WATER RIGHTS

The waters of Ship Creek, along with a 600-foot area on both sides of Ship Creek as the watershed, was granted to the city of Anchorage by Presidential Proclamation 1519, dated April 16, 1919. Through the development of the Anchorage area, the city was forced to abandon its pump plant in the Railroad Reserve because of contamination, and build a water supply line to the headwaters of the creek. To build this line, the city had to cross about 3 miles of the military reserve. As a concession to the granting of this easement, the city was required to enter into a stipulation in 1941 with the military for the division of the Ship Creek waters on a population basis. On this basis, neither party to the agreement can make definite plans as to what water will be available in the future for master planning. The city has approached the military on the basis of a change to the original stipulation for the division of the waters on a fixed percentage of the available flow. No determination has been made and congressional attention may be required before the agreement is reached. The military is in the progress of construction of a water treatment plant, and the city is very anxious to complete their design for a similar plant. However, this is not practical until definite water rights can be established.

HIGHWAYS AND ACCESS ROADS

Special citizen committees working through the city planning commission prepared master street and highway plans for the Greater Anchorage area. Several copies of these reports are available for the record. The Alaska Railroad, the Alaska Road Commission, Elmendorf and Fort Richardson, all had representatives on the citizen committees. After completion of the reports, request has been made by the city for the military to participate in the construction of the designated access roads. In different meetings the feeling has been expressed that any access road to or through the city would be of no benefit to the military, but we are hopeful that they will request the Bureau of Public Roads to investigate possible access routes.

House bill No. 245, introduced in the 84th Congress, originally provided the Alaska Road Commission with authority to construct highways and access roads through cities. Just prior to the passing of the bill, access roads were deleted because the Bureau of Public Roads already had that authority. Neither of the Federal agencies have expended any funds on highways or access roads in the city and no planning is under way.

There are three main military access routes leading from the city to the military installations. The first is the Glenn Highway where up to 20,000 cars per day travel a two-lane country-road type pavement. The pavement is of low quality and maintenance costs are exorbitant. The second is Post Road leading to the main gate at Elmendorf. This is also a two-lane paved road carrying up to 16,000 cars per day. The third is the two-lane gravel road running through the Railroad Reserve at the north extension of C Street carrying over 14,000 cars per day. There are 8 tracks and 3 sharp 90° curves along the route that create very serious traffic hazards. The Alaska Railroad concurs with the city that the only solution to the problem is a quarter mile overpass, costing approximately $1,500,000. Again, we

are requesting the military to participate jointly with the Alaska Railroad and the city to construct this mutually beneficial project. The Seward Highway and Spenard Road leading from the urban areas of Spenard to the city cross the Chester Creek basin where steep grades are encountered. These, again, are two-lane roads carrying in excess of 16,000 cars per day each. During the icy conditions in the winter, particularly during snowfalls, traffic is at a complete standstill. Last winter on several occasions, I observed these routes at 10:30 a. m. with cars lined up for miles, most of which were trying to get through to Elmendorf or Fort Richardson. We are presently preparing a request to the Alaska Road Commission for construction of a bypass from the Seward Highway near the crossing of Chester Creek, northeasterly along the Chester Creek flats through Mountain View, and connecting with the newly constructed military bypass highway, or Glenn Highway. This would not only bypass the steep grades entering the city but would alleviate the congestion of traffic at the junction of the Seward Highway with Glenn Highway and Post Road. Part of the right-ofway for this route has been purchased by the city. This, together with the C Street overpass, would give immediate relief to the serious traffic congestion that presently exists.

Alaska is substantially making no progress in the development of a general highway system in the Territory due to the mediocre appropriations for operation of the Alaska Road Commission. Statehood appears to be the only means whereby Alaska can enjoin in the benefits of the Federal Aid Highway Act. Since Alaska has almost 73 percent of its area in public lands, matching funds would be on the basis of 13.5 percent for Alaska and 86.5 percent for Federal Government. If eligible under the present plan, Alaska would receive approximately $23 million with a matching fund of $3,500,000. With this Alaska could keep pace with the ever-increasing demands for roads.

Mr. BARTLETT. Thank you, Mr. Matkin.

Mr. Shannon.

