Legislature(1995 - 1996)

02/27/1996 01:38 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  HOUSE BILL NO. 352                                                           
                                                                               
       "An Act giving notice of and approving a lease-purchase                 
       agreement with the City of Palmer for a fire management                 
       facility at the Palmer Airport."                                        
                                                                               
  REPRESENTATIVE SCOTT  OGAN,  sponsor HB  352,  testified  in                 
  support of  the legislation.   He  noted that  HB 352  would                 
                                                                               
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  provide authorization  for a  lease-purchase agreement  with                 
  the City  of Palmer  to finance  and build  a Department  of                 
  Natural  Resources fire  management facility  at the  Palmer                 
  Airport.  He asserted that the agreement will save the State                 
  $282.0 thousand dollars a year.   He stressed that the State                 
  will save $8.5 million  dollars over 20 years.   He observed                 
  that the new  facility would consolidate four  wildland fire                 
  facilities in the area  of the Palmer Airport.   He observed                 
  that the Department of Natural Resources'  flight operations                 
  are currently run from a lease  space at the Palmer Airport.                 
  The administrative operations are coordinated in  Anchorage.                 
  Warehouse support is  provided in  Eagle River.   Additional                 
  administrative and warehousing activities occur at Big Lake.                 
  He asserted  that the  legislation will  make wildland  fire                 
  fighting response time  more efficient.   He explained  that                 
  materials are transported from the  warehouse in Eagle River                 
  to the Palmer Airport.  He  noted that response time effects                 
  the level  of fire  support needed.   He  observed that  the                 
  Governor's Budget  Summary recognizes that the  project will                 
  save the Department  of Natural Resources money.   The State                 
  would own the facility at the end of the agreement.                          
                                                                               
  Representative Ogan  stressed that the City of Palmer has an                 
  airport and undeveloped  land available.  The  runway at the                 
  Palmer  Airport  is  long  enough  to operate  fire  support                 
  planes.   He  emphasized  that  air traffic  at  the  Palmer                 
  Airport is less than at the Anchorage International Airport.                 
  He maintained that the Palmer  Airport is centrally located.                 
  He  added  that  Palmer  also  has  community  services  and                 
  commercial support options available.   He observed that the                 
  City of Palmer supports the project.                                         
                                                                               
  Representative Brown questioned how the project will improve                 
  access.  Representative  Ogan observed that  burning permits                 
  would   be   transferred   from   Big    Lake   to   Palmer.                 
  Representative Brown questioned what services are located in                 
  the  Anchorage  Frontier  Building that  would  be  moved to                 
  Palmer.                                                                      
                                                                               
  TOM BOUTIN,  DIRECTOR, DIVISION  OF FORESTRY,  DEPARTMENT OF                 
  NATURAL   RESOURCES  replied  that  4,200  square  feet  for                 
  wildland fire logistics would be transferred.  He noted that                 
  the Urban  and Community Forestry Program, Support Services,                 
  Forest Stewardship  and  Resource  Management  Program  will                 
  remain in the Frontier Building.  He clarified that Wildland                 
  Fire Logistics would be the only function transferred.                       
                                                                               
  Representative Brown  asked  why  the  legislation  was  not                 
  introduced  by  the Governor.    Mr. Boutin  noted  that the                 
  legislation had already been introduced.  He emphasized that                 
  the Commissioner  of  the Department  of  Natural  Resources                 
  strongly supports the project.                                               
                                                                               
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  Representative Brown noted that the Department has pursued a                 
  policy of letting  fires burn.   Mr. Boutin agreed that  the                 
  majority of land under  state protection is in the  let burn                 
  category.    He  added  that  due  to  suburban  sprawl  the                 
  percentage  of  land in  the  let  burn category  is  at the                 
  maximum.  In response to a question by Representative Brown,                 
  Mr. Boutin  clarified that AS  41.15 requires  the State  to                 
  perform fire  suppression  on state,  municipal and  private                 
  land.   He noted that  the federal government reimburses the                 
  State for fires fought on federal  land and on Alaska Native                 
  Claims Settlement  Act lands.   He  noted that  the 56  fire                 
  districts   around  the   State  act  under   a  cooperative                 
  agreement.                                                                   
                                                                               
