Legislature(2001 - 2002)

04/09/2002 08:06 AM STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 444 - ALASKA PUBLIC BUILDING FUND                                                                                          
                                                                                                                                
CHAIR COGHILL  announced that the  first order of  business would                                                               
be  HOUSE BILL  NO. 444,  "An Act  relating to  buildings covered                                                               
under  the Alaska  public  building fund;  and  providing for  an                                                               
effective date."                                                                                                                
                                                                                                                                
Number 0080                                                                                                                     
                                                                                                                                
REPRESENTATIVE JEANNETTE  JAMES, sponsor, presented HB  444.  She                                                               
explained  that  the  original bill  [HB  112,  21st  Legislative                                                               
Session] that  passed on the  Alaska Public Building  Fund listed                                                               
the  facilities that  were covered  for deferred  maintenance for                                                               
only a  trial period.   The  advantage of  setting up  the Alaska                                                               
public building  fund was  to put the  amount of  depreciation in                                                               
the fund that was allowed on  the rentals.  She explained how the                                                               
state was able to gather more  money through this process to have                                                               
the money  for deferred  maintenance.  She  noted that  this will                                                               
not take care of all the  maintenance issues, but that it goes in                                                               
that direction.   The building fund carries over year  to year if                                                               
the money is  not used.  The legislature can  take that money for                                                               
something else; in  fact, the first year it did  that, which very                                                               
much distressed her.                                                                                                            
                                                                                                                                
REPRESENTATIVE JAMES  indicated that there are  some very serious                                                               
needs in some of  the buildings on the list in  Juneau.  Since it                                                               
worked well on the buildings  during the trial period, this bill,                                                               
instead  of defining  what covered  buildings means,  just simply                                                               
says, "'covered buildings' means any  building owned by the state                                                               
for  which the  responsibility  for  operation, maintenance,  and                                                               
management   has    been   assigned   to   the    Department   of                                                               
Administration."                                                                                                                
                                                                                                                                
Number 0450                                                                                                                     
                                                                                                                                
CHAIR COGHILL asked  if increasing the number  of buildings would                                                               
diminish the ability to take care of the buildings.                                                                             
                                                                                                                                
REPRESENTATIVE JAMES  said no  and that wasn't  the intent.   The                                                               
intent is  the ability to  determine what  the rent ought  to be.                                                               
The only things  being paid for now in the  budget are the lights                                                               
and the specifics.   In this case, the rent on  the space will be                                                               
determined  and  then the  budget  would  cover the  rent,  which                                                               
includes  some depreciation  as well  as the  other things.   She                                                               
commented that it is a rational  way to handle the buildings.  It                                                               
provides the opportunity to charge  other agencies or groups that                                                               
use  any part  of  the buildings  the same  rent  that the  state                                                               
charges itself.  Instead of getting  a free ride, they'll have to                                                               
pay  some rent  toward the  depreciation  of the  building.   She                                                               
noted that the day after this  legislation is passed, not all the                                                               
buildings around the  state will be included;  it'll go gradually                                                               
forward as the numbers are established.                                                                                         
                                                                                                                                
Number 0590                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES said if the  agencies are paying so much per                                                               
square foot for rent, she believes  that they may choose to be in                                                               
a smaller  space, so  there will  be more  money for  programs or                                                               
whatever  they do.   She  has always  been opposed  to the  state                                                               
owning anything.   She supports  the private sector's  owning the                                                               
buildings,  and the  state should  rent them  for an  amount that                                                               
manages  to keep  them in  good condition.   That's  a hard  sell                                                               
because it's  more money, she suggested.   The state is  going to                                                               
continue to come up with extra  money to fix things, because this                                                               
isn't going  to fix  everything, but  this is  a lot  better than                                                               
what used to be.  She urged everyone to support it.                                                                             
                                                                                                                                
Number 0690                                                                                                                     
                                                                                                                                
REPRESENTATIVE  STEVENS  commented that  this  is  not really  an                                                               
issue  of garnering  rent  but rather  establishing  a fund  from                                                               
which the  buildings would be  maintained adequately.   He agreed                                                               
it is  a wise thing to  do and expressed surprise  that it hadn't                                                               
been done before.                                                                                                               
                                                                                                                                
