SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE February 18, 1998 1:35 p.m. MEMBERS PRESENT Senator Jerry Mackie, Chairman Senator Dave Donley Senator Randy Phillips Senator Lyman Hoffman MEMBERS ABSENT Senator Gary Wilken, Vice Chairman COMMITTEE CALENDAR SENATE BILL NO. 28 "An Act relating to the unincorporated community capital project matching grant program; and providing for an effective date." SENATE BILL NO. 190 "An Act relating to eminent domain and to negotiations to purchase property before it is taken through eminent domain; and providing for an effective date." SENATE BILL NO. 191 "An Act relating to the exchange of state tide and submerged land to protect municipal watersheds and provide for airports and marine transportation facilities; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 28 - See Community & Regional Affairs minutes dated 2/18/98. SB 190 - See Community & Regional Affairs minutes dated 2/18/98. SB 191 - See Community & Regional Affairs minutes dated 2/18/98. WITNESS REGISTER Senator John Torgerson State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Prime Sponsor of SB 28 Ms. Kim Metcalfe-Helmar, Special Assistant Department of Community & Regional Affairs P.O. Box 112100 Juneau, AK 99811-2100 POSITION STATEMENT: No position on CSSB 28(STA) Rick Harris, Senior Vice President Sealaska Corporation One Sealaska Plaza Juneau, AK 99801 POSITION STATEMENT: Testified in support of SB 190 & SB 191 Ms. Lisa Blacher Alaska Conservation Voice P.O. Box 22151 Juneau, AK 99802 POSITION STATEMENT: Voiced concerns with SB 190 & SB 191 John Jensen, Chief Right-of-Way Agent, Central Region Department of Transportation & Public Facilities P.O. Box 196900 Anchorage, AK 99519-6900 POSITION STATEMENT: Commented on SB 190 & SB 191 Ms. Jane Angvik, Director Division of Land Department of Natural Resources 3601 C St., Suite 1122 Anchorage, AK 99503-5947 POSITION STATEMENT: Department has significant concerns with SB 191 Dick Mylius Division of Land Department of Natural Resources 3601 C St., Suite 1122 Anchorage, AK 99503-5947 POSITION STATEMENT: Has concerns with SB 191 ACTION NARRATIVE TAPE 98-4, SIDE A Number 001 SB 28 - UNINCORP. COMMUNITY MATCHING GRANTS CHAIRMAN MACKIE called the Senate Community & Regional Affairs Committee meeting to order at 1:35 p.m., and noted the presence of Senators Phillips, Hoffman, Donley and Mackie. CHAIRMAN MACKIE announced SB 28 would be taken up as the first order of business. He noted there was a draft committee substitute which is substantially different than the original bill and is the result of his working with Senator Torgerson on several issues. SENATOR JOHN TORGERSON, prime sponsor of SB 28, speaking to the committee substitute, said the thrust behind the bill was to let unincorporated communities that are in organized boroughs also participate in the unincorporated community matching grant program. Currently, that grant money is only available if the community is outside of a borough. Senator Torgerson outlined the following revisions to the Unincorporated Community Capital Project Matching Grant Program: . The legislation provides that the unincorporated communities in an organized area must come up with a 30 percent match in money similar to the way boroughs do for their Capital Matching Grant Program. This does not change the existing unincorporated communities outside the boroughs from the current required match of 5 percent; . It changes the program so that a community must have a project in order to be granted the money. Currently, a grant is given regardless if there is a project on the books or not; . It revises the fund distribution so projects can be based on health and safety considerations subject to a ranking system put together by the department. It is anticipated that the ranking system would be something similar to the Department of Environmental Conservation's ranking process for water projects, as well as other ranking criteria that's used across the board in other departments; . It requires the governor to include projects in his capital projects which would then come to the Legislature for final appropriation; and . It changes the lapse time of the program from five years to four years. If a community has a project approved, it can accumulate money for up to four years for a same project since the maximum that be granted in one fiscal year is $25,000. Senator Torgerson directed attention to backup information containing a list of incorporated areas by Senate district, the communities that are currently in the program by Senate district, and the communities that would be added to the program. He noted that it roughly doubles the number of entities that could be eligible for this program. Number 090 CHAIRMAN MACKIE asked Senator Torgerson what happens if the projects that are submitted to the Legislature by the governor and agencies are funded below the amount requested for the $25,000 grants to these communities. SENATOR TORGERSON responded that is where they anticipate the ranking system would kick in and projects would be ranked by the departments based on health and safety considerations. He also noted that unincorporated areas inside of boroughs must have borough assembly approval for projects and the borough assemblies must recognize a nonprofit entity that's going to represent that area. Number 115 SENATOR HOFFMAN said the legislation seems to treat all of the unincorporated communities much more fairly, but he expressed concern that Section 2 changes the amount of the grant from a minimum of $25,000 to a maximum of $25,000, so a community can accumulate up to $100,000 over a four-year period, but in many rural areas of the state it is conceivable that $100,000 wouldn't even cover a forty by sixty building. SENATOR TORGERSON responded that there are other processes to go through