Legislature(1993 - 1994)
03/08/1994 03:00 PM House HES
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
HB 466 - AHFC BONDS FOR UNIV OF AK USES Number 394 BRIAN ROGERS, Vice-President for Finance, University of Alaska, testified in support of HB 466. He stated that the legislation would address the long standing problem of deferred maintenance throughout the University of Alaska system. He said the proposal would authorize the Alaska Housing Finance Corporation (AHFC) to issue up to $30 million for the repair and rehabilitation of student housing projects and would authorize the University of Alaska to issue an additional $45 million in bonds to cover other deferred maintenance projects throughout the system. MR. ROGERS referred to project lists in the committee bill packets and stated that the deferred maintenance problem totals over $150 million. He said, accumulated over time, it would be a major step in solving the problem. He expected that funds would be spent at $25 million per year, which would fix dormitories and address other projects. He further stated that $30 million in AHFC bonds is the full amount of the repair and rehabilitation projects for student housing throughout the system and would bring all existing student housing deferred maintenance down to zero. He stated that $45 million is the most current debt capacity allowed and he felt that going further than that would jeopardize the University's excellent credit rating. He said bonds would provide a comprehensive program to address the deferred maintenance problem and would prevent accelerated deferred maintenance. MR. ROGERS further stated that currently the cost of money is the lowest it has been in the last thirty years. He said with a payoff over time with inflated dollars, the net present value will not be that much larger than the cost of issuance. He then indicated that Will Gay was on line to testify also. CHAIR BUNDE asked for testimony from Mr. Gay. Number 477 WILL GAY, Executive Director, Alaska Housing Finance Corporation, testified via offnet in support of HB 466. He stated that the bill would allow a chance for the AHFC to have access to the capital market and to help youths with student housing. He said this was an example of one of the many ways that AHFC can help the state. He commented that he had heard rumors about various amounts of assets that could be expropriated away from the AHFC. He felt it was an example of how AHFC can help the state with its housing needs. Number 507 REP. BRICE asked if the AHFC or the University will have to go before the legislature again for approval of specific projects. MR. ROGERS stated that the bond issue would not require further legislative authority. He said the University has tried to supply the legislature with a full list of projects and he would continue to keep the legislature apprised of the progress. Number 532 REP. VEZEY asked Mr. Rogers to explain to him why there is a $75 million bond authorization and a zero fiscal note. MR. ROGERS explained that the fiscal note is zero in terms of initial costs, but there is a debt service note that has not been provided. The amount of debt service would "ramp up" to a total of $6.2 million on an annual basis, once all the bonds are issued and debt service begins. There would be no cost to the general fund next year, but there certainly would be in the following years. REP. VEZEY said he did not have a fiscal note from the University. CHAIR BUNDE asked Alison Elgee to testify. Number 550 ALISON ELGEE, Statewide Budget Director, University of Alaska, testified on HB 466. She stated that the proposal is in essence an appropriation bill that would appropriate debt capacity. She said included in Section 6, subsection B, is the description of the anticipated annual payment amount on $45,000 that would be bonded under the University's debt capacity. Number 593 (CHAIR BUNDE stated for the record that Rep. Kott arrived at 3:24 p.m.) REP. VEZEY said he is still did not see a fiscal note that addresses the debt service. MS. ELGEE said she would be glad to provide Rep. Vezey with a fiscal note. MR. ROGERS stated that the debt service would be appropriated out of the Alaska Debt Retirement Fund. He said he was unaware that a fiscal note had not been prepared for that. REP. VEZEY asked what the Alaska Debt Retirement Fund is. MR. ROGERS explained that it is a fund that was created by Alaska Statute 37.15.011 that consists of annual appropriations by the legislature. Number 627 CHAIR BUNDE asked Chip Wagoner to testify. Number 630 CHIP WAGONER, Vice-President, Alumni Board, University of Alaska Fairbanks (UAF), testified in support of HB 466. He stated that there is much history in the University of Alaska and today the University is one of the most internationally known research, teaching and public service institutions in the world. He said it is rated in the top ten in research institutions in the country, and second in the Pacific Northwest for the number