Number 0740                                                                                                                     
                                                                                                                                
CHAIR COGHILL  asked if there were  any reports of how  it's gone                                                               
on any of the specific designated buildings.                                                                                    
                                                                                                                                
REPRESENTATIVE   JAMES   answered   that   the   Department   [of                                                               
Administration] has indicated things are  working well.  She said                                                               
she has visited some of the  buildings on the list and noted they                                                               
are  in  desperate  need  of more  maintenance  than  this  would                                                               
provide, but  that's because  they started out  needing a  lot of                                                               
maintenance.   There is another  piece of legislation  that would                                                               
allow bonding  to do  some of  that repair  work.   She commented                                                               
that it is an embarrassment to  her to have state workers working                                                               
in the conditions of some of the buildings.                                                                                     
                                                                                                                                
Number 0830                                                                                                                     
                                                                                                                                
REPRESENTATIVE FATE asked why this hasn't been done before.                                                                     
                                                                                                                                
REPRESENTATIVE  JAMES said  it has  been  done for  the last  two                                                               
years, and it was just lucky  to get that bill through the "other                                                               
end of  this building."   She  also explained  that she  has been                                                               
working on this issue for eight  years before that, trying to get                                                               
some  methodology to  set aside  the amount  of money  needed for                                                               
keeping things up.  It had to start  as a trial issue in order to                                                               
get it through.   In fact, the  other body took the  money out of                                                               
it  that year  and  put it  in the  budget  for another  purpose.                                                               
There are  probably lots  of reasons why  it wasn't  done before,                                                               
but that's  not important now,  she commented; it's  starting now                                                               
and needs to go forward.                                                                                                        
                                                                                                                                
REPRESENTATIVE  JAMES  explained that  in  her  very first  House                                                               
State  Affairs Standing  Committee meeting,  she had  a wonderful                                                               
plan  to manage  maintenance on  all facilities,  but the  fiscal                                                               
note was  enough to "choke a  horse."  All the  committee members                                                               
liked  the idea,  but they  couldn't deal  with the  fiscal note.                                                               
She said, "We'd be a lot further if we could've done that."                                                                     
                                                                                                                                
Number 1025                                                                                                                     
                                                                                                                                
CHRISTINE PARCE,  Director, Central  Office, Division  of General                                                               
Services, Department of Administration  (DOA), agreed that HB 112                                                               
had  been a  success and  much  to the  credit of  Representative                                                               
James.   It provided  the opportunity  to charge  rent, determine                                                               
depreciation,  garner those  funds, and  bring new  money to  the                                                               
state  to  be used  to  stop  the  further deterioration  of  the                                                               
buildings.     There  are  many   large  projects   the  deferred                                                               
maintenance list  can't address.   It  is a  good thing  that the                                                               
department  is able  to  use these  depreciation  dollars now  to                                                               
prevent further deterioration.                                                                                                  
                                                                                                                                
Number 1107                                                                                                                     
                                                                                                                                
REPRESENTATIVE STEVENS asked how the  fund works and if the funds                                                               
can be used on any of the buildings.                                                                                            
                                                                                                                                
MS. PARCE explained  that each building is regressed  to its date                                                               
of origin, and an accounting  process determines how the building                                                               
can  be depreciated.    That number  is an  expense  in the  rent                                                               
factor,  along with  utilities and  regular maintenance  expenses                                                               
such  as cleaning,  janitorial, and  that sort  of thing.   Those                                                               
monies  are  particular  to  a building,  and  the  expenses  are                                                               
tracked building  by building.   It  is all in  one pool,  so she                                                               
supposed if  there were  a desperate  need somewhere,  that money                                                               
could be used  from one building to another in  an emergency, but                                                               
that  isn't the  purpose.   The purpose  is for  the funds  to be                                                               
retained for that building.                                                                                                     
                                                                                                                                
REPRESENTATIVE  STEVENS asked  if the  money would  be enough  to                                                               
replace the building eventually.                                                                                                
                                                                                                                                
MS. PARCE  said she didn't  think that was  true.  It's  just for                                                               
basic maintenance.   The depreciation  doesn't bring in a  lot of                                                               
money.  She estimated the amount  for the nine buildings for 2002                                                               
at $1.7 million.                                                                                                                
                                                                                                                                