to receive grant money, and this was never intended to be everything for an unincorporated community to pick projects without having some kind of fiscal restraint on it. He said this levels the playing field, and by going to the maximum, probably more communities can be squeezed in if they have smaller requests to begin with. Number 180 SENATOR PHILLIPS directed attention to page 2, line 2 and the phrase "social unit," which he thought should be defined in the legislation. SENATOR TORGERSON replied that it was a good point, and that he would check with the drafter to see if it should be further defined. Number 200 Responding to an inquiry by Chairman Mackie, SENATOR TORGERSON explained that the original legislation included recognized nonprofits within the state of Alaska, but it was taken out in a sponsor substitute, and he has no intention of expanding the legislation. He added that some entities aren't communities as defined by unincorporated community and filed under the state as a recognized unincorporated community, and that might be why "social unit" was included in the legislation. Number 256 KIM METCALFE-HELMAR, Special Assistant, Department of Community & Regional Affairs, said the department had not had a chance to look over the new committee substitute, but she thought the establishment of a ranking system would change program administration significantly. There being no further testimony on SB 28, CHAIRMAN MACKIE requested a motion to adopt the committee substitute and to move the bill out of committee. SENATOR PHILLIPS moved the adoption of CSSB 28(CRA) and to move CSSB 28(CRA) out of committee with individual recommendations. Hearing no objection, it was so ordered. Number 285 SB 190 - ATTEMPT TO PURCHASE BEFORE EMINENT DOMAIN CHAIRMAN MACKIE brought SB 190 before the committee as the next order of business. As the prime sponsor of the legislation, he turned the gavel over to Senator Phillips while he made his presentation on the bill. SENATOR MACKIE said he introduced SB 190 to bring fairness and expediency to state and municipal government actions which require the acquisition of private lands for public uses. The usual practice is to acquire private property through condemnation proceedings. This is a process where the governmental entity exercises the power of eminent domain to take the property and compensate the owner with or without the private owner's consent or agreement. The only recourse for an unwilling owner is to challenge in court the validity of the taking's public purpose and the amount of compensation. In most cases the court's consideration is principally to determine the appropriate level of compensation. For both the governmental entity and the private property owner, this can be an expensive and time consuming procedure. For many land owners, the prospect of contesting a condemnation proceeding in court is often beyond the landowner's financial abilities to pursue. In these situations the landowner is at the mercy of the governmental entity, the extent of its property desires, and its method of determining compensation. Senator Mackie said SB 190 would simply require that prior to condemnation, a reasonable and diligent effort is made to purchase private property through negotiations with the property owner. He pointed out that at least 23 states have similar requirements. He said he thinks it is reasonable to ask that the government entity that's going to take the land makes every diligent effort to negotiate with the person on a value and price prior to just taking it because someone that doesn't have any money or an understanding of the legal process could be overwhelmed with the bureaucracy and be at a disadvantage in trying to protect his or her property rights. Number 325 SENATOR PHILLIPS invited Rick Harris to the table to testify on SB 190 and then turned the gavel back over to Chairman Mackie. RICK HARRIS, Senior Vice President of Sealaska Corporation, said the corporation has 330,000 acres of fee estate scattered throughout Southeast Alaska, and eminent domain has become an important issue to them, not because they are an ANCSA corporation but because they are a private land holder within the state. However, Sealaska has found that current eminent domain laws do not provide the protections that they would like to have in their dealings with the government. Mr. Harris said SB 190 would add some additional protections to the private landowner by requiring the government and other condemning authorities to diligently attempt, in good faith, to purchase private land before taking that land through the power of eminent domain. Two prerequisites that would be critical to improve the eminent domain law would be to require a diligent, good faith effort to purchase, and to justify the particular property interest that is being taken. In his closing comments, Mr. Harris said Sealaska believes that SB 190 will level the playing field. The landowner and the state will begin with an arms-length bargaining relationship. The landowner will have the benefit of full disclosure of information used by the state to determine the public purpose for the taking and value of the interest taken. Number 364 SENATOR PHILLIPS questioned why this is a problem because he has been involved with a few of these situations in his own district and they worked out fairly well. MR. HARRIS responded that Sealaska has had several situations where eminent domain has been used against them. He cited as an example the Kake Airport where the Department of Transportation wanted to purchase the right-of- way and required that the trees be cut down and retained at a low level. Sealaska effectively has a piece of property that can no longer be commercial forest land. He said they need a better negotiating process in terms of how the state comes to them to negotiate using