Legislature(2013 - 2014)BARNES 124
03/21/2013 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| HB23 | |
| HB131 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 23 | TELECONFERENCED | |
| + | HB 131 | TELECONFERENCED | |
| + | TELECONFERENCED |
HB 23-KNIK ARM CROSSING; AHFC
CHAIR P. WILSON announced that the first order of business would
be HOUSE BILL NO. 23, "An Act relating to bonds of the Knik Arm
Bridge and Toll Authority; relating to reserve funds of the
authority; relating to taxes and assessments on a person that is
a party to an agreement with the authority; and establishing the
Knik Arm Crossing fund."
1:04:01 PM
REPRESENTATIVE MARK NEUMAN, Alaska State Legislature, said he
reviewed the proposed amendments to HB 23 and does not support
any of them. First, this bill has undergone extensive review by
the Department of Law (DOL) and the Department of Revenue (DOR)
since the Knik Arm Bridge and Toll Authority (KABATA) is a state
entity. He understood one concern that has been raised is
related to population estimates. In particular, the three
finalists hoping to partner with KABATA who will have invested
$10 million of private funds will conduct their own traffic
analysis. Next, this bill has a zero fiscal note and simply is
the mechanism to continue to the next phase, which is for the
final design build and construction. Finally, if the financial
aspects aren't viable, which are ones similar to the process
used any pipeline project coming before the legislature, the
bill would just continue to get us down the road. He asked the
committee to support HB 23, as is.
1:05:41 PM
TOM BRICE, Lobbyist, Alaska District Council of Laborers, stated
that the Alaska District Council of Laborers is comprised of
three unions, including the Public Employees Local 71, Laborers
Local 942, and Laborers Local 341. He said he was asked by the
business manager to express support for HB 23 and the efforts to
build the Knik Arm Crossing (KAC). He encouraged support for
the project in terms of creating an alternative route from
Anchorage to the Matanuska-Susitna valley in terms of potential
economic development. He offered that numerous members live in
the valley and work in Anchorage and the bridge project would
assist them, as well. He thanked members and encouraged their
support for HB 23.
1:07:36 PM
PAUL GROSSI, Lobbyist, Alaska State Pipe Trades UA Local 375,
stated that he represents the statewide ironworkers in Alaska.
He said that the ironworkers support this bill in terms of jobs,
but also to stimulate the economy and help develop the Knik side
of Cook Inlet. He said that the business manager lives in
Wasilla and was caught in an eight-hour traffic delay due to an
accident. This brought up the safety needs for the residents in
Anchorage and the Matanuska-Susitna valley. He urged support
for the bill since it would fund a well-needed project.
CHAIR P. WILSON, after first determining no one else wished to
testify, closed public testimony HB 23.
1:09:56 PM
REPRESENTATIVE FEIGE said he is not opposed to the idea of a
bridge, which would have certain benefits, but he has concerns
about the financing of the bridge.
1:10:20 PM
REPRESENTATIVE FEIGE moved to adopt Amendment 1, labeled 28-
LS0141\A.1, Martin, 3/20/13, which read, as follows [original
punctuation provided]:
Page 2, line 6:
Delete "a new subsection"
Insert "new subsection"
Page 2, following line 23:
Insert a new subsection to read:
"(f) The authority may not issue any bonds under
this section or enter into an agreement under
AS 19.75.111(a)(5) for design or construction of the
Knik Arm bridge until the authority or its partner has
received a loan for at least 49 percent of the cost of
the design and construction of the Knik Arm bridge
from the federal government under 23 U.S.C. 601 - 609
(Transportation Infrastructure Finance and Innovation
Act of 1998)."
1:10:29 PM
REPRESENTATIVE GATTIS objected.
1:10:41 PM
REPRESENTATIVE FEIGE moved to adopt an amendment to Amendment 1.
He pointed out a typographical error in Amendment 1. He said
the language should be changed from Insert "new subsection" to
"new subsections". There being no objection, the amendment to
Amendment 1 was adopted.
