Legislature(2001 - 2002)

03/23/2001 01:47 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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                                                                   
     ·    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                                                                   
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.                                                                          

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