  DEAN   BROWN,   DEPUTY  DIRECTOR,   DIVISION   OF  FORESTRY,                 
  DEPARTMENT OF NATURAL RESOURCES  clarified that the Division                 
  responds  to  wildland  fires  within  the  Municipality  of                 
  Anchorage.    The  Division does  not  respond  to structure                 
  protection unless a structure is threatened by an out growth                 
  of a wildland  fire.  The Division does not respond to house                 
  fires.  Representative Brown questioned if fees for services                 
  have been considered.   Ms. Brown stated that they  have not                 
  considered instituting user fees.                                            
                                                                               
  Representative  Brown  asked  if  the   City  of  Palmer  is                 
  available to bond for  the facility.  Mr. Boutin  noted that                 
  financing  would  be   identical  to  the  lease   financing                 
  obligation   used   to   build   the   Palmer    Courthouse.                 
  Representative Brown  suggested  that most  of the  economic                 
  benefit goes to the  City of Palmer.  She  expressed concern                 
  over the number of  lease purchase agreements the State  has                 
  acquired.  Mr. Boutin observed that lease purchases for real                 
  estate are located  in the  front section  of the  operating                 
  budget.                                                                      
                                                                               
  Representative Parnell  asked  if the  State currently  owns                 
  other facilities used by the  Division.  Mr. Boutin observed                 
  that the Eagle River facility  is a portable warehouse  that                 
  could be moved  or used by other  agencies.  It is  on state                 
  land.  The  Big Lake facility is state owned and is on state                 
  land.   He observed that  the Department will  not be out of                 
  the lease space  in the Frontier  Building until the end  of                 
  the  current rental  agreement.   The  lease will  expire in                 
  July, 1999.   The  State could  rent the  space for  another                 
  agency.   Representative Parnell questioned  if the  savings                 
  would be to the State or to the Department only.  Mr. Boutin                 
  argued that there will be a savings to the State.   He added                 
  that materials  are transported  back and  forth from  Eagle                 
  River  to  Palmer.   Representative  Ogan  noted  that other                 
  agencies are interested in the Eagle River facility.                         
                                                                               
                                                                               
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  Representative  Parnell  questioned  if  there  would  be  a                 
  savings to the State to build the facility with state funds.                 
  Mr. Boutin noted  that the true  interest cost would be  tax                 
  free at approximately 5 percent.   The state general fund is                 
  invested  at  a  taxable yield.    He  added  that there  is                 
  arbitrage  every time  the State  enters into  a tax  exempt                 
  obligation.                                                                  
                                                                               
  Representative Therriault noted that the  let burn policy is                 
  based on  the decision  that there  are benefits to  letting                 
  some areas  burn.   He pointed  out that  the policy  is not                 
  necessarily driven by the budget.   He added that fees would                 
  be difficult to administer and could have adverse effects on                 
  fire suppression efforts.                                                    
                                                                               
  Representative  Navarre  noted  the  Majority's budget  plan                 
  calls for  significant reductions  in the  operating budget.                 
  He  suggested that it  is premature to  consider the project                 
  authorization until the  impact of reductions  is seen.   He                 
  stated  that the project does  not appear to  be a bad idea.                 
  He asked what kinds of needs assessments are being done.  He                 
  maintained that today's assumptions will  not hold true over                 
  time.                                                                        
                                                                               
  Representative Brown referred to backup material provided to                 
  the Committee by the Department of Natural Resources, "South                 
  Zone  Facilities Consolidation,  Proposed  Lease Finance  at                 
  Palmer Airport (copy  on file).  Brown noted that  the FY 99                 
  savings  is shown  at $24.8  thousand dollars.   Mr.  Boutin                 
  explained  that  the  on going  annual  facility  savings is                 
  estimated  at  $282.9  thousand dollars.  There  will  be an                 
  additional one time savings  of $24.8 thousand dollar in  FY                 
  99.  Ms.  Brown explained that  the transfer would occur  in                 
  phases  transfer  due to  the  seasonal nature  of  the fire                 
  season.                                                                      
                                                                               
  NICO  BUS,  ACTING  DIRECTOR,   DIVISION  OF  ADMINISTRATIVE                 
  SERVICES, DEPARTMENT OF NATURAL RESOURCES clarified that the                 
  savings in                                                                   
  FY  99 will  occur as the  Department partially  vacates the                 
  office space  at the Frontier  Building.  He  explained that                 
  General Services can move other  positions into the space as                 
  they are vacated before the lease expires.  As positions are                 
  transferred other rental  space can  be cancelled as  leases                 
  expire.                                                                      
                                                                               
