Legislature(2001 - 2002)
03/23/2001 01:47 PM FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HOUSE BILL NO. 51 An Act giving notice of and approving the entry into, and the issuance of certificates of participation for, a lease-purchase agreement for a seafood and food safety laboratory facility; and providing for an effective date. JANICE ADAIR, DIRECTOR, DIVISION OF ENVIRONMENTAL HEALTH, DEPARTMENT OF ENVIRONMENTAL CONSERVATION, explained that the legislation would address the following concerns: · Noted that the lease expired in December of last year, and could only be extended on a short-term basis. AS 36.30.083 allows the Division of General Services to extend a lease under two conditions: 1) A 1% lease reduction can be achieved or 2) A 10% reduction could be achieved and the American with Disabilities Act (ADA) requirements met. In the case of the current facility, the lease rate is $1.03/square foot and complies with ADA. She stated that the owners are not interested in a 15% reduction in their lease rate. Additionally, the building is up for sale. · Indicated that one way or the other, the lab will have to move. With money previously appropriated by the Legislature to look at the most cost- effective way to replace the lab, a private consultant was hired to do an economic evaluation. He determined that "hands down", the most cost- effective means would be a state-owned facility. In fact, leasing a laboratory rather than owning would cost the State 56% more over the 20-year term of the bond repayment. · Added that the functions of such a site are required regulatory functions for the sale of shellfish and diary products in national and international commerce markets. No other laboratories in the State perform the functions, nor could they under federal rules. · The laboratory also certifies private, commercial laboratories to conduct tests required under the Safe Drinking Water Act (SDWA) for public water systems. Unless a private laboratory is certified, Environmental Protection Agency (EPA) will not accept their test results. Since Alaska is a primary State for the drinking water program, we could not accept them either. Ms. Adair noted that the laboratory is currently located in Palmer, and the plan includes relocating it to Anchorage. She enumerated the reasons for the move: · Anchorage is a central location that could receive shellfish samples as quickly as possible from many areas of the State. · The site needs to be on a public sewer system, as many chemicals are used. · A site is needed where there is no excessive vibrations, dust or electron-magnetic interference for the performance of the analytical equipment. · The lot size should be between 4-6 acres to accommodate the building, parking and snow machine storage. · The land should be State owned to keep the price as low as possible. Ms. Adair concluded that the location in Anchorage would significantly benefit the shellfish industry. That location would reduce the costs slightly, but most importantly it would speed up the delivery of the time-sensitive sample to the laboratory for testing. Co-Chair Mulder inquired what the anticipated size of the facility would be. Ms. Adair replied it would be 20,530 square feet. The current space is 10,000 square feet, which is extremely inadequate and has unsafe conditions. She noted that eleven employees would be moved to Anchorage and that two offices, one in Homer and one in Wasilla would be combined. She commented that fourteen employees would remain in Palmer. In response to Co-Chair Mulder, she noted that there is food testing only in these laboratories, not agricultural testing. Ms. Adair discussed the functions, which would remain outside of Anchorage. Co-Chair Mulder asked the number of employees in the future expected to be using the new facility. Ms. Adair replied that the Department is not planning any growth in the laboratory staff in the near future. Co-Chair Mulder noted that in an analysis provided by the Department, it was indicated that without the bill, they would be forced to go out and get a request for proposal (RFP) this summer. Ms. Adair emphasized that the lease cannot be extended at the current location. By December 31, 2002, the last of the extensions will be over. A long-term extension cannot be done in that spot, consequently no RFP for a long-term lease. Co-Chair Mulder questioned that reasoning. He stated that there were provisions in current statute that allowed for the extension, however, the current landlord would have to agree to a certain amount of reductions. Ms. Adair replied that the current landlord is not interested in a 15% reduction. Co-Chair Mulder asked if there was documentation supporting that statement. Ms. Adair stated that there was nothing in writing as all the conversations had taken place on the phone. She offered to check into it. Co-Chair Mulder questioned the opposition to privatizing the services. Ms. Adair explained that there is information available from the Food and Drug Administration (FDA) regarding that concern. They technically have a program doing that, but there is no staff or funding. There is no state in the United States that does not provide this service through a state laboratory. Co-Chair Mulder requested that further information be forwarded to him. Representative Croft referenced the "owning" versus the "leasing" language. He asked why it would be better to own the lab by the State. Ms. Adair explained that the functions of the laboratory would be needed on a long-term basis. She pointed out that the shellfish industry is growing and at this time, there is no private lab in the State that provides these services. She enumerated the reasons indicating why the State should own their own facility. It is important that the lab can be configured so that it would provide more advantages over time. Ms. Adair indicated that General Services Division had assisted in developing the plan. Representative Hudson inquired how much had been invested in the proposal to date. Ms. Adair stated that in FY99, $145.7 thousand general fund dollars had been allocated, and that last year, an additional $240 thousand general fund dollars had been invested into the project, which to date, has almost been used up. Representative Hudson asked if the lease purchase would be used over a 20-year period of time. Ms. Adair acknowledged that was correct and that it would cost approximately $1.2 million dollars per year. Present lease costs are run annually at $115 thousand dollars. Representative Hudson questioned when the Department would be able to occupy the facility. Ms. Adair replied that it would take 2.5 to 3 years to build. The current lease expires in December 2002. She stated that there would need to be some lease extension if the facility was to be built. Representative Hudson asked about the RFP and if a private company could build the facility for less money. Ms. Adair replied that the Department had not prepared an RFP because the laboratory specifics would be very