1:11:28 PM
REPRESENTATIVE FEIGE explained that the KABATA asked the state
to financially support the project through availability
payments. Future legislatures would essentially be required to
provide financial backing to repay the loans through the
Transportation Infrastructure Financing Innovative Act of 1998
(TIFIA) program and bonds that are issued minus revenue
generated by the project. The committee is being asked to make
a decision today that essentially moves the project forward with
the state's backing without knowing the level of the state's
financial backing. The financial plan presented to the
committee is based upon the assumption that half the financing
for the KAC will be part of the TIFIA program. According to
TIFIA, "The program's fundamental goal is to leverage federal
funds by attracting substantial private and other non-federal
co-investment and critical improvements to the nation's surface
transportation system." TIFIA was created because state and
local governments seeking to finance large-scale transportation
projects often have experienced difficulty in obtaining
financing at reasonable rates due to the uncertainties due
related to these revenue streams. Tolls and other project-based
revenues are difficult to predict, particularly for new
facilities. He emphasized that the legislature is responsible
for the spending made by the state. He said he does not feel
comfortable moving the project forward when the legislature has
no idea how much the state will need to repay the loans and
bonds and particularly since it would subject future members of
the legislature on whether to appropriate money for a project or
risk damaging the excellent credit rating the state enjoys
because of the prudent spending decisions our predecessors have
made.. This amendment says the project may not go forward
unless the federal funding under TIFIA is received as stated in
the financial plan submitted to the legislature for review as
justification for the possibility of future appropriations by
the state.
1:13:21 PM
MICHAEL FOSTER, Chairman, Knik Arm Bridge and Toll Authority
(KABATA), Department of Transportation & Public Facilities
(DOT&PF), in response to the comment that the state would be
responsible for repayment of the loans and bonds, said that was
incorrect. He stated that the state's responsibility on the
project through the public-private partnership (P3) is the
contractual obligation to pay the availability payment, which is
the payment to the developer. He explained that the term
"availability payment" means the availability for traffic, such
that the state would make a payment to the private partner if
the bridge is available for traffic. He emphasized that the
state's responsibility is only for the contractual payment terms
the state agrees to at the end of the proposal process.
Specifically, KABATA cannot control what TIFIA will or will not
finance. The KABATA's models are based on a 49 percent and 33
percent funding mechanism; however, it is more likely that TIFIA
will fund at 33 percent [of the project's cost] so the 49
percent bar would be an unrealistic goal. Granted, the TIFIA
funding is important, but it isn't the only financing mechanism
available to finance the project. If KABATA was not successful
in obtaining the TIFIA loan, the private activity bonds (PAB)
would be an option, as well as other financing options. He
offered his belief that to tie this project to TIFIA would not
provide KABATA's private partners opportunities to consider
other types of financial models.
1:15:52 PM
CHAIR P. WILSON asked Mr. Foster to identify the additional 66
percent of project funding, if 33 percent of the project is
funded through the TIFIA loan.
MR. FOSTER responded that one option for the private partner
would be private activity bonds (PABs). Additionally, the
private partner's equity will be approximately 10 percent of the
project but other financial opportunities in the marketplace
also exist. He clarified that the private partner is
responsible for financing the project and therefore KABATA will
not direct the private partner on how to finance the project.
1:16:32 PM
REPRESENTATIVE FEIGE asked what the availability payment is
based on and for the amount of the payment.
MR. FOSTER answered that the model presented is based on the
private partner [obtaining a TIFIA loan]. He stated that he did
not have the availability curve with him today; however, it has
previously been submitted to the committee, in terms of the
availability structure. Additionally, the amount of the
availability payment will not be known until the competitive
process is completed and proposals are submitted.
1:17:17 PM
REPRESENTATIVE FEIGE asked whether it is safe to say the
availability payments will depend heavily on the interest rate
of the project's financing.
MR. FOSTER answered yes; the financial model will dictate or
drive the availability payment structure.
REPRESENTATIVE NEUMAN added that the interest rate [falls within
payments] for a 30-year basis. For example, the Federal Energy
Regulatory Commission (FERC) generally considers 12 percent as a
common rate on gas pipelines and mega projects, so [the KAC
project] rates are in line with most projects financed through
the private industry. He characterized [the interest rate] as
the standard procedure used.
1:18:03 PM
REPRESENTATIVE KREISS-TOMKINS understood that Mr. Foster does
not think the 49 percent model for TIFIA financing is a
reasonable assumption. He asked how that compares to his past
statements, with respect to TIFIA financing, and how KABATA's
view on the likelihood of obtaining 49 percent TIFIA financing
has evolved over the years.