of national merit scholars attending UAF. He stated that UAF is one of the few institutions in the country that has been not only designated as a land grant college, but also as a sea grant college and a space grant college. He indicated that past legislatures have certainly recognized the importance of young people and their futures in the state. MR. WAGONER said there are over 22 acres of roofs on the buildings at UAF, nearly 2.6 million square feet of floors, and over 25% of all state facilities are on the UAF campus. He then explained that UAF is one of the oldest investments in the state with buildings over 70 years old. He said the mechanical systems are falling apart and they do not have ventilation systems. He also stated that nearly 90% of the buildings are over 20 years old. MR. WAGONER further commented on the state of disrepair throughout the entire UAF campus, citing leaking roofs and falling concrete. He asserted that if the situation continues into the next few years, it will cost the state even more to maintain its investment. He said the deferred maintenance is "catch up work." He said deferred maintenance has been the Alumni Board's number one priority for the last two years. He suggested that if the entire $150 million could not be funded, they were willing to accept $75 million. MR. WAGONER stated that a comprehensive funding solution is necessary to maintain Alaska's sound investment in the University. He urged the committee to make deferred maintenance for the University system its chief priority this session. Number 818 CHAIR BUNDE asked Mr. Wagoner if there was any private support coming through from the Alumni. MR. WAGONER stated that UAF just completed a campaign to raise funds for scholarships, etc. He said he was pleased to say that the Alumni Board and the public contributed over $12 million. He said the Alumni Association plans to become more proactive. CHAIR BUNDE commended the efforts of the Alumni Board. He then commented that the reason the state has the deferred maintenance problem now is because the University administration and the Regents did not spend the money that had been given to them by the legislature, they invested it in other places. He said he will support the bill now but would not support any reallocation of funds in the future. Number 865 REP. BRICE added that the Chamber of Commerce has been a great support to the University. He then thanked Mr. Wagoner for his time and testimony.. Number 884 NICHOLAS ABRAMCZYK, Member, Associated Students of the University of Alaska, Fairbanks, testified in support of HB 466. He stated that he is a resident on the UAF campus. He said that he uses the analogy that he is the tenant and the state is his landlord. He specified various states of disrepair he has encountered, citing flooded bathrooms, broken heating systems at -60 degrees, and obstacle courses of buckets in the halls that catch the water leaking from the ceilings. He related his concern he had as to whether his younger brother would be offered any type of quality education if the problem wasn't addressed. He urged the committee to pass HB 466. Number 955 CHAIR BUNDE thanked Mr. Abramczyk for his testimony. REP. BRICE explained that while he was sitting in class at UAF he had encountered tiles and light panels falling from the ceiling. He asserted that there is bound to be liability when deferred maintenance is not dealt with appropriately and he supposed that a student could be seriously injured. He said ultimately the cost would fall back on the state. Number 000 CHAIR BUNDE suggested that another option would be to close the facilities. He then closed public testimony and asked for testimony. REP. G. DAVIS reiterated the problems the University was facing and said the issue must be addressed. He indicated that the financial aspect should be addressed in the Finance Committee. He made a motion to move HB 466 out of committee with individual recommendations. CHAIR BUNDE objected and asked if the committee would rather wait for the missing fiscal note. REP. VEZEY said he would vote against moving the bill out until a fiscal note is received. Number 022 REP. BRICE indicated that the committee is aware of the necessary funds which are outlined specifically in the bill. He said the information is there but not in fiscal note form. Number 028 REP. TOOHEY agreed with Rep. Brice. She said the committee's job has been done and the funding would be addressed by Finance. REP. BRICE agreed with Rep. Toohey and Rep. Brice. CHAIR BUNDE called for the vote. Representatives Toohey, Bunde, G. Davis, Olberg, B. Davis, Nicholia, and Brice voted Yea, and Rep. Vezey voted Nay. Chair Bunde stated that HB 466 was passed out of committee without the accompanying fiscal note. MR. ROGERS stated that he could have the fiscal note delivered to the committee by the end of the day. CHAIR BUNDE thanked Mr. Rogers. He then brought HB 234 to the table.
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