Legislature(1995 - 1996)
03/18/1996 03:12 PM L&C
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
HB 533 - ALASKA AEROSPACE DEVELOPMENT CORP. BOARD Number 2061 CHAIRMAN KOTT announced the committee would address HB 533, "An Act relating to the board of directors of the Alaska Aerospace Development Corporation." CLIFF STONE, Legislative Assistant to Representative Alan Austerman, sponsor of HB 533, read the following statement into the record: "The Alaska Aerospace Development Corporation (AADC) is a young organization that has energetically pursued its charge to bring a new industry and new opportunities to Alaska. Its first task was to bring talented people with significant experience in the aerospace industry to Alaska as employees and consultants. It has done that. Through their efforts, the AADC has won federal contracts, generated significant industrial interest, and brought Alaska international recognition as a potential center for a major growth industry. The probability for success is extremely high and the prospects for Alaska's economy are exceptional. "AADC's focus has been on two projects. The development of a rocket launch complex in Kodiak and the location of satellite ground stations in the Fairbanks area. AADC has also pursued educational opportunities throughout the state and global warehousing and manufacturing possibilities in Anchorage. "The present board of directors of the AADC has served the state of Alaska extremely well, in directing the purposes of the corporation. The professional, technical and scientific expertise provided by the University of Alaska members of the board, have guided the start up phase of this endeavor. "As we move into the construction phase of this operation and beyond, it is imperative that the board be restructured to include specific members of the business community. These individuals should have experience in and an understanding of economic development and marketing analysis, based on their existing or previous participation in private enterprise. "Additionally, the CS and new comparison charts that you have before you would allow two more individuals who have or currently hold positions in the commercial space industry to serve on the board." MR. STONE said as an ex officio member, Representative Austerman feels this would lend credence to the space industry and puts more expertise on the board as we move into the operational phase of this project. Number 2270 REPRESENTATIVE ROKEBERG asked if the legislative ex officio is already included in the statute. MR. STONE said he believes that is in statute, under the education section, 14.40.830, subsection (d), "In addition to the members of the board or directors described in (a) of this section, two members of the legislature shall serve as ex officio nonvoting members..." He said the Speaker of the House made a decision to appoint Representatives Austerman and Therriault. Senator Frank was appointed as the nonvoting member. Number 2355 REPRESENTATIVE SANDERS made a motion to adopt CSHB 533, work draft 9-LS1737/C. CHAIRMAN KOTT asked if there was an objection. Hearing none, the committee substitute was adopted. Number 2403 REPRESENTATIVE PORTER indicated concern regarding a board having an even amount of members. MR. STONE said the addition of the tenth member is a nonvoting member. He said Mr. Ladner with Alaska Aerospace felt that it would be a good addition to the board to have an international member so there would be connections to the Pacific Rim and beyond. He said the board would be a nine voting member board. [END OF TAPE] TAPE 96-24, SIDE A Number 037 MR. STONE noted Representative Austerman would like the committee to consider three amendments. Number 051 REPRESENTATIVE ROKEBERG moved Amendment 1, which follows: Page 2, line 1 and 2, following "(4)": Delete "the executive director of the Alaska Science and Technology Foundation;" Renumber the following subsections on page 2: Line 3; (5) becomes (4) Line 5; (6) becomes (5) Line 12; (7) becomes (6). Number 070 CHAIRMAN KOTT objected for the purpose of hearing Representative Rokeberg describe the amendment. REPRESENTATIVE ROKEBERG said the amendment would delete director of the Alaska Science and Technology Foundation (ASTF). He said he would defer to Mr. Stone. Number 106 MR. STONE said it was felt that because of HB 315, which passed last year, ASTF now has the authority to grant Alaska Aerospace up to $5 million to get the project off the ground. Although legal counsel says there is no conflict of interest with the executive director of that entity sitting on the board, Representative Austerman felt it might be in the best interest to delete the executive director of ASTF and allow some more expertise from either the business world or from the commercial space industry. REPRESENTATIVE ELTON said the ASTF executive director would be deleted