MR. FOSTER answered that he has not changed his previous
testimony. He said that KABATA has submitted a letter of
interest in [to the U.S. Department of Transportation (DOT)]
requesting 49 percent funding. He related that 29 projects are
in the queue requested by 17 different states competing for $17
billion in capacity, although the requests are currently under
capacity. After speaking to the Federal Highway Administration
(FHWA) and the U.S. Department of Transportation (DOT), KABATA
feels confident that the TIFIA projects will likely be funded at
the 33 percent level versus the 49 percent level. Even though
the KABATA has requested 49 percent funding [in its letter of
interest for the TIFIA loan], KABATA's expectation is high that
the [private partner] will obtain the TIFIA program funding, but
it will be at the 33 percent level. He remarked that if the
TIFIA funding came in at 49 percent, it would be a gift.
REPRESENTATIVE KREISS-TOMKINS asked whether KABATA has been more
confident in the past that the TIFIA funding would be offered at
49 percent.
MR. FOSTER answered that in the past, the TIFIA funding has been
set at 33 percent; however the federal Moving Ahead for Progress
in the 21st Century Act (MAP-21) program raised it to 49
percent. He offered his belief that the U.S. DOT was testing
the waters on it since the previous allocations were at 33
percent.
1:19:57 PM
REPRESENTATIVE KREISS-TOMKINS asked for clarification on the
previous allocations.
MR. FOSTER responded that the previous FHWA bill is different
than the current MAP-21 funding. The prior bill had a capacity
of approximately $1 billion, which used a 33 percent allocation.
He said under MAP-21 has a 49 percent and 33 percent option for
any Greenfield project, but it appears that most projects will
qualify at the 33 percent allocation level. He reiterated that
this is the first time the federal funding has been at the 49
percent allocation level
CHAIR P. WILSON understood that no one was able to obtain more
than 33 percent prior to this year, but this year due to MAP-21
the allocation was changed.
REPRESENTATIVE NEUMAN remarked that it is always more prudent go
on the conservative side of the financing.
1:21:05 PM
REPRESENTATIVE FEIGE said the sponsor agrees the availability
payments are partly based on interest rates. He asked what will
happen if the state defaults and refuses to make the
availability payments. He further asked for the effect on the
bridge and the state's credit rating.
MR. FOSTER answered that the infrastructure will be owned by the
state, even during construction. The finished infrastructure
will have a national highway system (NHS) designation once it is
completed. Thus the bridge will be part of NHS system. If the
state did not make the availability payments and defaulted on
the payment, it certainly would affect the credit rating of the
state, he said.
REPRESENTATIVE NEUMAN said this contract has been closely
watched by the Department of Revenue (DOR) and by the Department
of Law (DOL). He stated that these departments have frequently
reviewed the project financing to ensure that the state's
liability does not exceed its capacity.
CHAIR P. WILSON cautioned that she does not want the committee
to go too deep into financing since HB 23 has a Finance
committee referral, so she asked members to focus on policy
issues as much as possible.
1:22:51 PM
REPRESENTATIVE FEIGE acknowledged the Chair's concerns, but the
policy is essentially if the TIFIA loan is not approved, the
KABATA would likely incur higher interest rates, which will lead
to higher availability payments. He cautioned that the terms do
not have an upper limit or any control on the gate once the bill
passes. He acknowledged that obtaining the 49 percent TIFIA
loan is perhaps more remote than a 33 percent allocation level.
REPRESENTATIVE FEIGE moved to adopt Amendment 2 to Amendment 1
[text provided previously], to change "49" percent to "33"
percent. There being no objection, Amendment 2 to Amendment 1
was adopted.
CHAIR P. WILSON restated a portion of Amendment 1, as amended.
Amendment 1, as amended would read, as follows [original
punctuation provided]:
Page 2, line 6:
Delete "a new subsection"
Insert "new subsections"
Page 2, following line 23:
Insert a new subsection to read:
"(f) The authority may not issue any bonds under
this section or enter into an agreement under
AS 19.75.111(a)(5) for design or construction of the
Knik Arm bridge until the authority or its partner has
received a loan for at least 33 percent of the cost of
the design and construction of the Knik Arm bridge
from the federal government under 23 U.S.C. 601 - 609
(Transportation Infrastructure Finance and Innovation
Act of 1998).
1:24:26 PM
REPRESENTATIVE GATTIS maintained her objection. She offered her
belief that this is an unrealistic amendment because the
issuance of the TIFIA loan is under the control of the U.S.
Department of Transportation (U.S. DOT), although any amount of
TIFIA participation that can be secured will be beneficial for
this state project.