Number 1275                                                                                                                     
                                                                                                                                
CHAIR COGHILL  asked about  the process  for adding  buildings to                                                               
the list.                                                                                                                       
                                                                                                                                
MS.  PARCE  told  the  committee   that  on  July  1,  2001,  the                                                               
department took over the buildings on  the list of HB 112.  There                                                               
had been  a lot of  work in  anticipation of that  in calculating                                                               
costs and figuring  the rent and depreciation.   In November, the                                                               
department  entered  into  a  management  agreement  with  DOT&PF                                                               
[Department  of Transportation  & Public  Facilities] to  look at                                                               
other  buildings:   the Dimond  Courthouse, the  museum, and  the                                                               
subport building.   With the expenditures in FY 01  and the bills                                                               
DOT&PF  had  paid  on  those  buildings,  there  was  a  body  of                                                               
information.   One by  one, each building  will be  regressed and                                                               
the  true  value, replacement  value,  and  depreciation will  be                                                               
determined.  It's  not going to be in one  fell swoop, she noted.                                                               
Most of the buildings covered are  in the Southeast region.  Also                                                               
covered  are the  FROB [Fairbanks  Regional Office  Building] and                                                               
the  [Robert   B.]  Atwood  [Building]  in   Anchorage,  but  the                                                               
department won't be expanding into those areas immediately.                                                                     
                                                                                                                                
Number 1430                                                                                                                     
                                                                                                                                
REPRESENTATIVE  STEVENS   said  he   assumes  that   the  covered                                                               
buildings in the bill include most  state buildings.  He asked if                                                               
courthouses and  fish and game  buildings in  various communities                                                               
are generally covered by the DOA,  or are owned by the individual                                                               
agencies.                                                                                                                       
                                                                                                                                
MS.  PARCE answered  that some  departments  are responsible  for                                                               
facilities.  The buildings on the  list from HB 112 are under the                                                               
responsibility of  the Department of Administration.   The DOT&PF                                                               
continues   to  maintain   many   facilities,  including   office                                                               
buildings, airports,  and harbors; the Department  of Corrections                                                               
maintains prisons; and  the [Alaska Department of]  Fish and Game                                                               
and  the  Department  of  Public   Safety  have  facilities  they                                                               
maintain.   She  said she  foresees the  DOA trying  to take  the                                                               
management responsibility for office structures.                                                                                
                                                                                                                                
REPRESENTATIVE  STEVENS  wondered  if eventually  all  the  state                                                               
buildings would be under the Department of Administration.                                                                      
                                                                                                                                
MS. PARCE said she didn't know; that's a "big world."                                                                           
                                                                                                                                
REPRESENTATIVE JAMES  commented that  DOT&PF is certainly  one of                                                               
the  larger administrations,  and that  she would  be pleased  to                                                               
have  it  getting back  to  building  roads instead  of  managing                                                               
buildings.                                                                                                                      
                                                                                                                                
REPRESENTATIVE  STEVENS  said he  sees  the  wisdom in  having  a                                                               
maintenance fund, whether it is under DOA or not.                                                                               
                                                                                                                                
Number 1583                                                                                                                     
                                                                                                                                
REPRESENTATIVE JAMES  noted there  are still  horrible situations                                                               
in  buildings, even  though  it's  been worked  on  the last  ten                                                               
years.                                                                                                                          
                                                                                                                                
CHAIR COGHILL commented  that the state built a lot  in the 1980s                                                               
and didn't anticipate the maintenance and operation.                                                                            
                                                                                                                                
Number 1602                                                                                                                     
                                                                                                                                
REPRESENTATIVE   HAYES  asked   if   the   current  GO   [general                                                               
obligation]  bond would  cover deferred  maintenance or  just new                                                               
buildings.                                                                                                                      
                                                                                                                                
MS.  PARCE  explained  that  the  governor's  bill  is  for  many                                                               
deferred maintenance projects.                                                                                                  
                                                                                                                                
Number 1694                                                                                                                     
                                                                                                                                
REPRESENTATIVE WILSON  moved to  report HB  444 out  of committee                                                               
with individual recommendations and  the accompanying zero fiscal                                                               
notes.   There being no objection,  HB 444 was reported  from the                                                               
House State Affairs Standing Committee.                                                                                         

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