their eminent domain authorities. SENATOR DONLEY pointed out that if they've got a legitimate claim and the state is not negotiating with them, they can go to court. However, MR. HARRIS replied that the cost of litigation becomes just as difficult as the negotiation. He said they are trying to avoid going to court, but he suggested the legislation could be strengthened further by requiring that when the condemning makes a declaration of eminent domain that they have to pay that amount of money and the landowner can use that money as a vehicle to litigate. Number 472 CHAIRMAN MACKIE commented that there are a lot of different examples that can be used and the large private landowners, in most cases, would always have the resources to negotiate, but the small landowners may not have the resources, attorneys, etc., to challenge the government. He questioned what is unreasonable about asking the government to make a reasonable effort to negotiate with the person prior to taking their land. SENATOR DONLEY stated he agreed with the Chairman's philosophy, but his fear exists in creating a new statutory test the Judiciary can interpret in ways that were never intended be interpreted that way. CHAIRMAN MACKIE said the committee would continue to take testimony on the bill, but he acknowledged some work needed to be done on the legislation to see if some language can be crafted that would not create serious burdens of proof in the courts. Number 540 LISA BLACHER, representing the Alaska Conservation Voice, stated her group commends the intent of the bill, but they do have some concerns with it. They question the term "interest to be taken," which appears three times in the bill, and believe the way it is used is ambiguous and they question what it refers to. It is suggested that the language either be deleted or defined more clearly. She said it also appears that the bill may establish a new level of right of compensation similar to regular proposed regulatory takings legislation, and if so, they don't think it is wise to open the door to the possibility of such financial liability to the state. Number 560 JOHN JENSEN, Chief Right-of Way Agent for the Central Region, Department of Transportation and Public Facilities, stated he was present to answer questions the committee may have about the eminent domain process as it has been practically applied. SENATOR PHILLIPS asked Mr. Jensen if there was a problem in southeast as far as attitude or approaches is concerned. MR. JENSEN acknowledged there may be a problem of attitude, but he believes the department does make a good faith effort; however, their differences typically and usually in compensation lead to the frustrations addressed by Mr. Harris. Number 579 SENATOR HOFFMAN asked Mr. Jensen if he thought the legislation would assist in the eminent domain process. MR. JENSEN replied that like Senator Donley he has some concern with the interpretation of some of the language in the bill and the possibility that it may delay the process. TAPE 98-4, SIDE B Number 567 CHAIRMAN MACKIE agreed that the language may need to be reworked, but he questioned why the fear of something in the nature of a good faith effort if they are already doing so. He doesn't believe it will cause delays, but sometimes if it does cause a delay for a short time, he thinks it is reasonable to protect an individual's rights to property that they he may worked all his life to secure. MR. JENSEN said he agreed with Senator Mackie, but his only reservation is the unknown on how that language will be interpreted even though they already do that. Number 535 CHAIRMAN MACKIE stated SB 190 would be held in committee for further work on its language. SB 191 - EXCHANGE OF STATE TIDE AND SUBMERGED LAND CHAIRMAN MACKIE brought SB 191 before the committee as the final order of business. He turned the gavel over to Senator Phillips while he made a presentation on his bill. SENATOR MACKIE, prime sponsor of SB 191, said it was introduced as a companion bill to SB 190 to deal with some of these land issues. He explained that if a municipality needs an area for a watershed to the protect the community's water supply, or for a ferry terminal, or for an airport, etc., the legislation gives DNR the option of exchanging tide and submerged lands for privately owned lands needed by a municipality. He said it is another option that would allow DNR to have a little more flexibility to work with the private landowners to accomplish a public good. Number 508 RICK HARRIS, Senior Vice President, Sealaska Corporation, said approximately 10 percent of the land in Southeast Alaska is in private ownership, but most of that land is disproportionately located in and around the state's municipalities. Frequently, these lands needed by the municipalities for essential municipal services are held in private ownership. Sealaska supports creating a new mechanism that would allow the state to acquire those essential municipal lands and at the same time allow the private landowners to receive some other value that would serve their purposes and needs. Mr. Harris said that under current law, DNR is already authorized to negotiate land exchanges, but these general land exchange statutes are quite discretionary, and there is no vehicle through which either a municipality or another state agency can compel DNR to commit state-owned lands to improve public purposes. Also, the existing law lacks a clear statement of legislative priorities to guide DNR in the types of exchanges which the agency should focus. Concluding, Mr. Harris said Sealaska thinks SB 191 will provide an excellent opportunity to resolve some of the issues dealt with on a daily basis throughout the state. Number 475 Responding to SENATOR PHILLIPS, MR. HARRIS explained Sealaska Corporation owns municipal watersheds in Hydaburg, has selection