REPRESENTATIVE FEIGE said he heard Mr. Foster and others testify
that if the TIFIA loans were not approved, the likelihood of
this project moving forward was not very high. He suggested
that it is reasonable control to place on the project.
1:25:45 PM
REPRESENTATIVE NEUMAN reiterated that HB 23 has a zero fiscal
note. This [bill] allows [the project] to move forward. If the
financing package that the state wants to sign isn't appropriate
or the private partner doesn't want to sign, the project won't
go forward. He said, "It's as simple as that."
A roll call vote was taken. Representatives Feige and Kreiss-
Tomkins voted in favor of Amendment 1. Representatives
Isaacson, Gattis, Johnson, Lynn, and P. Wilson voted against it.
Therefore, Amendment 1, as amended, failed by a vote of 2-5.
1:26:38 PM
REPRESENTATIVE FEIGE moved to adopt Amendment 2, labeled [28-
LS0141\A.2, Martin, 3/21/13], which read, as follows [original
punctuation provided]:
Page 1, line 1, following "An Act":
Insert "relating to construction of a tollway
from the Knik Arm bridge to the Parks Highway;"
Page 1, following line 5:
Insert new bill sections to read:
"* Section 1. AS 19.75.011 is amended to read:
Sec. 19.75.011. Purpose. The purpose of the
authority created by this chapter is to develop,
stimulate, and advance the economic welfare of the
state and further the development of public
transportation systems in the vicinity of the Upper
Cook Inlet with construction of a bridge to span Knik
Arm and a tollway and related infrastructure from the
bridge to the Parks Highway to [AND] connect the
Municipality of Anchorage and the Matanuska-Susitna
Borough.
* Sec. 2. AS 19.75.111 is amended to read:
Sec. 19.75.111. Powers and duties of the
authority. (a) Except as otherwise explicitly made
applicable to the authority, the performance of the
authority's duties and the exercise of its powers,
including its powers to issue bonds and otherwise
incur debt, shall be governed exclusively by this
chapter. In furtherance of its purposes, the authority
may
(1) own, acquire, construct, develop,
create, reconstruct, equip, operate, maintain, extend,
and improve the Knik Arm bridge, [AND] its appurtenant
facilities, and the tollway access road;
(2) sue and be sued;
(3) adopt a seal;
(4) adopt, amend, and repeal regulations
under AS 44.62 and establish bylaws;
(5) make and execute agreements, contracts,
and all other instruments with any public or private
person, governmental unit or agency, corporation, or
other business entity lawfully conducting business in
the United States for the exercise of its powers and
functions under this chapter and for the financing,
design, construction, maintenance, improvement, or
operation of facilities, properties, or projects of
the authority, including making and executing
contracts with any person, firm, corporation,
governmental agency, or other entity for the purpose
of
(A) incurring indebtedness, obtaining
investments in the authority's projects, acquiring or
granting lump sum payments for services in advance or
in arrears, grants, and other financing; and
(B) entering into public-private
partnerships or service contracts in any form;
(6) in its own name acquire, lease, rent,
sell, or convey real and personal property;
(7) issue and refund bonds in accordance
with this chapter, in order to pay the cost of the
Knik Arm bridge, [AND] its appurtenant facilities, and
the tollway access road; the authority may also secure
payment of the bonds as provided in this chapter;
(8) incur other indebtedness, including
lines of credit and indebtedness to the Federal
Highway Administration, United States Department of
Transportation, under 23 U.S.C. 601 - 610
(Transportation Infrastructure Finance and Innovation
Act of 1998), as amended, and secure that indebtedness
as provided in this chapter;
(9) apply for and accept gifts, grants, or
loans from a federal agency or an agency or
instrumentality of the state, or from a municipality,
private organization, or other source, including
obtaining title to state, local government, or
privately owned land, directly or through a department
of the state having jurisdiction of the land;
(10) fix and collect fees, rents, tolls,
rates, or other charges for the use of the Knik Arm
bridge, [AND] appurtenant facilities, and tollway
access road, or for a service developed, operated, or
provided by the authority; notwithstanding
AS 37.10.050(a), fees, rents, tolls, rates, and other
charges fixed and collected under this paragraph may
exceed the actual operating cost of the use of the
bridge, facility, tollway access road, or service;
(11) bring civil actions, refer criminal
actions to the appropriate authority, and take other
actions or enter into agreements with law enforcement
and collection agencies to enforce the collection of
its fees, rents, tolls, rates, other charges,
penalties, and other obligations;
(12) pledge, encumber, transfer, or
otherwise obligate revenue derived by the authority
from the ownership, use, or operation of toll
facilities, including fees, rents, tolls, rates,
