Legislature(2005 - 2006)HOUSE FINANCE 519
03/16/2006 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB441 | |
| SB157 | |
| HB478 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 176 | TELECONFERENCED | |
| + | HB 271 | TELECONFERENCED | |
| + | HB 441 | TELECONFERENCED | |
| + | SB 157 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 478 | TELECONFERENCED | |
HOUSE BILL NO. 478
"An Act relating to the municipal harbor facility grant
program; and providing for an effective date."
MOVED to ADOPT Work Draft 24-LS1694\I, Cook, 3/15/06
Representative Stoltze MOVED to ADOPT Work Draft 24-
LS1694/I, Cook, 3/15/06. There being NO OBJECTION, the
Committee Substitute was ADOPTED.
2:35:38 PM
REPRESENTATIVE BILL THOMAS, SPONSOR, stated that this was a
companion bill to SB 291 (Sen. Steadman). He noted that the
bill had been introduced to respond to the State process of
transferring harbors to municipalities, and discovering
funding shortfalls needed to complete necessary repairs.
The bill developed through comments from the Alaskan
Association of Harbormasters throughout Alaska. The bill
will create a harbor facility grant fund, using funds such
as fisheries business tax or fuel tax and other taxes. The
Department of Administration would administer the grants.
He pointed out the requirement of a 50/50 grant match from
municipalities, requiring commitment on the local level.
The funding would provide repair or major maintenance in
communities, and be limited to one grant per year per
facility. Some communities may have more than one harbor,
but would be limited to a $5 million aggregate cap.
2:38:08 PM
Representative Thomas noted that to qualify for a grant, a
municipality must demonstrate the ability to operate
independently of state aid in the future, and noted that
several communities were making this adjustment by
increasing harbor rates. He pointed out that new
construction received the lowest priority in the project
list. The proposed effective date of the legislation is
July 1, 2006.
2:39:33 PM
IAN FISK, STAFF, REPRESENTATIVE THOMAS, noted the change in
the grammer on Page 2, line 14, from "should be" to "is". He
also noted that on lines 19 to 23, language was inserted to
clarify the types of funds that could be used for the
municipal match, especially the shared portions of the
fisheries business tax. He also pointed out that language
regarding municipal revenue sharing was also included in
case those monies became available in the future. He noted
that previous language added by the Community and Regional
Affairs Committee had prohibited any state funds from being
used in the municipal match, and stated the Sponsor's desire
that certain state funds be excepted.
2:40:52 PM
Representative Kerttula observed that Page 3, line 5,
limited municipalities to only one grant. She asked if this
referred to just this program, or any programs, and
suggested the need for a technical amendment.
Mr. Fisk responded that this limitation pertained only to
the program, and conceded that an amendment might be
helpful.
Representative Kerttula asked for the reason of the program
limitation to one grant. Mr. Fisk responded that the
program was limited to address the deferred maintenance
needs carrying over from the State transfer. He noted that
they wished to ensure that a municipality was able to meet
those needs not properly addressed by the State.
2:42:54 PM
Representative Hawker observed that if one grant was
received, another grant could not be obtained. He asked
hypothetically if during a granting period, all requests
except one were minimally funded, this would leave all
funding available for the unfunded project in the subsequent
year. Representative Thomas stated that projects would be
prioritized by community need. He noted that some
communities had more than one harbor, and could apply for
one harbor per year. He conceded that some projects may
have to wait a few years to receive funding. He gave the
example of Yakutat, when a transferred harbor experienced a
shortfall in maintenance funding. Representative Hawker
acknowledged the intent, but suggested more work on the
language to close a potential loophole.
Vice-Chair Meyer expressed his intent to HOLD the bill in
order to receive more testimony and potential amendment.
Representative Kelly asked if the list of transferred habors
was all-inclusive. Representative Thomas replied that there
could be other harbors being transferred this year that were
not yet on the list.
2:47:15 PM
JOHN STONE, PRESIDENT, ALASKA ASSOCIATION OF HARBOR MASTERS
AND PORT ADMINISTRATORS testified in support and gratitude
for the bill. His organization represents 27 municipal
harbor systems throughout the state. He noted that they had
been working on this problem for many years. He expressed
support of the bill and the matching grant program. He
noted that he had provided the committee with written
comments (copy on file.)
Mr. Stone pointed out that much of the harbor structure
being transferred to municipalities had been built in the
1960's through 1980's. He showed the Committee an outdated
power cable from Harris Harbor in Juneau that fed 40, 30-amp
shore power services. The cable was indicative of the
electrical code of the 1960's. He compared it to the newly
installed cable. He emphasized the expense involved in
trying to recapitalize the infrastructure.
Mr. Stone referred to a question about page 3, regarding the
one-time grant. He explained that the intent of the Harbor
Masters was to ensure that grants were used for rebuilding a
facility on a one-time basis.