Mr. SHANNON. When we speak of requests for Federal assistance, very often it probably appears that cities in Alaska make no effort to help themselves. Such impression is false, because Anchorage has created a large debt and has exercised its own initiative in the construction of many of its community facilities without Federal assistance. We have had to concentrate principally on public utility installations, because it became necessary for the city to provide its own utilities since the risk appeared too great for unsecured private capital. The extent of our utilities construction and general governmental improvements, such as street improvements, public buildings, storm drains, and so forth, have been substantial-but they have been financed at a tremendous cost which is considerably out of line with what similar communities in the States have had to pay. I would like to introduce to you at this time Mr. George Nichols, our city comptroller, to present some of the financial data, illustrating briefly the tremendous effort that the local taxpayer has made to make Anchorage a modern city and yet, with this effort, there are still voids in our financing which must be filled. I would like to present Mr. Nichols, Mr. Chairman.

Mr. BARTLETT. Mr. Nichols, would you identify yourself.

STATEMENT OF GEORGE W. NICHOLS, CITY COMPTROLLER, ANCHORAGE, ALASKA

Mr. NICHOLS. George W. Nichols, comptroller, city of Anchorage. Mr. BARTLETT. Do you have a prepared statement?

Mr. NICHOLS. Yes, sir; I have.

Mr. BARTLETT. Proceed then.

Mr. NICHOLS. Before I read the prepared statement, Mr. Chairman and members of the committee, I noticed you said Congressman Dawson noticed a number of changes here in Anchorage since he was here in 1947. Well, there have been some changes not only in privately financed facilities but also in our community facilities.

In 1947 the people were taking their bootstraps and pulling their feet out of the mudholes. Since that time, 1948 and 1949, those bootstraps got a little worn, and they decided to trade them for a financial bootstrap to try to continue pulling their feet out of the mudholes.

In 1949 they started a progressive improvement plan for the city through privately financed bonds. As the picture stands now the bootstraps for which they traded the ones they were pulling out of the mudholes with is now a little strained, and we are forced to look to the Federal Government for some assistance in repairing that strap. A recent survey by the League of Alaskan Cities revealed that the municipalities of the Territory had a total outstanding debt of $22,301,000 in publicly financed bonds, as of December 31, 1954. The interest rates on these bonds averaged 4.2 percent. Of the total amount outstanding, $18,094,500 was for improvement and expansion of publicly owned utilities, $2,718,500 for street and sewer improvements and only $1,488,000 was issued for general municipal purposes, such as recreational facilities, libraries, or other improvements repaid solely from general property taxes. Territorial law provides that all interest on special assessment bonds must be repaid from property

taxes.

Mr. DAWSON. Could I ask a question at that point. Do you have a statutory debt limit?

Mr. NICHOLS. We have two statutory limits. One, 10 percent of our assessed valuation provided by organic act, and a $12,500,000 limitation granted by Congress.

Mr. DAWSON. I assume later on in your statement you will give us some indication of how near you are to your debt limit.

Mr. NICHOLS. I do not believe that is part of the statement.

can certainly make that available though.

We

Mr. ABBOTT. In the figures you have given thus far are you saying that the only general obligation bonded indebtedness you have is the latter figure you gave?

Mr. NICHOLS. No; the latter figures I gave are only those that have been issued for general improvements such as recreational facilities, libraries, and those improvements which normally come from general tax dollars. In other words, we have been forced to obligate ourselves mostly for utilities, which are normally financed through private capital.

Mr. DAWSON. Do you have revenue bonds?

Mr. NICHOLS. We have only one issue of revenue bonds, the city of Anchorage. We have been forced to give a general obligation pledge in order to sell our bonds.

The law also provides that the municipality must contribute, from general taxes, at least one-third of the cost of street or sewer improvements. The lack of private capital in financing utility improvements, coupled with high interest costs for all bonds sold, has impaired the ability of Alaskan municipalities to provide standards of service and facilities that are normally financed from general property taxes.

Since 1935, the city of Anchorage has issued $11,937,500 in improvement bonds. And that includes all utilities, all bond issues. Mr. DAWSON. Those are all general obligations?

Mr. NICHOLS. Yes, sir; of this total, $10,195,000 have been sold since 1948-that is when we took hold of our own bootstraps-for the following purposes:

Utility bonds__

Street and sewer improvement bonds.
General purpose bonds...