and substituted with an additional person from a commercial space industry. MR. STONE explained the executive director of ASTF would be deleted, then two corporate officers would be added to the top of the list. He noted that is in the proposed Amendment 2. Number 277 CHAIRMAN KOTT withdrew his objection to Amendment 1. Number 296 REPRESENTATIVE ROKEBERG moved that Amendment 2 be adopted which follows: Page 1, line 8 and 9, following "(1)": Delete "one state resident who have recently held or who are currently holding positions in a private corporation as a president, " Insert "two state residents who have recently held or who are currently holding positions in a private corporation as a president," Renumber the following: Page 2, line 20, following "in": Delete "(a)(1), (6), and (7)" Insert "(a)(1), (5), and (6)" Page 2, lines 23 and 24, following "in": Delete "(a)(1), (6), and (7)" Insert "(a)(1), (5), and (6)" CHAIRMAN KOTT said hearing no further objection to Amendment 1, it has been adopted. He said there has been a motion to adopt Amendment 2, and asked if there was objection. REPRESENTATIVE ELTON objected for the purpose of a question. He said this means we now would have two state residents who probably won't have any expertise at all in the field. He asked for an explanation. He referred to a University of Alaska facility member that is involved in research and asked why that wouldn't be just as valuable a second corporate officer. MR. STONE said in his mind, it certainly is. The person who sits on the existing board has been a valuable asset to the Aerospace Board. When his rotation came up, it was felt that going into the construction and then the eventual operational phase of the launch facility and the satellite down link, people with the business sense - marketing analysis, economic development expertise, could better guide us to bring in the customers to further the mission of the corporation. Number 408 REPRESENTATIVE ELTON said he would lift his objection with the observation that 50 percent of the people that direct private corporations are in the lower half of their field. He noted he is not sure that he is totally comfortable with the notion that one is better than the other. REPRESENTATIVE ROKEBERG asked if perhaps the addition of the word "chairman" or "president" may be appropriate. MR. STONE said it goes on to say, "private corporation as president, vice-president, corporate officer, financial officer..." It is broad and lists four or five individuals. He said to address Representative Elton's concerns, the thinking was that at least people in those positions should have a good working knowledge of what it takes to run a corporation. Number 511 REPRESENTATIVE ELTON reiterated his intent to withdraw his objection. CHAIRMAN KOTT said there being no further objection, Amendment 2 was adopted. Number 552 REPRESENTATIVE ROKEBERG moved Amendment 3, which follows: Page 2, following line 25: Insert "Sec. 4. AS 14.40.831 is amended to read:" Chair and vice-chair. [THE PRESIDENT OF THE UNIVERSITY OF ALASKA OR THE DESIGNEE OF THE PRESIDENT SHALL BE THE CHAIR OF THE BOARD OF DIRECTORS OF THE CORPORATION. THE COMMISSIONER OF COMMERCE AND ECONOMIC DEVELOPMENT OR THE DESIGNEE OF THE COMMISSIONER SHALL BE VICE-CHAIR.] The board of directors of the corporation shall select a chair and vice-chair from among all voting members of the board of directors of the corporation. Renumber the following section on Page 2: Change "Sec. 4. TRANSITIONAL PROVISION. to Sec. 5. TRANSITIONAL PROVISION." CHAIRMAN KOTT asked if there was an objection to the adoption of Amendment 3. REPRESENTATIVE ELTON said, "I hate to object because it sounds like that's what I really am." He referred to Amendment 3 and said he doesn't understand the "Chair and vice-chair." Representative Elton said he doesn't see how the language would fit. Number 643 MR. STONE said Section 4 is almost the statute in total. He noted he should have provided a copy of the statute to the committee members. The president of the University of Alaska or the designee of the president shall be the chair of the board of directors of the corporation. The commissioner of Commerce and Economic Development or the designee of the commissioner shall be vice-chair of the board of directors of the corporation. Mr. Stone indicated that there is one more sentence that he can't bring to mind. He said the feeling was if you lost president Jerome Komisar to one event or anther, somebody else coming in could be from out-of-state or could be an in-state person. Representative Austerman's feeling was that in discussions with Mr. Ladner, the board of directors of the corporation could then, amongst themselves, pick the best qualified individual. Number 711 REPRESENTATIVE ELTON withdrew his objection to Amendment 3. CHAIRMAN KOTT said hearing no further objection, Amendment 