2:52:26 PM
Representative Kelly asked about the transfer of the
facilities and the amount of funding that accompanied the
transfer. Mr. Stone replied that the purpose was to bring
the harbors to good condition. He stated that the funding
was far short of what was needed to restore facilties, even
in terms of code requirements. He also noted that user
needs had also changed, with larger float systems now
required. The money provided was only one quarter to one
third of what the communities actually needed.
Representative Kelly asked how the amount of funding had
been determined. Mr. Stone replied that the formula used
was consistent, but overall quite low.
Representative Holm asked whether, when the transfer
occurred, there was a misunderstanding about the facility
requirements. Mr. Stone stated that the money was intended
to restore facilities to good condition, but it that it fell
far short. He suggested that this may have been because
many facilities were at the end of their useful life,
requiring more than simply maintenance. He also noted a
difference in code, rather than a depreciation of an
investment.
Representative Holm asked if the intent was to build new
facilities. Mr. Stone confirmed that this may be what
occurs, although various communities will try to refurbish
as they can. Representative Holm expressed concern over the
matching funds, and wondered if a better formula was now in
place to determine the amount of funding needed. Mr. Stone
explained that a consulting engineer would be hired to
develop a cost estimate to be used to apply for the grant.
Representative Kerttula asked how much funding per year was
spent by the City and Borough of Juneau to maintain harbors,
and how much would be saved by the State by transferring
this maintenance to communities. Mr. Stone replied that
the operating cost for maintaining the float system in
Juneau was approximately $2 million a year. Representative
Kerttula observed that this did not cover all of the costs,
and only represented one community.
2:59:45 PM
Representative Kelly asked how it could be prevented that a
grant accompanying a transfer was not being wasted on
maintenance that would eventually be replaced in a rebuild.
Mr. Stone stated that DOT would watch for this during the
grant process, but that in each case the most economical
rebuild would be considered.
3:01:01 PM
KURT REYNERTSON, MANAGER, CITY OF SELDOVIA, testified in
support of the legislation. He noted that they had recently
passed a resolution through their city council. He
explained that when they took over from harbormasters, they
received $2.6 million from the State. After an engineer's
estimate of $3.4 million, they discovered an $800-900
thousand shortage in order to provide good harbor standards.
He stated that this amount was insurmountable for a
community of their size. He commented that the bill would
help to provide needed municipal services.
3:02:55 PM
Representative Kelly asked if the $2.6 million for
refurbishment was included in the amount for the rebuild of
the harbor. Mr. Reynertson replied that engineering
designs cost approximately $250 thousand, and the remaining
funding would be utilized to complete the actual harbor
rehabilitation.
3:03:50 PM
GARY HENNIGH, MANAGER, CITY OF KING COVE, testified via
teleconference. He expressed support for the bill and for
the harbormasters for their work on the topic. He explained
that their community was one of the first to take over
management of their harbor from the State. He noted that
the management has been more difficult than anticipated. He
explained that the harbor was in poor condition, affecting
the local residents who use the harbor. He stated his
opinion that dedicating the fisheries tax as a funding
source was a good idea. He noted that between $4 and $5
million had been paid into harbor repair by local fishers.
He observed that linking this income to solving the harbor
problem spoke well of legislators working with local
harbormasters. He suggested that on page 2, lines 17 and
18, language be changed so that State Revenue funds from
revenue sharing or a legislative grant could be used as a
match. He suggested that these sources of municipal funding
would be driven predominately by oil and gas revenues
experienced by other areas of the state.
3:07:41 PM
He also suggested that on Page 3, lines 1 and 2, to add a
provision allowing those communities that first accepted
harbor transfers receive a small "head start" in applying
for funds, allowing for some portion of the funding in the
first two years to be set aside for communities which had
initially taken over harbor management. He emphasized that
in past years, DOT had no formula to assist municipalities
in determining the amount needed to bring the harbor up to
reasonable standards. He noted that $352 thousand received
in the early 1990's did not make a legitimate contribution.
3:09:05 PM
Representative Kelly commented that Hooonah, Juneau and
Valdez had implemented significant fee increases in their
harbors, and asked what fee increases had been experienced
by their community.
Mr. Hennigh responded that for fifteen years the fee for
moorage had increased by only 25 percent. He noted the need
for a local fee increase, but observed that currently the
residents might be unwilling to pay increased fees on a
harbor that was in ill repair. He proposed that support for
fees would increase when they could be assured that there
would be building improvements.
3:10:31 PM
Representative Kelly asked how many were on the waiting list
for slips. Mr. Hennigh responded that there was no waiting
list, since unless one was a commercial fisher, they would
not be docking there. He noted that their waterfront was
very busy, although the community was often overlooked. He
stated they were the largest per capita fish producing area
in that part of the state of Alaska.
3:11:42 PM
Vice-Chair Meyer stated that HB176 would not be heard;
likewise he stated that HB271 would not be heard in the
meeting.
Public Testimony continued.
3:12:59 PM
GREG MEISSNER, HARBORMASTER, CITY OF WRANGELL, testified in
support of the bill. He voiced concern over page 3, line 9,
regarding the one time only nature of a grant per facility.