$6, 435, 000

3, 035, 000 725,000

In addition to the bonds issued, the citizens of Anchorage have approved the issuance of an additional $7,800,000 in bonds which have not been sold to date. These figures indicate the willingness of the local citizens to provide their own financing of local improvements. Further proof of this willingness for financing at a local level is shown when we find that all bond elections since 1948 have been approved by the taxpayers by an overwhelming majority except one small issue which unfortunately was a new city hall.

The financing of the various improvement programs within the city of Anchorage has been and is being hampered by two major causes (1) the high interest rates demanded by bondholders on all Alaskan bonds, and (2) the high ratio of federally owned lands within the corporate limits which are nonassessable on special assessment projects and nontaxable and, therefore, exempt from sharing with other property owners the cost of community improvements and services. While the bond buyer average for interest on 20 municipal bonds during the past 10 years has varied from 1.5 percent to 3.1 percent, the interest rate paid by Alaskan municipalities on major bond issues has varied from 3% percent to 6 percent. This interest rate apparently is not based on past payment records of Alaskan cities since no Alaska city has ever defaulted on a bond payment. Apparently the three factors bondholders consider is the remoteness of the Territory, lack of statehood, and the part that Federal spending plays in local economy. In 1956 interest payable from general tax dollars will amount to 17 percent of taxes received by the city of Anchorage for general municipal purposes. If this interest rate could be reduced to the most recent bond buyer index of 2.6 percent, $51,005 more would be available for municipal services or for further financing of principal payments for improvements of municipal facilities.

Street and sewer improvements are financed through special assessment bonds. Since federally owned property is nonassessable, this means that not only all interest must be paid by other property owners but also that portion of the improvement normally charged to the benefited property owner must be financed by other property owners. For example, the 1949 street and sewer improvement program was built at a cost of $1,214,515, excluding interest costs. Of this amount, $507,166 was chargeable to property owners. However, of the amount chargeable to property owners, $15,277 was assessed against

federally owned properties which had no authority to pay for the improvements although their properties were benefited to the same extent as private property owners. Had these funds been forthcoming from the Federal Government, further improvements could have been made benefiting not only federally owned but privately owned properties. If all federally owned properties within the city of Anchorage were privately owned, it has been established that the assessed valuation of the city would be increased $50 million (50 percent of the present valuation) for an increase of $500,000 in funds available for municipal improvements and services. I might also point out that the biggest increase in assessed valuation would come from a proprietary function being performed in the Territory by the Federal Government.

A 1954 survey of 10 cities in the western and northern United States revealed that an average dwelling unit was assessed by the city of Anchorage for $12,375, compared to $3,925 assessed valuation for the other 9 cities. The per capita assessment in the city of Anchorage in 1955 was $3,106, compared to $1,720 per capita assessment in Portland, Oreg. These comparisons indicate that the saturation point has been reached in the ability of local taxpayers to finance improvements without some assistance from the Federal Government.

Two programs which could be sponsored by the Federal Government and materially assist in the financing of the city's improvement program would be (1) insuring by the Federal Government all bonds issued by the various governmental units within the Territory, and (2) provisions for payment in lieu of assessments on federally owned properties which receive benefits through special assessment districts, such as street and sewer improvements.

Mr. BARTLETT. Thank you very much, Mr. Nichols.
Mr. SHANNON. Mr. Chairman?

Mr. BARTLETT. Yes, Mr. Shannon.

Mr. SHANNON. You might be wondering while Mr. Nichols was testifying giving the financial picture of the city why that you are sitting in this lovely building here which is the public library if we are so devoid of finances. Fortunately, we have a citizen that was mayor of the city who knew something of our financial conditions during his administration. He created a foundation and 2 years ago he came to the city and said. "If you will build a library, my foundation will pay for it." So the city constructed this library at a cost of about $350,000. And former Mayor C. J. Loussac who is now a resident of Seattle, through his foundation, is paying for this particular building. I wanted to point out that some of the frills we have are made available not through our tax structure but through understanding citizens.

Mr. BARTLETT. I am happy you pointed out, Mr. Shannon, to the committee members the very public spirited contribution made by Mr. Loussac.

Mrs. GREEN. For the record, too, I think no member of the committee would consider a public library a frill but rather quite a necessity.

Mr. SHANNON. Mr. Chairman, I was speaking relatively. Here this building is a frill because of its modern, very complete facilities. I agree with you though, it is a very necessary service.

Mr. Chairman, Mr. Nichols has pointed out in his presentation some of the inequities caused by the local tax exemption of Federal