  Representative Brown  noted that the Department  stated that                 
  the cost of underground fuel  storage tank replacements will                 
  be mitigated by the move.  Ms. Brown explained that the move                 
  to  Palmer  will  allow  the  Department  to  use  available                 
  commercial facilities  for  fuel storage.    The  Department                 
  would no longer need to use underground oil tanks located at                 
                                                                               
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  the  Big  Lake  facility.   These  tanks  would  need to  be                 
  replaced if their use was continued.                                         
                                                                               
  TOM SMITH, CITY  MANAGER, CITY OF  PALMER testified via  the                 
  teleconference network.  He observed that the City of Palmer                 
  passed  Resolution  No.  1049  in  support of  the  Forestry                 
  Consolidation Project at the Palmer Municipal Airport.                       
                                                                               
  Ms.  Brown reviewed charts  provided to the  Committee.  She                 
  noted that 80  percent of fires are  caused by humans.   She                 
  noted that  the Department's operations  are spread  between                 
  five locations.  She emphasized  that if the Department  can                 
  catch a fire when it is small that the cost is minimal.  She                 
  stressed that a project fire can cost the State $2.0 million                 
  dollars or  more.   She emphasized  that consolidation  will                 
  decrease response time and increase safety.  She pointed out                 
  that there are 30 miles between the Eagle River facility and                 
  the Palmer Airport.                                                          
                                                                               
  (Tape Change, HFC 96-51, Side 2)                                             
                                                                               
  Ms.  Brown  noted  that  basic   public  services  would  be                 
  maintained in Anchorage.   The  central office which  houses                 
  all the federal  programs and  urban and community  forestry                 
  will remain in  the Frontier  Building.   She stressed  that                 
  expenses associated with large project  fires can be reduced                 
  through  greater efficiencies.  She observed that population                 
  has increased in  areas that are  not readily accessible  by                 
  road.                                                                        
                                                                               
  Co-Chair Foster MOVED to report HB 352 out of Committee with                 
  individual recommendations and with the accompanying  fiscal                 
  notes.  There being NO OBJECTION, it was so ordered.                         
                                                                               
  HB  352  was reported  out  of  Committee with  a  "do pass"                 
  recommendation  and  with  a  fiscal   impact  note  by  the                 
  Department of Revenue,  dated 2/2/96; and with a zero fiscal                 
  note  by   the  Department  of  Transportation   and  Public                 
  Facilities, dated 2/2/96.                                                    
                                                                               
  Representative Navarre  OBJECTED for purpose  of discussion.                 
  He questioned  where the  debt service  on the  project fits                 
  into  the  Majority's overall  plan and  with the  impact of                 
  budget  cuts.      Representative   Navarre   WITHDREW   his                 
  objections.                                                                  
                                                                               
  Representative  Brown OBJECTED  for  purpose of  discussion.                 
  Co-Chair Hanley  stressed that  the State  will always  have                 
  fire fighting  capability.  He asked how  current costs will                 
  be  financed if  consolidation  does not  take  effect.   He                 
  stressed that consolidation will save money over time.                       
                                                                               
                                                                               
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  Representative  Navarre  questioned  if  consolidation  will                 
  result in savings.  Mr. Boutin  stated that the numbers show                 
  both a  future  value and  a  discounted net  present  value                 
  savings.  He emphasized that the State will own the building                 
  at the end of the lease.  Representative Navarre argued that                 
  reductions  in   the  budget   could   result  in   deferred                 
  maintenance.  He emphasized that  deferred maintenance could                 
  result  in  the  failure of  the  building  before projected                 
  savings can be realized.   He stressed that any  budget plan                 
  must build in the project's cost over the next 20 years.                     
                                                                               
  Representative Brown WITHDREW her objection.                                 
                                                                               
  Representative  Kohring   observed  that  savings   will  be                 
  realized  by  increased  efficiencies  and  improvements  in                 
  response time.                                                               
                                                                               
  Representative  Brown  asked  how  the  $6.0  million dollar                 
  construction  cost will be financed.   Mr. Boutin noted that                 
  the City of Palmer will issue a lease obligation.                            

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