the borough, 1.73 percent is owned by the Goldbelt Corporation, 1.34 percent by the State of Alaska, and .4 percent by the Alaska Mental Health Trust and University of Alaska. Only .3 percent is in private ownership, and a mere .04 percent is owned by the municipality. When DNR applied the land entitlement formula to the Petersburg Borough, only a very small amount of land remained in VUU status. They realized their entitlement was inadequate for what they were hoping to accomplish and that other boroughs also received small land entitlements, initially, but were able to increase these through legislation. The most recent example was in 2010 when both Wrangell and Haines received additional acreage. In the late 1990s, the Lake and Peninsula Borough and the Yakutat Borough had their land entitlements set through legislation. MS. CABRERA said this is important to Petersburg, because just over 96 percent of its land base is federally managed, and of its non-federal lands, the major land holders are the Goldbelt Corporation and the State of Alaska. In short, while the borough itself is large, the majority of its land is not and will never be included in their local tax base, and most is not available to generate economic returns for residents or the state. 3:45:16 PM The Petersburg Borough would like the opportunity to move some of these lands into private ownership and add them to its tax base as residential or commercial developments. They want the opportunity to secure resource development through new sources of rock for construction, road maintenance, and other projects. In general, they would like the opportunity to be more economically self-sufficient, and 1,400 acres simply does not provide enough developable land to support these goals. MS. CABRERA explained that the DNR has stated it does not generally voice support for this type of legislation, but neither does it oppose the request. The borough provided a general outline of the lands they would select under SB 28, and DNR did not express any concerns about these potential selections. Lastly, Ms. Cabrera said the committee knows that these are difficult times and in its own small way, Petersburg wants to be part of the solution, not a casualty of the crisis, and an increased land base is a key component to the long-term sustainability of the municipality. 3:46:28 PM SENATOR STEDMAN asked her to explain her position in the borough. MS. CABRERA said that she is the Community and Economic Development Director and works directly with the local planning commission; she has also been the staff for their ad hoc land selection committee, a group of residents that have developed criteria and done some land selections already. She also works with the local Economic Development Council. SENATOR MEYER said he wasn't as concerned about the number of acres as to their value, and asked how this compares from a dollar standpoint to other boroughs that have been formed and been given land. MS. CABRERA answered that historically fiscal notes weren't attached to any of the land conveyances, so they don't have a number. But if you were to apply DNR's number, the value for Fairbanks' land grant would have been $602 million, and Anchorage's would have been $241 million. So, Petersburg's is relatively small both in acreage and in dollar amount compared to the other municipalities. SENATOR MEYER said it would be better to compare it to other boroughs in Southeast where there isn't as private much land. MR. CABRERA answered that Wrangell's land was valued at $51,600,000, using the DNR number. 3:49:15 PM MARTY PARSONS, Deputy Director, Division of Mining, Land and Water, Department of Natural Resources (DNR), Anchorage, Alaska, answered that question explaining that they were asked by another committee to provide a number for the additional lands based on potential land sales, material development, timber values, and those types of things and they had not done that in the past for other Southeast communities. SENATOR MEYER said that sort of answered his question. MR. CABRERA clarified that she was using the number DNR came up with. It's not like that number was attached to the legislation, so it's not necessarily apples and apples. SENATOR HUGHES noted there is no fiscal note, and asked if she has until October 2018 for land selections and if that is adequate. She also noticed the commissioner didn't have a timeframe for approval and asked if that is normal or problematic. MS. CABRERA replied that it can be accomplished by the date, but it would be nice if DNR had a timetable. They have been told it it's a matter of years before the conveyance would be completed. SENATOR HUGHES asked if she is aware that any of the past legislation had included a timeline for the commissioner. MS. CABRERA answered none that she has seen. SENATOR HUGHES asked that question of DNR. MR. PARSONS commented that normally those timeframes are not included in this kind of legislation. They work with statutory requirements that have to do with when the actual selections are received from the borough; some of which are rejected. Completing a conveyance is an interactive process he said. SENATOR HUGHES asked if he knew of any cases that have a timeframe in statute. MR. PARSONS said he had not seen legislation with a timeframe attached to completion of a conveyance. SENATOR WIELECHOWSKI asked Mr. Parsons to describe the 14,000 acres. MR. PARSONS answered the lands are varied; some are close to Petersburg, some are outlying as in Thomas Bay, some are settlement lands and some lands the state could have used for material sites for road construction. Some of the land has timber value and some is muskeg, but some areas are relatively high-value residential subdivisions. 3:53:49 PM SENATOR WIELECHOWSKI asked if he could figure out the value of the lands that were provided for Wrangell and Anchorage in relation to the proposed 14,000 acres in this bill. MR. PARSONS replied they looked at lands that were available for settlement: both high-value lands and not-so-high value. They looked at estimated timber resources and a base value per acre. They also looked at certain material sites that they had a revenue history on, and that's where the number of $68,638,000 came from. SENATOR WIELECHOWSKI responded that they just got the fiscal note, and asked if he had estimated $5,375/acre. MR. PARSONS answered yes. SENATOR WIELECHOWSKI asked how this acreage compares to what would be given to a borough and if he department had done any sort of comparison like that. MR. PARSONS answered the department did not do a calculation on Wrangell, but rather negotiated quite heavily with them to reach a solution. For the acre number, he normally calculates 10 percent of the VUU land, which according to statute is what is made available for the municipal entitlement. In this particular case, the 14,666 acres calculate out to about 95 percent of the borough's VUU land. SENATOR WIELECHOWSKI asked if the standard for VUU land is 10 percent and if he is saying that all the other communities have 10 percent of it. Statutory exceptions were made for Haines at 21.3 percent and Wrangell at 44.2 percent, and he wanted to know what percent the Petersburg entitlement is. MR. PARSONS replied the Petersburg entitlement is approximately 95 percent of the VUU land within the borough boundaries. SENATOR WIELECHOWSKI asked if he has a position on that and if it is a reasonable amount. MR. PARSONS answered that DNR normally doesn't take a position on this issue, but leaves it up to the committee to determine. So much of the land in Southeast is the Tongass National Forest. The same is true for Wrangell. SENATOR STEDMAN added that Sitka Borough is the same. It's virtually all Tongass National Forest and very little private land. 3:58:34 PM CHAIR GIESSEL asked about the borough's economic base and how this land will be of value to Petersburg residents. MS. CABRERA replied that commercial fishing and seafood processing is the primary economic force in Petersburg. With this land they could diversify: some remote property could be suitable for development for tourism, and some property could be available for resource development, specifically sand and gravel sites. She explained that generally muskeg needs to be filled in before one can build on it, and their supply of good gravel is running out. Some parcels are suitable for settlement into private hands and onto the tax base. SENATOR STEDMAN remarked that families used to live in Cleveland Passage and Whitney Island 100 years go and it used to have a post office. Now it's grown over. So, some of the land has been used before, which could provide planning opportunities. He was not too sure about the timber value, because it is all broken up. 4:03:18 PM SENATOR MEYER asked if she intends to subdivide this land for homes and businesses, which he thinks this is a great idea, but he didn't want to give away all this acreage to be made into one large park. MS. CABRERA responded that they live in the middle of a big park already. CHAIR GIESSEL opened public testimony. Finding none, she closed it. SENATOR STEDMAN closed saying he appreciated the committee's time in hearing this bill. [SB 28 was held in committee.]