complex and that the Department does not have the expertise to outline that type of detail. Representative Lancaster voiced concern that the General Services Division had not contracted an RFP. Ms. Adair agreed that they could do that but that would require funding which is not available for hiring those people. Representative Lancaster thought that the square footage price being requested seemed excessive. Ms. Adair replied that laboratory areas need more space for equipment and ventilation systems. Representative Lancaster reiterated that $5 dollars a square foot was excessive; he noted that it is double what "Class A" office space would cost. Vice-Chair Bunde commented that there currently is a lot of space available in Anchorage. Ms. Adair replied that there is no laboratory space available at this time and that any space would need tremendous remodeling costs. To renovate any existing space would cost more than to build a new space for the specifics required. She stressed that it would not be good to have to move twice. The Lab is hoping to extend the current lease until the new building is finished. Representative Harris pointed out that there is strong opposition to the move in the Palmer area. He questioned how such concerns should be addressed. Ms. Adair agreed that the solution presents a dilemma in such a large state. The Department always tries to balance the needs of the industry and the size of the State. She added that the Department is trying to be responsive to those who use the facility and stated that only those employees directly associated with these concerns would be moved and that most of the employees would remain in Palmer. In response to Representative Harris concern, Ms. Adair reiterated that there is no suitable space available in Anchorage at this time. Co-Chair Mulder referenced the Certificates-of-Participation (COP), and noted that they were generally issued when there was a private contractor building the facility. He asked if that was still the anticipated arrangement. Ms. Adair stated that it was and asked the Devon Mitchell be called on to testify regarding that concern. Co-Chair Mulder reiterated his concerns with the cost being $666 dollars per square foot. He pointed out that the lease cost was equivalent to $60 dollars per square foot. Representative Croft emphasized that this lab must not be compared to office space rental. He requested material on cost comparisons of laboratory space throughout the country. Representative Croft recommended that the RFP concept not be the focus. He indicated his surprise with the letter included in member's packets from Representative Ogen voicing his opposition to the legislation. Representative Hudson asked if the current building was for sale and if so, how much would it cost. He inquired if that consideration had been made. Ms. Adair replied that the current building is a reconverted Piggley Wiggley grocery store. There are many operations that are insufficient for labatory analysis which cannot be handled in that facility. She stressed that it would take significant renovation costs to make that building functionable. Representative Lancaster inquired if the Food and Drug Administration (FDA) could help with the design and layout of a facility. Ms. Adair responded that the FDA does not provide that service to the State. Representative Lancaster asked if there currently was a design available. Ms. Adair replied that the current crafting would be a design award and then a build award. Co-Chair Mulder questioned if the size were decreased, what would be left out of the new project. Ms. Adair replied that the Department would ponder that concern. CHERYL SUTTON, SOUTHEAST ALASKA REGIONAL DIVE FISHERIES ASSOCIATION (SARDFA), JUNEAU, noted the current lab is used for processing gooey duck clams. SARDFA is developing the gooey duck clam fishery. Fisheries are often times located in remote areas throughout the State. When weather is bad, it is difficult to access the lab services. She noted that there is a 30-hour limit on water sampling time. The current lab location is difficult to access. Anchorage would be a better location for the industry for accessibility. Ms. Sutton noted that SARDFA has worked with the Department on these issues. She supported the idea of satellite labs for better accessibility. TAPE HFC 01 - 60, Side B Ms. Sutton stated that any cost streamlining would be beneficial to the industry. She concluded, advising that SARDFA supported HB 51. Representative Hudson asked if the laboratory at the Anchorage Seafood facility would be sufficient. Ms. Sutton exclaimed that she had not been in that lab. One of the difficulties is that the FDA dictates standards and for paralytic shellfish poisoning (PSP), and those standards are rigid. Representative Hudson recommended that a determination be made to see if that lab would be sufficient. Representative Lancaster inquired if products were "dumped" if they did not make the 30-hour test. Ms. Sutton explained that the 30-hour rule exists for water sampling. For products, there also is a very time sensitive limit matter. The Department of Environmental Conservation is currently working with the industry. DAVE STANCLIFF, STAFF, REPRESENTATIVE SCOTT OGEN, testified that both the lease and the options should be reconsidered. He encouraged the Committee to check out the options of that lease. He suggested that the space could be modified and that the owner of the building was willing to make changes. Mr. Stancliff agreed that the facility is crowded and that the space is tight, however, the requested square foot expansion appears to be fairly "liberal". He questioned how much of the new space was intended to be used for labatory versus clerical. Mr. Stancliff noted that Representative Ogan's office would attempt to work with the Department. Ms. Adair responded to Representative Hudson's concern, noting that the ASI lab was very small, and acts as a quality standards lab. If comparing it to the needs of the Department, it would be an "apples" to "oranges" compromise. She added that she had met with Representative Ogan's office and that they had discussed that the new lab would be laboratory space and not new employee space. HART HODGES, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE, offered to answer questions of the Committee. Representative Davies asked the appropriate industry standard for the space size needed. TOM LIVINGSTON, (TESTIFIED VIA TELECONFERENCE), ARCHITECT, ANCHORAGE, noted that the space consideration had been technically analyzed and reconsidered. He noted that there are two specifications, which drive the needs of the lab: · The first is safety of the staff; and · The second is the quality of the science. He added that the laboratory intensive building would make it very expensive. Representative Davies requested a comparison of other health lab costs. Mr. Livingston noted that he would submit that information to the Committee. HB 51 was HELD in Committee for further consideration.