HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE April 27, 1998 8:07 a.m. MEMBERS PRESENT Representative Ivan Ivan, Chairman Representative Fred Dyson Representative Joe Ryan Representative Jerry Sanders Representative Albert Kookesh Representative Reggie Joule MEMBERS ABSENT Representative Scott Ogan COMMITTEE CALENDAR CS FOR SENATE BILL NO. 281(RES) "An Act relating to general grant land entitlements for the City and Borough of Yakutat; and providing for an effective date." - MOVED HCSCSSB 281(CRA) OUT OF COMMITTEE (* First public hearing) PREVIOUS ACTION BILL: SB 281 SHORT TITLE: YAKUTAT GENERAL GRANT LAND ENTITLEMENT SPONSOR(S): SENATOR(S) MACKIE Jrn-Date Jrn-Page Action 2/06/98 2426 (S) READ THE FIRST TIME - REFERRAL(S) 2/06/98 2426 (S) CRA, RES 2/23/98 (S) CRA AT 1:30 PM BUTROVICH ROOM 205 2/23/98 (S) MINUTE(CRA) 2/24/98 2629 (S) CRA RPT CS 1DP 3NR SAME TITLE 2/24/98 2629 (S) DP: MACKIE NR: HOFFMAN, PHILLIPS, WILKEN 2/24/98 2630 (S) FISCAL NOTE TO SB & CS (DNR) 2/24/98 2630 (S) FIN REFERRAL ADDED: RES THEN FIN 3/20/98 (S) RES AT 3:30 PM BUTROVICH ROOM 205 3/23/98 (S) RES AT 3:30 PM BUTROVICH ROOM 205 3/23/98 (S) MINUTE(RES) 4/17/98 3335 (S) RES RPT CS 2DP 4NR SAME TITLE 4/17/98 3336 (S) DP: TORGERSON, LEMAN; NR: HALFORD, 4/17/98 3336 (S) LINCOLN, SHARP, GREEN 4/17/98 3336 (S) FISCAL NOTE TO CS (DNR) 4/21/98 (S) FIN AT 9:00 AM SENATE FINANCE 532 4/21/98 (S) RLS AT 12:15 PM FAHRENKAMP RM 203 4/21/98 3411 (S) FIN RPT 4DP 3NR (RES)CS 4/21/98 3411 (S) DP: PEARCE, SHARP, ADAMS, TORGERSON 4/21/98 3411 (S) NR: PHILLIPS, PARNELL, DONLEY 4/21/98 3411 (S) PREVIOUS FN (DNR) 4/22/98 3435 (S) RULES TO CALENDAR 4/22/98 4/22/98 3439 (S) READ THE SECOND TIME 4/22/98 3439 (S) RES CS ADOPTED UNAN CONSENT 4/22/98 3439 (S) ADVANCED TO THIRD READING UNAN CONSENT 4/22/98 3439 (S) READ THE THIRD TIME CSSB 281(RES) 4/22/98 3439 (S) PASSED Y19 N- E1 4/22/98 3445 (S) TRANSMITTED TO (H) 4/23/98 3209 (H) READ THE FIRST TIME - REFERRAL(S) 4/23/98 3209 (H) CRA, FINANCE 4/27/98 (H) CRA AT 8:00 AM CAPITOL 124 WITNESS REGISTER SENATOR JERRY MACKIE Alaska State Legislature Capitol Building, Room 427 Juneau, Alaska 99801 Telephone: (907) 465-4925 POSITION STATEMENT: Sponsor of CSSB 281(RES). DARYL JAMES, Mayor City and Borough of Yakutat P.O. Box 411 Yakutat, Alaska 99689 Telephone: (907) 784-3323 POSITION STATEMENT: Testified in support of the proposed HCSCSSB 281(CRA). DICK MYLIUS Resource Assessment and Development Division of Land Department of Natural Resources 3601 "C" Street, Suite 1130 Anchorage, Alaska 99503-5947 Telephone: (907) 269-8532 POSITION STATEMENT: Commented on HCSCSSB 218(CRA). ACTION NARRATIVE TAPE 98-23, SIDE A Number 0001 CHAIRMAN IVAN IVAN called the House Community and Regional Affairs Standing Committee meeting to order at 8:07 a.m. Members present at the call to order were Representatives Ivan, Dyson, Ryan, Sanders, Kookesh and Joule. CSSB 281 (RES) - YAKUTAT GENERAL GRANT LAND ENTITLEMENT Number 003 CHAIRMAN IVAN announced the committee would address CSSB 281(RES) "An Act relating to general grant land entitlements for the City and Borough of Yakutat; and providing for an effective date," sponsored by Senator Mackie. SENATOR JERRY MACKIE came before the committee to explain CSSB 281. He read the following statement into the record: "Senate Bill 281 was introduced to complete the formation of the Yakutat Borough and the land entitlements that the state grants to support local government. Initially, the petition of the people of Yakutat to incorporate as a borough in 1992 was considerably reduced in size by the Local Boundary Commission. The land entitlement for the new borough by the formula of 10 percent of 'vacant, unappropriated, and unreserved (VUU)' state lands was a mere 138 acres is what the community received. "The City and Borough of Yakutat subsequently petitioned the Local Boundary Commission to reclaim much of the area on its northern boarder. In a reversal of its earlier decision, the Local Boundary Commission approved the annexation which contains a substantial amount of state VUU lands. It is estimated that if the annexed area had been included for the original borough formation, the municipal entitlement would amounted to about 33,000 acres. "It has been a long established policy for the state to assist the formation and operation of local governments with generous grants of state land. Senate Bill 281 corrects the defects in the borough formation process that resulted in such a small land entitlement for the City and Borough of Yakutat by increasing its