Legislature(2001 - 2002)
04/09/2002 08:06 AM STA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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.