Legislative attorneys say Houston land transfer to AIDEA may fail public-purpose test

Legislative attorneys told a joint meeting of the Alaska Senate and House Resources committees Thursday that the state's plan to transfer nearly 20,000 acres near Houston to the Alaska Industrial Development and Export Authority may not meet the public-purpose test. The authority's executive director said state law already answers that question.

The state would convey the land, about two miles north of Houston in the Mat-Su Borough, at no cost. It would waive its right to reclaim the land. The Department of Natural Resources' preliminary decision, which is not yet final, finds the transfer serves a public purpose. It says keeping the reclamation right would limit the authority's bonding and financing options. No department official testified at the hearing. Senate Resources Chair Cathy Giessel said the governor denied Commissioner John Crowther's attendance.

A Sept. 4 Legislative Legal Services memo says the department may convey the land if the transfer serves a public purpose. That likely requires review of the land's uses. The preliminary decision excludes specific review of the authority's post-transfer plans, saying the land would no longer be state land once transferred. Legislative attorney Claire Radford said that exclusion "may raise legal issues."

The memo also addresses a March regulation that defines public purpose to include support for private industry. Radford said a court likely would not defer to that regulation. The Alaska Supreme Court has held the test turns on the property's use, not its owner.

Executive Director Randy Ruaro cited economic development statutes and a 1962 Alaska Supreme Court case involving the authority's predecessor. He said that when the authority works to create jobs and economic development, "by definition it is acting for a public purpose." The memo cites both sources but says this transfer, lacking express legislative approval, turns on its own merits.

No specific project has been approved or selected. Ruaro said no data center project exists. He called a large data center "an implausible use" because no surplus power is available, but said it is "not being removed" from possible uses. He named gravel and housing as likely uses and said he knew of no appraisal.

Sen. Bill Wielechowski asked whether a court would allow "an effective laundering of state land" through the authority for less than fair market value. Radford said that question needed more research.

"You're just saying, give it to us and trust us," Wielechowski said. "I'm not sure that's the way the law works or the Constitution works." He asked Ruaro, who had said any agreement was "a ways away," to commit to no binding contracts before the next governor takes office. "Through the chair, no, I will not," Ruaro said.

Giessel questioned who would set the price for private users. Ruaro answered, "I can't envision a scenario where we would be giving away land for free that has value."

The Houston City Council and Mat-Su Borough Assembly both voted against the transfer. Backcountry Hunters & Anglers raised concerns about public access and recreation. Ruaro acknowledged the authority "could have done more here upfront on the early side" with communities.

Five of the Senate committee's seven members opposed the transfer in written comments. They asked for a response to the legal memo. Giessel said none has come. Public comment closed Sept. 14. Commenters may appeal the final decision to the natural resources commissioner, then to superior court.