entitlement to 21,500 acres. The [Senate] Resources Committee version reduced the additional entitlement to 8,552 [acres]. The bill also extends the authority of the director of the Division of Lands in the Department of Natural Resources to condition and restrict any of the municipality's selections made under this increased grant." SENATOR MACKIE explained that the bill would give the City and Borough of Yakutat the land in the same fashion any other borough that is formed would receive land. He noted that on page 1, line 6 through page 2, line 6, other boroughs are listed that have received land. He said the mayor of Yakutat and several other people have been working on this for a number of years. They have gone way out of their way to accommodate everyone involved. Senator Mackie explained the area is a myriad of streams and tributaries. It is a habitat area that is real critical to the fishing industry and a lot of other state agencies. He pointed out that there is university land, Chugach Native Corporation land, department of Natural Resources (DNR) and fish and game concerns. He referred to mental health lands and said that was the last stumbling block they had to deal with and those concerns were all worked out. SENATOR MACKIE said when the bill was introduced, it asked that the state award 30,000 acres to Yakutat. The Senate Community and Regional Affairs Committee reduced that amount to 21,500. That figure was the number that everyone could agree to and everybody supported it. It was reduced because the Mental Health Trust Authority and the university had some concerns. All the issues were worked out. Senator Mackie informed the committee that before any of the lands can be given to Yakutat, it first has to be nominated. The director of the Division of Lands in DNR will look at the area, consider other concerns from state agencies and then make a decision as to whether to allow lands to be selected. Once the lands are selected, the City and Borough of Yakutat will have to have it surveyed, et cetera, at their own expense. Senator Mackie encouraged the committee to consider the 21,500 acre number. Number 133 REPRESENTATIVE JOE RYAN said, "I remember back in my municipal days that this land was supposed to be used as a basis for them to get the money together to get the government but everybody got a municipal entitlement and they're sitting the land. Up in Fairbanks, when I served on the assembly, they still got 108,000 out of 112,000 and it was given 30 years ago. Is there any guarantee these guys are going to let this land loose because I'd love to see land get away from the state if somebody would put it into private hands. You know, I would really like to facilitate that. But are we going to give these folks 20,000 they're going to sit on for 30 years or what's the plan?" SENATOR MACKIE said some of the land probably will not be able to be developed because of how it is designated and whether it is in habitat areas. He stated there is a very viable forest industry in the Yakutat Borough. They work together with the forest companies and build consensus on things and that is how they will do it with this land. Senator Mackie pointed out that currently they have only 138 acres. The land will be used for municipal needs, watershed needs and other types of home sites if they choose to make land available to the public. He explained that the Yakutat Borough is the newest borough in the state and they have every interest of progressing and trying to become more self sufficient and viable. Without the land base, they won't be able to do that. Number 170 REPRESENTATIVE FRED DYSON said, "It seems like last session there was a Yakutat land selection boundary commission step. How does that relate to this?" SENATOR MACKIE explained it was the annexation that was approved. The final designation of the boundaries of the Yakutat Borough was approved by the Local Boundary Commission. What was before the legislature last year was a resolution to overturn that annexation by the Local Boundary Commission. He said the House Community and Regional Affairs Committee, after taking testimony, did not allow that to happen. The state land within those boundaries is what is of issue today in terms of what amount of that land will actually go the ownership of the municipality. REPRESENTATIVE DYSON asked if the committee is currently addressing the 8,500 acres. SENATOR MACKIE said that is correct. REPRESENTATIVE DYSON asked how it got from 28,000 acres down to 8,000 acres. SENATOR MACKIE explained