rights in the municipal watershed of Craig, and owns municipal watersheds in Kake and Hoonah. On three different occasions, Sealaska has attempted to find vehicles to create land exchanges that would allow them to move away from those watersheds and get them back into public ownership, and in all cases, those efforts have been thwarted for a variety of reasons. Number 440 JANE ANGVIK, Division of Land, Department of Natural Resources, testifying via teleconference from Anchorage, said DNR has some significant concerns about SB 191 in general, particularly with the prospect of transferring tidelands to private ownership. The state has a legal responsibility under the public trust doctrine to retain most tidelands and submerged lands. This is because DNR is required, through the public trust doctrine, to manage the shoreline lands for the use and enjoyment of all Alaskans. She pointed out that most other states do not allow private individuals to acquire shore lands, and in the past, many that did so have spent millions of dollars to reacquire these public lands. Ms. Angvik said that while existing statutes allow DNR to transfer tidelands to municipalities, the Legislature specifically prohibited municipalities from selling these lands. She pointed out that in the areas Mr. Harris made reference to, Hydaburg, Craig, Kake, Hoonah, the state has very little land so that the possibility for land exchanges is very slim simply because they don't have anything to exchange. Ms. Angvik said the notion of public trust requires that access to the water, water allocation, and marine activities are protected in perpetuity in order to provide for the common use of the land. Ms. Angvik also expressed concern with the issue of valuing tidelands and trying to ascertain the value of tidelands relative to the value of uplands. This is a challenge because there aren't very many tidelands that have actually been conveyed. Ms. Angvik pointed out that Section 14(c)(3) of Alaska Native Claims Settlement Act provided for local governments to have up to 1,280 acres to use for municipal purposes, so while DNR is very supportive of providing some surety for municipal governments, particularly in Southeast Alaska, to controlling their watersheds for example, they do not believe that conveying the tidelands is the methodology to pursue. Number 364 CHAIRMAN MACKIE pointed out that Section 14(c)(3) applies to village corporations, not regional corporations like Sealaska. The fact is that Sealaska Corporation physically owns the land and the watersheds of those other communities. He questioned how Sealaska is supposed to be compensated or treated fairly in giving up those lands for a public purpose if DNR doesn't have any land to exchange and they are not able to do a land exchange with them. He added that the purpose of SB 191 is to give DNR an option to deal with this issue, an option that they would have available to them in cases that make sense for absolute public need for essential public services. MS. ANGVIK responded that the capacity of DNR to be able to evaluate the public interest and the long-term interests of the state is removed by the legislation and it is a mandatory requirement. While she understands the difficulty associated with community development, in particular Southeast Alaska where the vast majority of the land is owned by the federal government, she doesn't have alternative ways of compensating a private landowner if what they owned is the watershed. DICK MYLIUS, Division of Land, Department of Natural Resources , also pointed out that if DNR transferred title it is no longer land managed by the department, and even though the landowner may currently allow public use or access by the public, once it is their land they can change that policy in the future. In other states the courts have actually gone back and reacquired public trust lands where the public has lost access to the shoreline. Number 301 JOHN JENSEN, Department of Transportation & Public Facilities, said eminent domain proceedings are a tool DOT uses that provides the least cost to the public, and it is most often the most expedient way to acquire lands. CHAIRMAN MACKIE asked Mr. Jensen if he saw this legislation as something positive where DOT wouldn't have to come up with the cash; that by working with the municipality and DNR they exchange some tidelands adjacent to an upland ownership which is all private anyway. MR. JENSEN responded that it may be appropriate in some instances, but he agrees with Ms. Angvik that if the agency is required to do that then it becomes somewhat of an obstacle to development of that particular project. He suggested it should be voluntary between both parties. Number 205 LISA BLACHER, representing the Alaska Conservation Voice, stated their support for the protections in current law that ensure public access to navigable and public waters of the state. They are concerned that the proposed changes in SB 191 will weaken those protections by allowing state tide and submerged lands to become privately owned through land exchanges. Ms. Blacher stated that the Alaska Conservation Voice's concern is with access because right now Alaska does have public access to all of these state tide and submerged lands. At the very least, they would like the bill to limit the transfer of state tide and submerged lands within municipal boundaries so as to not open up the entire state for that type of transfer opportunity. There being no further testimony on SB 191, CHAIRMAN MACKIE said it was his intention to move the bill on to the Resources Committee. SENATOR DONLEY moved SB 191 and the accompanying fiscal note be passed out of committee with individual recommendations. Hearing no objection, it was so ordered. There being no further business to come before the committee, the meeting adjourned at 3:02 p.m.