Legislature(1999 - 2000)
04/11/2000 03:15 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 445
"An Act relating to a rural school construction and
planned maintenance pilot program; and providing for an
effective date."
Co-Chair Mulder spoke in support of HB 445. He observed the
expense and difficulty of building in rural Alaska. The
legislation creates a pilot program to see if there is a
better way to build schools in rural Alaska. He pointed out
that there are four functions involved in building:
financing, design, construction, and maintenance and
operation. He maintained that these four functions tend to
be segregated. Each has its own contingency. The biggest
contingencies are generally in design and construction and
can range up to 15 percent. Bonds are sometimes let far in
advance of when the money is actually needed for the
project. There are no time limits between when bonds are let
and when the money is needed. He maintained that there would
be less money lost through interest paid if the time between
the bonding and building were reduced.
Co-Chair Mulder summarized that the bill unites the four
facets of school construction under one umbrella and reduces
costs associated with timing, contingency-planning dollars,
and change orders. The goal of the bill is to have school
construction without change orders. The bill provides
coordination and allows all components to work together,
while building a facility to the specifications of the
school district and employing local hire standards without
contingencies and cost overruns. This process is not new to
the private sector.
Co-Chair Mulder explained that the legislation would
authorize the department to enter into a RFP process to see
if there are entities that would bid as a package and
oversee the construction as a package in order to guarantee
savings to the state of Alaska.
In response to a question by Representative Grussendorf, Co-
Chair Mulder noted that he worked with the department and
other individuals on the legislation. He maintained that the
department wants direction from the legislature. He did not
anticipate that there would be a fiscal impact note
accompanying the legislation.
Co-Chair Therriault observed that the department did not
anticipate submitting a fiscal impact note. A House Finance
Committee zero fiscal note would be submitted with the bill.
Representative Phillips recalled discussions, which
indicated that the management contractor would oversee the
project for three years after its completion. The
legislation provides for "a private sector facility
maintenance plan" for "a period of time following
completion." She questioned if a "period of time" was
included over a "three-year period" because it is a test
project. Co-Chair Mulder agreed that the anticipation is
that there would be supervision for a three-year period
following completion. He thought that the department would
like to have some flexibility in regards to the "warranty"
period.
Representative Austerman referred to a handout provided by
Co-Chair Mulder titled Rural Schools Capital Construction
and Planned Maintenance Pilot Project (copy on file.) Co-
Chair Mulder observed that Mark Pepper, was the consultant.
Representative Austerman noted that the legislation pertains
to all schools. He emphasized that schools in Kodiak would
have different needs than schools in Nome. Co-Chair Mulder
pointed out that the legislation reads: A request for
proposals required under this subsection must solicit
proposals for development of all school construction
projects funded for construction in fiscal year 2001 and
located within rural educational attendance areas. He
observed that Kodiak is not within a rural educational
attendance area. He noted that there are existing designs
for many of the schools that are on the list. The intent is
not to impose a prototypical design, but to have proper
management of the design, construction and maintenance
phases in order to increase efficiency and reduce change
orders.
Representative Grussendorf recalled similar legislation in a
previous year.
Representative J. Davies referred to page 2, line 10 and
questioned the definition of "development". Co-Chair Mulder
responded that the intent is to provide management, but that
development was used because it is more encompassing.
Representative J. Davies pointed out that the legislation
focuses on FY01 construction projects and that projects may
take more than one fiscal year to complete. Co-Chair Mulder
clarified that the legislation pertains to projects that are
funded in fiscal year 2001. The legislation would be a pilot
program. He observed that some communities do not have much
experience with school construction. The intent is to
provide assistance and technical oversight to make sure the
state gets the best value for its dollars.
Representative J. Davies expressed concern that each school
be put to bid as an individual package, so that different
people around the state might work on the projects. Co-Chair
Mulder affirmed that it was his intent that the projects are
put out as separate bids and not focused toward one entity.
Vice Chair Bunde expressed concern that savings can be
realized through an economy of scale. Co-Chair Mulder
stressed that most of the projects have completed the design
phase. In response to a question by Vice Chair Bunde, Co-
Chair Mulder observed that he did not know how many schools
would be affected.
Representative G. Davis acknowledged the use of prototypes
but emphasized concerns regarding local input.