the change was made in the Senate Resources Committee. Senator Halford changed it from 21,000 acres to 8,552. Senator Mackie said he doesn't support that as the final number. REPRESENTATIVE DYSON asked what the arguments were against 21,000 acres or 30,000 acres. SENATOR MACKIE explained when Yakutat became a borough, if they had the boundaries that they currently have, they would have been entitled to about 33,000 acres. He referred to the Senate Community and Regional Affairs Committee and said during the negotiations with all the different entities, they actually looked at the lands that would possibly be selected and that actually would be usable. In terms of that negotiation process, 21,000 acres was the number that they believes everybody could support because it eliminated certain parcels of land that people had concern with. Senator Mackie said the Senate Resources Committee decided that was too much land and reduced the amount to 8,552 acres. He said the basis was that if they save 10 percent VUU land at this current time, if it just now became a borough today, the vacant VUU land would be 8,552 which is 10 percent of 8,500 acres. They had, in their mind, a formula that worked. Again, this is an arbitrary type of decision that the legislature could make. Senator Mackie said he wouldn't say that that formula was totally flawed or anything else. He stated it was another way of looking at it which reduced the size of the land. Senator Mackie said he was told that the real concern was in the Cape Yakataga area, if Prince William Sound ever wanted to become a borough, that they had to leave some land in order to have them come down. The borough boundaries of the City and Borough of Yakutat have already been set. He said he didn't buy that argument because they're not going to come in and just take away half the Yakutat Borough after they just went through all of this process. So all the land that's being nominated here within the 21,500 acres is clearly within the boundaries of the Yakutat Borough. It's clearly a decision that the legislature can make and has made in all these different instances where we've given out the land. He said the only reason that he's supporting the 21,500 is because that's what everybody agrees to and there is no opposition to that whatsoever. REPRESENTATIVE DYSON said the 21,000 acres eliminates the concerns for competing claims for the land. SENATOR MACKIE responded that the 21,000 acres is only about 25 percent of the vacant VUU land. There is in excess of 85,000 acres of state land. This would only be about one-quarter of that. He explained 8,500 acres represents 10 percent of the vacant VUU land of state land and 21,000 acres would represent approximately 25 percent. He noted the formula is the same formula that was used for Anchorage, Juneau, Sitka, Bristol Bay, Fairbanks, Haines, Kenai, Ketchikan, Kodiak, Lake and Peninsula, Mat-Su and North Slope. Number 323 REPRESENTATIVE ALBERT KOOKESH moved an amendment and asked to speak on it. The amendment read as follows: Page 2, line 5, following "Yakutat": Delete "8,552" Insert "21,500" REPRESENTATIVE RYAN objected for the purpose of an explanation. REPRESENTATIVE KOOKESH said, "Yakutat, when it decided to form a borough, is doing what most of the majority members in the House and Senate want unorganized areas of the state to do and that is to form a borough so that they would take charge of their own destiny - that they would be responsible for some of the government services that need to be offered in that area." Representative Kookesh said to offer them 138 is an insult. He said 21,500 acres is still not the entire entitlement that they're entitled to but that is what everybody agreed to. He stated he agrees with the sponsor in that the Borough of Yakutat and the other entities involved have agreed that is a number everyone can agree to. There is no objection to it and it should be passed on. The borough needs that kind of acreage to survive." REPRESENTATIVE KOOKESH explained that there is a tax consequence in that if it is any less, it would impact the borough. If the borough is under funded, at least with land, it would be a disservice and it would put them at a negative impasse immediately on the formation of their borough. Representative Kookesh said there is a letter from their assembly stating that if the amount of land is below 21,500, maybe the bill should die which is sad for two reasons. "One, because we're the ones that want them to form a borough in the first place; and secondly, if