05/07/1994 02:15 PM House FIN

  SB 338    An Act relating  to the issuance of  revenue bonds                 
            for  acquisition and  construction  of the  Alaska                 
            Discovery  Center  for the  Ship Creek  Project in                 
            Anchorage; relating  to a study of the feasibility                 
            and  financial viability  of the  Alaska Discovery                 
            Center;  relating  to construction  of  the Alaska                 
                                                                               
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            Discovery Center; and  providing for an  effective                 
            date.                                                              
                                                                               
            CS SB 338 (FIN) was reported out of Committee with                 
            "no recommendations"  and with a zero  fiscal note                 
            by the Department of Revenue dated 3/02/94.                        
                                                                               
  SENATE BILL 338                                                              
                                                                               
       "An  Act relating to the  issuance of revenue bonds for                 
       acquisition and  construction of  the Alaska  Discovery                 
       Center  for  the  Ship   Creek  Project  in  Anchorage;                 
       relating to a  study of  the feasibility and  financial                 
       viability of the  Alaska Discovery Center; relating  to                 
       construction  of  the   Alaska  Discovery  Center;  and                 
       providing for an effective date."                                       
                                                                               
  JOSHUA FINK, STAFF,  SENATOR TIM  KELLY, explained that  the                 
  Alaska Railroad  Corporation (ARRC)  has a  unique and  rare                 
  federal authorization  to issue  non-recourse revenue  bonds                 
  for  private  as well  as public  interests.   SB  338 would                 
  authorize ARRC to  sell $55 million dollars  in non-recourse                 
  revenue bonds to be loaned to a public or private entity for                 
  the  acquisition, design  and construction  of the  Northern                 
  Discovery Center  at Ship  Creek Landings  if the  following                 
  conditions were met:                                                         
                                                                               
       1.   The potential developer pays for a feasibility and                 
            financial  viability study  to be  performed  by a                 
            person/business selected by the ARRC.                              
                                                                               
       2.   The  ARRC   board   of   directors   reviews   the                 
            feasibility  study and  determines the  project is                 
            viable.                                                            
                                                                               
  Mr. Fink added  that the payment  of the bonds and  interest                 
  would be made  solely with assets and revenues received from                 
  the  owner/operators  of  the facility,  and  that  ARRC was                 
  prohibited  from  using  any  other  financing  or financial                 
  vehicle to repay the bonds.  He concluded  that prior to the                 
  start of construction, the developer must post a payment and                 
  completion bond in favor of ARRC.                                            
                                                                               
  Representative Brown asked if the study was necessary before                 
  the  bonds  could be  issued.   Mr.  Fink explained  that in                 
  Section #1, Line  #11, the inclusion of "if" would establish                 
  the condition:  "They are allowed to issue the bonds if  the                 
  Board of Directors determines after  completion of the study                 
  conducted in Section #7".                                                    
                                                                               
  Representative Brown questioned  why authorization was being                 
  granted for $55  million dollars when  only $40 million  was                 
                                                                               
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  needed.  Mr.  Fink replied that  the language would  clarify                 
  that "Not more than $55  million dollars" would be required.                 
  He stressed that $55 million would be the ceiling.                           
                                                                               
  MARK LOPATIN, LOPATIN &  COMPANY, WEST BLOOMFIELD, MICHIGAN,                 
  echoed that $55 million would be the project ceiling.                        
                                                                               
  Representative Martin asked the bonding  value of the Alaska                 
  Railroad.                                                                    
                                                                               
  MARK   HICKEY,   ALASKA  RAILROAD   CORPORATION,  ANCHORAGE,                 
  commented that provisions made in  the 1988 State law  would                 
  require a five year amendment,  although, currently there is                 
  no  specific mandate.   The  legislative intent would  be to                 
  dispose  of  the   railroad.     Mr.  Hickey  said   federal                 
  requirement   provides  that  if   the  railroad   is  sold,                 
  arrangements for right-of-way  would be made.   He indicated                 
  that these  provisions are  not relevant to  the bond  issue                 
  before the Committee.                                                        
                                                                               
  Representative Brown asked  the agreement terms between  the                 
  government  of St.  Petersburg and  the  Northern Crossroads                 
  Discovery  Center  and if  there  was expectation  for State                 
  support for the project.  She stated there would be a public                 
  subsidy  involved  in  the  facility's  construction.    Mr.                 
  LoPatin briefed the Committee  that there was no need  for a                 
  government  subsidy for  the development or  construction of                 
  Discovery Center.  Following construction,  it will become a                 
  private venture between the Discovery  Center and the Museum                 
  of St. Petersburg.                                                           
                                                                               
  Representative Brown  questioned  if  the  Discovery  Center                 
  would  be  compensating  St.  Petersburg  for  the  loan  of                 
  materials.  Mr.  LoPatin understood that  the length of  the                 
  agreement  would be  thirty  five years  and that  the terms                 
  would be  provided by  a letter  of intent  between the  two                 
  interests.  Discovery  Center will  pay the Russian  Museums                 
  for contributing materials  and displaying  them.  He  added                 
  that the specifics have not yet been agreed upon.                            
                                                                               
  Co-Chair MacLean pointed out that the project was similar to                 
  a previously vetoed project - the Alaska Heritage Park.  Mr.                 
  Fink advised that the projects were substantially different.                 
                                                                               
                                                                               
  Representative Martin  questioned the collateral  used.  Mr.                 
  LoPatin explained that  the collateral used would  not be an                 
  obligation  to the  Alaska Railroad.   Representative Hanley                 
  clarified  that if the bonds were not  backed, no one in the                 
  bond market would purchase them.                                             
                                                                               
  Representative  Brown  warned that  a  comprehensive traffic                 
                                                                               
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  analysis  should  be  under-taken in  order  to  address the                 
  effect on port  and railroad traffic.   Mr. LoPatin reminded                 
  Committee members that  $5.5 million dollars match  would be                 
  provided through development of the World Trade Center.  The                 
  cost  of the World Trade Center and  Hotel is expected to be                 
  $80 million dollars.  The plans  continue to move forward in                 
  anticipation of including the Discovery Center.                              
                                                                               
  Representative Hanley MOVED to report CS SB 338 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying zero fiscal  note.  There being  NO OBJECTIONS,                 
  it was so ordered.                                                           
                                                                               
  CS  SB  338 (FIN)  was reported  out  of Committee  with "no                 
  recommendations" and with a fiscal note by the Department of                 
  Revenue dated 3/02/94.