3 has been adopted. Number 750 JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic Development, said the Administration generally and basically supports the concept behind the bill. He stated the department generally concurs with the approach taken and the amendments that were just adopted. He noted they were amendments outlined in his proposed testimony. Mr. Bush said the board and the department foresaw they would have the commissioner of Commerce and Economic Development, the president of the university or his designee. The department then would recommend that there be seven public members appointed. Of those seven members, the department would recommend that at least three would have space expertise. The language in the committee substitute is fine except he would recommend one change, and that is the removal of the word, "commercial" in the phrase "commercial space industry." He said it concerns them only because there may be people with expertise in the space industry but not necessarily in the commercial space industry who may be qualified to be on the board. Mr. Bush said they would recommend it be changed to the number of at least three. MR. BUSH said another change would be the removal of the director of the Geophysical Institute of the University of Alaska, and make that another public appointee as well. He said the board would be seven public appointees, at least three of which would have space expertise and two of which would have expertise on financial matters. Mr. Bush said that would leave two positions that are not specifically designated at this point in time. The reason is the Governor has indicated he would like to appoint someone from the local community that is most affected by the project so that there is local interest. Number 987 PAT LADNER, Executive Director, Alaska Aerospace Development Corporation, testified via teleconference from Anchorage. He said his board should be congratulated for the fine work it has done. Mr. Ladner said the launch site was originally supposed to be at Poker Flat, but due to flight safety considerations, they had to do an evaluation and find another site. Originally, the board had a large contingency from the university and rightfully so. He said they are now moving into the next phase and he thinks they now need more corporate input. Mr. Ladner said his chairman believes that there are two options. You can leave the board the way it is because of all the things that are going on right now. You could ask the board to come up with a recommended change structure or you can change the board. MR. LADNER said if it is the determination of the legislature to change the board, then the board should be changed and have a quantum leap upgrade from the outstanding people that currently serve. To do that, a good portion of the people need to have commercial space experience. He said he thinks the commercial space area is what they need as they are doing commercial ground stations in Fairbanks. They are looking at a vast majority of the launches and Kodiak is (indisc.) commercial space and not military. Mr. Ladner said by bringing the people from the commercial space industry on to the board, they would bring a lot of expertise and recognizable credibility to what they are doing. Also, some of the people they were working with to create partnerships and possibly equity financial investments, you'd want to have a position on the board for those people. REPRESENTATIVE ROKEBERG said Mr. Ladner had indicated the "commercial" space industry and said there had been concerns about the "commercial" space industry. He said the existing statute has the words, "experience understanding the aerospace or commercial space industry." He asked if there are enough commercial space industry companies in operation that they could draw from. Representative Rokeberg asked if there isn't also the potentiality of some competitive advantages or disadvantages if these people were on the board. Number 1197 MR. LADNER said it could be that way but there are a lot of real notable aerospace or commercial space people. He said you would have people like Tom Stafford, who was on Apollo 14 and 15, and is very well respected, but is not associated with any one company. He is recognized throughout the world and would bring extreme credibility to any organization he is associated with. He said he thinks the option should be made. Mr. Ladner said if somebody came in and said, "Hey, I'll put in $15 million but I want a seat on the board," the right answer would be, "You have a seat on the board." REPRESENTATIVE ROKEBERG asked if it is his intention to try to use the board seats as marketing tools. MR. LADNER said absolutely not. He pointed out there are currently people on the board who are not connected with any major space industry but they bring a lot to the board. Mr. Ladner said they need