they let this bill die then their next step is to dissolve the borough." He stated they would dissolve the borough because they don't have enough land to operate. Representative Kookesh said there is no formula that says anybody is entitled to a certain amount. He said, "I understand the Anchorage scenario where they got 44,000 acres but at the same time you look at the value of that 44,000 acres compared to the value of the acreage, for example, in the Fairbanks North Star Borough - 112,000 acres. That 44,000 acres is certainly worth a lot more." REPRESENTATIVE KOOKESH referred to being familiar with the Yakutat area and said there is a lot of marsh in that area. A lot of that land will probably be unusable for development. Representative Kookesh said he believes it is in the best interest of the state and the borough that the amendment be accepted and allow the Yakutat Borough to start off on equal footing with the rest of the boroughs in the state. As a last point, Representative Kookesh pointed out that there are enough other rural areas of the state that are watching the Yakutat Borough and the legislature as it relates to organizing a borough. If they perceive a negative reaction from the legislature, that is a further reason for other rural areas not to organized. There needs to be a path for unorganized rural areas to be able to go forward to organize and to get a fair land entitlement in order to survive. Number 384 CHAIRMAN IVAN asked Representative Ryan if he still maintained his objection. REPRESENTATIVE RYAN withdrew his objection. CHAIRMAN IVAN announced the amendment by Representative Kookesh had been adopted. Number 389 DARYL JAMES, Mayor, City and Borough of Yakutat, came before the committee. He explained that as stated by Senator Mackie, the City and Borough of Yakutat has negotiated with all interested parties to bring about a consensus to land selections. The original bill included 30,000 acres and it was brought down to 21,000 acres by the interaction with the concerned parties. As the economy and state funding continues to decrease, the cities and boroughs are looking more to developing their areas economically. He referred to the area in question and said there are fishermen who have land leases with the state of Alaska and they would like to have their areas turned over to them as private land so they can use it without continuing leases with the state. Mr. James stated his emphasis, as mayor over the last six years, is to look at the economic development of the area. Over the past six years, the economy has continued to drop not only in fisheries but in all resources. The land basis is needed to spread out the property taxes to help offset the continuing decreases in both state and federal funding. Number 423 DICK MYLIUS, Resource Assessment and Development, Division of Land, Department of Natural Resources, testified via teleconference from Anchorage. He stated DNR supports granting the City and Borough of Yakutat an additional land entitlement. Mr. Mylius said the department feels that Yakutat deserves an additional entitlement because it received a very small entitlement under the formula in AS 29.65. The reason they support it is because there simply was very little land in the original borough. The borough subsequently added a large block of state land to the borough in an area that they clearly have desired to have included in the original borough proposal. Had this area been included initially, they would have received an additional entitlement which would have been 33,000 acres. However, subsequent to that, the DNR has done the Yakataga area plan and settled litigation over the University of Alaska's timber rights in that area. Therefore, the department believes they couldn't come up with 30,000 acres of land to convey to the City and Borough of Yakutat because the situation there had changed from the time of when they originally proposed to include this area in the borough. Mr. Mylius explained DNR supported the bill at 21,500 acres. They prefer, in a way, the smaller amount proposed by the Senate but would be willing work to convey them the 21,500 acres. He said the department believes it is going to be difficult to come up with 21,500 acres of entitlement because of the existing uses in the area and the delicate balance struck between timber harvest, wildlife and recreation. The department has agreed to try to come up with that amount of acreage should that be the acreage specified in the bill. He informed the committee members that the City