He asked what qualified as a "facility"; he pointed out that
perhaps each float would be considered a facility within a
single harbor, and suggested that it might make sense for a
community to refurbish one float at a time.
Mr. Meissner then referred to Line 16 of the bill and noted
that a replacement cost for a concrete float would be $5
million, vs. $3 million for a repair, and suggested that it
would be more cost effective to replace rather than repair.
3:15:04 PM
Mr. Stone responded that the definition of facility was an
issue being addressed with the Department of Transportation
and Public Facilities. He suggested that the cases would be
addressed on an individual basis. He stated that he would
be glad to speak directly with Mr. Meissner regarding his
questions.
3:16:02 PM
VALERY MCCANDELESS, MANAGER, CITY OF WRANGELL, testified via
teleconference in support of the bill. She expressed her
pleasure that the bill was addressing specific work on each
harbor.
3:16:49 PM
ALAN SORUM, HARBOR MASTER, CITY OF VALDEZ, testified via
teleconference in support of the bill. He noted that many
of the boats harbored in their city were from the city of
Fairbanks. He voiced his support for working with the
Department of Transportation and Public Facilities, with
whom they've worked on grants for harbor projects.
3:18:25 PM
SCOTT RANSOM, HARBOR MASTER, CITY OF SEWARD, testified via
teleconference in support of the bill. He noted that his
community had taken over the management of their harbor in
1999, and currently had over $6 million in deferred
maintenance. He noted that these were the oldest floats in
the harbor, installed after the earthquake. He stated that
they had two rate increases to support the harbors. The
bill will help with the deferred maintenance.
3:19:31 PM
RAY MAJESKI, HARBORMASTER, CITY AND BOROUGH OF SITKA,
testified via teleconference, in support of the bill. He
explained that the city had taken over three harbors from
the State, and after doing so discovered that Thompson
Harbor needed to be replaced, at a cost estimated at $6.7
million. He stated that $3 million of $4.4 million from the
State was spent on the other two harbors, with $1 million
remaining to replace Thompson Harbor. He noted that repairs
had added 15 more years to the other two harbors, but
stressed that Thompson Harbor was beyond repair. He
expressed concern regarding the statement that grant
applications must be filed in the fiscal year immediately
preceding February 1. He pointed out that they were
currently replacing the harbor and receiving bids, beginning
construction by mid-August. He hoped that the bill, if
passed, would cover their current process. He noted that in
the past six years, they'd raised moorage rates more than
100 percent. The bill would help the community members.
3:22:25 PM
He noted that to be able to take the burden off of harbor
users in his community, the bill would allow them to raise
them to raise rates at an acceptable level. He concluded
that the bill was a positive step.
3:23:08 PM
There being no further testimony, public testimony was
closed.
JOHN MAKINNON, DEPUTY COMMISSIONER, TRANSPORTATION AND
PUBLIC FACILITIES, responded to a question by Representative
Kelly regarding the original formulation of funding when
harbors were originally transferred from the State to
municipalities.
3:25:07 PM
He explained that most of the harbors discussed as
"underfunded" were part of the November 2002 statewide bond
issue, allocating $30 million to ten communities and 26
facilities. The numbers used for allocations resulted from
a 1992 Core of Engineers' condition survey of all boat
harbor facilities in Alaska. In 2002, the Department was
asked to develop a list of harbors for repair and amounts
for deferred maintenance. The numbers from the 1992 study
were adjusted for inflation and also for additional deferred
maintenance. He stated that it was unclear as to whether
those numbers were accurate. He conceded that the level to
which they aspired was not that which was desired by many
communities. He referred to testimony by Mr. Stone
regarding changes in codes, but noted that community changes
also resulted in different harbor user needs. Some harbors
had changed from working harbors into recreational harbors.
He stated that changes in community expectations were not
reflected in the numbers devised by the harbor engineer
involved in the bond study. He concluded that this
accounted for the discrepancy between the estimates.
3:27:39 PM
Responding to another question by Representative Kelly, Mr.
Makinnon noted that some harbors were very difficult to
transfer due to a difference in expectation. He noted that
communities were reluctant to raise rates to pay for
improvements.
3:28:45 PM
Representative Hawker noted his experience with the transfer
of the harbor at Whittier, stating clearly that there was no
State responsibility following the transfer of the harbor.
However, he noted the significant need at some of the harbor
facilities. He also proposed that harbors should be in
"excellent" condition rather than "good" as is stated in
current policy, along with the transfer of harbor
responsibility to local authorities.
3:30:42 PM
Representative Kelly observed that harbor masters found it
difficult to balance the amount of repairs needed with funds
available. He asked how the Legislature could avoid another
problem with deferred maintenance in the future.
Mr. Makinnon recommended a change in the definition of
"facility", including "portion thereof". A facility might
decide to improve a separate finger each year, and that
could be considered a separate facility. The intent is
that once the various portions are completed, it becomes the
responsibility of the community to collect adequate fees for
maintenance so as not to approach the State in another 15
years for replacement costs. He stressed that communities
need to take on the responsibility.
HB 478 was HEARD and HELD in Committee for further
consideration.
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