more of those types of people on the board, along with the corporate people, the financial officers, and chief executive officers. REPRESENTATIVE ROKEBERG asked Mr. Ladner if he has seen the committee substitute. MR. LADNER indicated he didn't have the committee substitute or the amendments. REPRESENTATIVE ROKEBERG said rather than delete "commercial space industry" it should read "aerospace or commercial space industry." MR. LADNER indicated that would be fine with him. Mr. Ladner explained on February 29, they held their final design review for the Kodiak launch complex in Washington, D.C. He said over 105 people attended from the aerospace industry, and government people from the Air Force and NASA. Mr. Ladner noted there was a midway point design review September, a year ago. At the most recent design review Senator Stevens gave the welcoming and opening remarks, followed by Senator Murkowski. Representative Young's chief of staff provided some comments. The Governor provided an excellent VHS video that welcomed everyone to the meeting and expressed his support and willingness to work with the industry. MR. LADNER referred to the satellite ground stations in Fairbanks and said one company has purchased or leased land on Chena Hot Springs road called "Earth watch" and they should be starting their ground station shortly. Space Imaging International is in the process of finalizing their lease agreement on the Richardson Highway. Mr. Ladner said they are also working with Orvil (Sp.?) Science - Orv Image, for another ground station in the Fairbanks area. The Air Force has also identified a place in Fairbanks. He referred to the cottage industry possibilities and said they are really good. Space Imaging could employ anywhere from 10 to 30 people depending on what type of operation they establish. MR. LADNER said a lot of this is the remote sensing which they would have access to within the state to satisfy a lot of our natural resources mapping and planning for governmental agencies. MR. LADNER referred to the Kodiak launch complex and said they are putting together the construction request for proposals package. They are also finishing up the environmental process. Hopefully, construction will start before the end of the construction season. Number 1515 There being no further questions or testimony, CHAIRMAN KOTT closed public testimony on HB 533. REPRESENTATIVE ROKEBERG moved Amendment 4. He explained the amendment would be on page 2, line 5, add the words "aerospace or". It would then read, "four members who have held or currently hold positions in the aerospace or commercial space industry..." CHAIRMAN KOTT asked if there was an objection to the amendment. Hearing none, Amendment 4 was adopted. Number 1559 REPRESENTATIVE ROKEBERG made a motion to move CSHB 533(L&C), as amended, Version C, with individual recommendations and a zero fiscal note, out of committee. REPRESENTATIVE ELTON objected. He asked which committee the bill would go to next. CHAIRMAN KOTT indicated Labor and Commerce is the last committee of referral. Number 1593 REPRESENTATIVE ELTON said the committee dealt with a bill earlier which reduces state costs by eliminating state positions. Now there is a bill before the committee where they could also reduce costs. With the adoption of Amendment 4, on page 2, line 12, we provide for one nonvoting member who has recognized prominence and influence within the international aerospace industry. He said he doesn't feel strongly about this because he thinks that sometimes cost is initially (indisc.). Now that people can be added from the noncommercial part of the aerospace industry, why not just add four people, provided that one is a person who has recognized prominence and influence within the international aerospace industry. That way nine people would be brought to the board meetings rather than ten and that person, with that stated area of expertise, would be allowed to vote. He said the person could be someone we're bringing in from Great Britain, Germany or Seattle. We don't know who or where, but why fly somebody from some place down south for these meetings when they don't get a chance to vote. CHAIRMAN KOTT asked Representative Elton if he still maintains his objection. REPRESENTATIVE ELTON said he will maintain his objection. He indicated he will think about this and maybe bring an amendment to the floor. CHAIRMAN KOTT asked Representative Rokeberg to withdraw his motion. He then asked Representative Elton to think about it over the next two days and bring something back to the committee at the next meeting. REPRESENTATIVE ELTON said he would draft an amendment for the committee's consideration. CHAIRMAN KOTT said the bill would be held over until the following Wednesday. REPRESENTATIVE ROKEBERG suggested that the committee might want to consider if the Kodiak public member also....