and Borough of Yakutat is in a real unique situation because of the interaction of the original borough proposal, the planning process and then coming back through annexation. If they were to add this area to the borough today by forming a borough, their entitlement would have been the 8,552 figure. That is basically what applying the 10 percent formula would have given them. The 10 percent formula is really not arbitrary, it's what the department has used for other municipalities. MR. MYLIUS explained that the 1978 legislation that set out the numbers for the Fairbanks North Star Borough, the Municipality of Anchorage and the City and Borough of Juneau was based on a formula that was roughly 10 percent, but it did factor in population and other factors. Since that time, any new municipality that has formed got strictly the 10 percent. For example, the Denali Borough, the Northwest Arctic Borough and the Aleutian East Borough had the 10 percent applied - 10 percent of vacant, unappropriated, unreserved state lands. The exception was the Lake and Peninsula Borough because the land use planning for that area resulted in their entitlement being what they thought was unrealistically low and the legislature gave them a larger entitlement. MR. MYLIUS said that there was a cap for several years that said that municipalities could only get 20 acres per person. That existed for about two years. He said he believes that the only municipality that would have been applied to would have been the Northwest Arctic Borough. The legislation was changed so it wouldn't apply to them. If such a cap were applied to the City and Borough of Yakutat, their entitlement would be about 16,000 acres because their population is 802 people - 802 X 20 = 16,040. MR. MYLIUS stated DNR agreed to the 21,500 acres in their discussion with Yakutat because DNR felt that they were a unique situation because of the interaction of their original incorporation proposal, the planning, et cetera. He said he would answer any questions the committee may have. Number 479 REPRESENTATIVE RYAN asked what the time frame is going to be for the transfer of the land to the borough if the legislation passes. MR. MYLIUS responded, "That depends on whether or not the City and Borough of Yakutat is willing to pay. Basically, the way we set it up right now is we've got a huge back load of municipal entitlements as a result of formation of some of those boroughs I mentioned, particularly Northwest Arctic, Denali, Lake and Pen. So we've got a backlog of over 600,000 acres owed to other municipalities and with our current staffing, it's going to take many years to convey that. And the City and Borough of Yakutat basically goes to the end of the line and so it could be as long as 15 to 20 years before they get the bulk of their land. However, if they are willing to essentially pay to have a DNR staff person available to help expedite some of their lands, we could speed that up significantly. And some of the other boroughs like Lake and Peninsula Borough has thought about doing that to get their land and we've talked about that with the City and Borough of Yakutat. In fact, if you've noticed there is fiscal note attached to this bill and in that fiscal note we have the amount of money that it would cost to transfer the lands to the city and borough. It shows up under program receipts in the source of the funding. That would be because if we were to process these expeditiously, we'd want the city and borough to pay, otherwise in fairness to those other boroughs that have been waiting for their land, we'd essentially put them to the end of the line. However, if there is a chunk of land they need immediately for a community development project or something, we try to process those as soon as we can. For example, I mentioned the Denali Borough is waiting for a bunch of their land but we've also conveyed them about 4,000 acres of land, so there is mostly subdivision lots they can turn around and sell in the near future. Even though we've got a large outstanding debt to all these municipalities, we still try to get them land they need for immediate needs." Number 513 REPRESENTATIVE DYSON made a motion to move CSSB 281, as amended, out of committee with individual recommendations and with the attached the fiscal note. There being no objection, HCSCSSB 218(CRA) moved out of House Community and Regional Affairs Standing Committee. ADJOURNMENT Number 521 CHAIRMAN IVAN adjourned the House Community and Regional Affairs Standing Committee at 8:44 a.m.