Legislature(2005 - 2006)HOUSE FINANCE 519
04/18/2006 10:00 AM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB426 | |
| HB500 | |
| HB496 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| = | HB 304 | ||
| + | HB 426 | TELECONFERENCED | |
| + | HB 496 | TELECONFERENCED | |
| *+ | HB 500 | TELECONFERENCED | |
| + | TELECONFERENCED |
11:23:53 AM HOUSE BILL NO. 500 An Act amending the principal amount of bonds that may be issued by the Alaska Industrial Development and Export Authority for the purpose of financing the development of Hatcher Pass. REPRESENTATIVE BILL STOLTZE, SPONSOR, pointed out that the Matanuska-Susitna (MatSu) Borough has been working with JL Properties, Inc. and the Alaska Industrial Development and Export Authority (AIDEA) in examining the potential for a Hatcher Pass Development Project. HB 500 allows for the next step to discuss financing of the project. Provisions for HB 500 are to: • Amend current language so that AIDEA may issue bonds or provide other financing for the development of Hatcher Pass, not just for the construction and improvement of Phase 1 of a ski resort. • Increase the principal amount of the bonds and other financing AIDEA provides from $15 million to $25 million dollars. Vice Chair Stoltze urged consideration of the bill. 11:25:19 AM DAVID GERMER, PROJECT MANAGER, HATCHER PASS PROJECT, JL PROPERITIES, noted that HB 500 would increase Alaska Industrial Development Export Authority (AIDEA) existing authorization to finance the Hatcher Pass project from $15 million dollars to $25 million dollars. AIDEA's financing can only be made available after a due diligence analysis. All regulatory and statutory requirements must first be met and in addition, the AIDEA Board must approve the financing. Mr. Germer provided historical background on the project. In October 2003, JL Properties responded to a public solicitation from the MatSu Borough to develop an alpine and Nordic ski venue. Over a two-year period, JL Properties worked with the Borough and AIDEA to develop a preliminary, conceptual & financial plan that met the goals of the Borough. The development plan consists of three pieces. He referenced the handout. (Copy on File). 11:27:02 AM Mr. Germer noted the location of the various components. The alpine area would house the regional ski resort, having a 2,300 capacity per day. He detailed various aspects of the resort. 11:28:50 AM Mr. Germer pointed out the residential area involved, 26 residential development pods in the guidelines. He discussed the trail system proposed for the project and activities related to them. 11:31:11 AM Mr. Germer noted the importance that each aspect of the project be integrated to succeed. He noted that financing by AIDEA was necessary for the financial success of the project. He advised that each entity would complete its own due diligence before the project could proceed and hoped construction could begin by spring 2008. Vice Chair Stoltze asked about the compatibility of the project with the adjacent mining development. Mr. Germer replied that area under consideration is 3-4 miles away from the mining spots. 11:33:03 AM Representative Kelly inquired about other owners. Mr. Germer replied that the principle owners of JL properties are Jonathan Rabini and Leonard Hyde. Representative Kelly asked about land ownership. Mr. Germer replied the MatSu Borough would make it a public/private partnership, as they own the land. Responding to another question regarding the risk assessment, Mr. Germer affirmed that AIDEA would complete a due diligence analysis along with JL Properties and the MatSu Borough; financial feasibility will be determined by AIDEA. 11:34:14 AM Representative Holm noted the road on the map through Hatcher Pass. Mr. Germer confirmed there is an existing lodge on the road, located at a spot lower than the proposed project. JOHN DUFFY, BOROUGH MANAGER, MAT-SU BOROUGH, testified in favor of the legislation. He stated that the MatSu Borough is in full support of the project, stressing the critical nature of AIDEA's involvement in financing. He reiterated that it would be a public/private partnership, with property obtained through the municipal entitlement program. He noted that they have utilized both Borough & State funding in the past for certain projects. Mr. Duffy continued, an economic feasibility study has been completed, conducted by a private firm in San Francisco, who confirmed the project's viability. That firm also completed an economic impact statement. Mr. Duffy addressed the number of jobs that would be created through the project. He summarized that by supporting ADIEA's involvement in the project, fulfills a long-term economic development goal of the Borough creates numerous jobs. 11:38:07 AM Representative Kelly asked the level of involvement from JL Properties. Mr. Germer replied that all proceeds from development of the project would go into a general fund to pay off all project debt. At that point, profits would be distributed equally between JL Properties, ADIEA and the Mat-Su Borough. JIM MCMILLAN, DEPUTY DIRECTOR OF CREDIT & BUSINESS DEVELOPMENT, ALASKA INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY, (AIDEA), ANCHORAGE, responded to further question by Representative Kelly, outlining the levels of debt retained by each entity. • JL Properties @ $5 million dollars • MatSu Borough @ $10 million dollars • AIDEA up to $25 million dollars The initial financing structure concept is an equity role for AIDEA, along with the other two entities. The final structure would be based upon due diligence & feasibility reports. 11:40:43 AM Representative Kelly asked if AIDEA would hold the mortgage. Mr. McMillan stressed the importance of development rights in the project. He noted that although the land has intrinsic value, the real value will be the development. 11:41:45 AM Representative Kelly voiced concern regarding other AIDEA financed projects that have not work. Mr. McMillan said that AIDEA has learned from past, noting the history of the proposed project. He stated AIDEA supports the legislation; the bill does not guarantee the financing of the project. He noted that only after all issues have been examined and a finance plan established, would financing be voted on. 11:44:09 AM Vice Chair Stoltze expressed his concerns, noting his role in facilitating discussion about the potential project. He noted that in the past, AIDEA might have been forced into unsuccessful projects. He indicated his "comfort" in the proposed process. 11:45:05 AM Representative Kelly observed that J&L Properties had been successful in other projects; he questioned their amount of equity in the project @ $5 million dollars. He worried that AIDEA might be left holding a large mortgage on the project and encouraged an appropriate level of control. 11:46:30 AM Mr. McMillan reiterated the long history AIDEA has had with the project. He noted the worthwhile aspects of the concept as proposed by JL Properties and the success rate of their company. He agreed that some previous projects had not been successful without such an integrative nature. AIDEA believes it is worthwhile to take the next steps. 11:48:40 AM Representative Weyhrauch asked the intended public process, noting concerns about development projects and their impact on the habitat. He questioned if the legislation provides authority to create bonds in advance of the public comment process. 11:49:47 AM Mr. Duffy affirmed that an extensive public process had been planned. Representative Joule asked about the projected completion date. Mr. McMillan stated that under AIDEA's statutes for development projects, any project funded in excess of $10 million dollars, requires legislative authorization to move forward. He added, in addition to the MatSu Borough public process, AIDEA also has a public process period. The local governing body must pass a resolution consenting to the project. 11:51:40 AM Representative Foster MOVED to REPORT HB 500 out of Committee with individual recommendations and with the accompanying zero note. There being NO OBJECTION, it was so ordered. HB 500 was reported out of Committee with a "no" recommendation and with new zero note by the Department of Commerce, Community & Economic Development.
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