JON STOLLE, PRESIDENT, AMERICAN INSTITUTE OF ARCHITECTS,
ANCHORAGE testified via teleconference. He expressed concern
that there had been insufficient debate on the bill. He
added that there are unsubstantiated claims that the
traditional method is slow and costly. He maintained that
the selection criteria seems to be narrowly crafted and
would exclude many design firms in Alaska. He emphasized
that there are few entities that would meet all of the
qualifications. He asserted that there are checks and
balances in the current system and recommended that the
legislation be held for further consideration.
DR. JOHN DAVIS, SUPERINTENDENT, BERING STRAIGHT SCHOOL
DISTRICT, UNALAKLEET testified via teleconference. He
expressed concern that the legislation would affect FY01
construction. He observed that most of the projects that
would be funded in FY01 would already be in the design
phase. It would cost additional money to reengineered or
rethink design plans. He expressed support for legislation
that would remove the school district from the
responsibility of constructing buildings. He stressed that
they have been able to achieve cost savings through the use
of a single architect on several projects. He pointed out
that many schools built under the Bureau of Indian Affairs
are prototypical in design.
Co-Chair Mulder emphasized that the legislation is not an
effort to force prototypical design. He acknowledged that
there are three projects in Unalakleet that have gone
through the design phase.
KAREN REHFELD, DIRECTOR, DIVISION OF EDUCATION SUPPORT
SERVICES, DEPARTMENT OF EDUCATION AND EARLY DEVELOPMENT
testified in support of the legislation. The department
supports the overall goal to efficiently manage school
construction projects, to reduce costs, and to maximize the
dollars available for schools. She observed that the
department has had discussions with Co-Chair Mulder and his
staff regarding the school construction management pilot
program in HB 445 and understands that it is the intent to
implement a pilot program for school construction projects
that are funded in FY01.
Ms. Rehfeld pointed out that the department does not know
which projects would be included. The pilot appears to only
involve REAA school district projects. There are concerns
with the timing, preparing the RFP and some of the technical
issues. There are some details that would need to be
considered in order for the pilot program to be successful,
but the department is supportive of efforts to address
school construction.
CARL ROSE, EXECUTIVE DIRECTOR, ASSOCIATION OF ALAKSA SCHOOL
BOARDS expressed concerns with the legislation. He referred
to experiences with cost overruns relating to a school built
in Skagway. He stressed that availability of funds
contributed to cost overrun problems. He observed that he
was the president of an insurance company that replaced four
schools that burnt down. He stressed that schools were
replaced with the assistance of an architect and a
contractor. It was in the insurance company's best interest
to replace the schools promptly. He maintained that adequate
funding reduced cost overruns. He stressed the need to
identify the problem and cost. He questioned what insurance
is there that equity and fairness would be provided in terms
of the distribution of jobs.
In response to a question by Co-Chair Mulder, Mr. Rose
observed that schools are insured for replacement costs.
Replacement costs are adjusted for a variety of factors.
The company worked with the communities in all but one case
the cost was contained. The needs of a community were
balanced.
Co-Chair Mulder pointed out that savings could be realized
if there is someone responsible to assure that shipments are
timely. Mr. Rose stressed that the availability of funding
is the major issue. Costs would have increased if they had
spread the work between seasons. He reiterated concerns
regarding issues of fairness and questioned if the work
would be single source to one person. Co-Chair Mulder spoke
in support of providing sufficient funding for projects.
Vice Chair Bunde stressed that the goal is to produce school
buildings and not provide economic development. Mr. Rose
responded that the issue is between a sole source contract
and competitive bid. Co-Chair Mulder stressed that the
department would protect competition.
Representative Williams referred to a tribal government
program where the tribe manages the construction of schools
and provides local hire. The federal government pays for the
local hire portion. Co-Chair Mulder stated that he would
look into the concept.
Representative J. Davies recommended that the bill require
two or three private sector developers with different
expertise in different areas of the state. He also suggested
that there be some cost analysis regarding how the
legislation would save money.
Representative J. Davies questioned if the second use of
"price" in line 16 was redundant. He also suggested that
there be a sunset provision to remove pilot program from
statue.
Co-Chair Mulder emphasized that the department has the
ability to implement the without legislation, but observed
that the department prefers to have legislative direction.
Representative J. Davies noted that some design firms have
indicated concerns with the speed in which the legislation
has advanced and the qualification list in subsection 2.
(TAPE CHANGE, HFC 00 - 112, SIDE 2)
Co-Chair Mulder emphasized that he is open for suggestions.
HB 445 was heard and HELD in Committee for further
consideration.
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