charges, or other revenue of the authority or money
that the legislature may appropriate, except a state
tax or license, as security for bonds or other
indebtedness or agreements of the authority;
(13) deposit or invest its funds, subject
to agreements with bondholders;
(14) procure insurance against any loss in
connection with its operation;
(15) contract for and engage the services
of consultants, experts, and financial and technical
advisors that the authority considers necessary for
the exercise of its powers and functions under this
chapter;
(16) apply for, obtain, hold, and use
permits, licenses, or approvals from appropriate
agencies of the state, the United States, a foreign
country, and any other proper agency in the same
manner as any other person;
(17) perform reconnaissance studies and
engineering, survey, and design studies with respect
to the Knik Arm bridge, [AND] its appurtenant
facilities and the tollway access road;
(18) exercise powers of eminent domain or
file a declaration of taking as necessary for the Knik
Arm bridge, [AND] appurtenant facilities, and tollway
access road under AS 09.55.240 - 09.55.460 to acquire
land or an interest in land; the authority's exercise
of powers under this paragraph may not exceed the
permissible exercise of those powers by the state;
(19) confer with municipal and other
governments, metropolitan planning organizations, and
the department, concerning the Knik Arm bridge or
tollway access road;
(20) do all acts and things necessary to
carry out the powers expressly granted or necessarily
implied in this chapter; nothing in this chapter
limits the powers of the authority that are expressly
granted or necessarily implied.
(b) The authority shall
(1) prepare an annual report of its
operations to include a balance sheet, an income
statement, a statement of changes in financial
position, a reconciliation of changes in equity
accounts, a summary of significant accounting
principles, an auditor's report, comments regarding
the year's business, and prospects for the next year;
the report shall be completed by the third day of each
regular session of the legislature, and the authority
shall notify the governor, the commissioner of the
department, the presiding officers of each house of
the legislature, and the Legislative Budget and Audit
Committee that the report is available;
(2) comply with the provisions of AS 37.07
(Executive Budget Act), except that AS 37.07 does not
apply to the activities of the authority that relate
to the authority's borrowing of money as provided in
this chapter, including the issuing of its obligations
or evidence of that borrowing and the repayment of the
debt obligation;
(3) establish a personnel management system
for hiring employees and setting employee-benefit
packages;
(4) establish procedures, rules, and rates
governing per diem and travel expenses of the
employees of the authority in substantial conformity
to statutes, procedures, rules, and rates applicable
to state employees of similar state entities;
(5) coordinate the exercise of its powers
to plan, design, construct, operate, and maintain the
Knik Arm bridge and tollway access road with the
department, and with the mayors of the Municipality of
Anchorage and the Matanuska-Susitna Borough;
(6) have the exclusive authority to
determine and fix fees, rents, tolls, rates, and other
charges, including the tolls for the use of the
bridge, [AND] appurtenant facilities, and tollway
access road and for the use of all other properties
under the control of or owned or managed by the
authority.
* Sec. 3. AS 19.75 is amended by adding a new
section to read:
Sec. 19.75.112. Conditions required to build Knik
Arm bridge. (a) The authority may not construct the
Knik Arm bridge, or enter into a public-private
partnership or service contract to construct the Knik
Arm bridge unless
(1) the authority designs, constructs, and
operates, or enters into a public-private partnership
or service contract to design, construct, and operate,
a tollway from the Knik Arm bridge to the Parks
Highway;
(2) the authority prepares a financial
report showing preliminary costs to design, construct,
and operate a tollway from the Knik Arm bridge to the
Parks Highway; and
(3) the legislature approves by law the
financial report prepared under (2) of this
subsection.
(b) The tollway access road constructed under
(a) of this section shall
(1) be operated as a limited access toll
road;
(2) allow for a speed limit at least equal
to the speed limit on the bridge; and
(3) be designed as a two-lane highway that
may be expanded to a four-lane divided highway.
(c) The authority may enter into an agreement
with the department for use of the rights-of-way
necessary for construction of the tollway under (a) of
this section.
(d) Notwithstanding another provision of this
title, the tollway constructed under (a) of this
section may not be part of the state highway system."
Page 1, line 6:
Delete "Section 1"
Insert "Sec. 4"
Renumber the following bill sections accordingly.
Page 2, following line 23:
Insert new bill sections to read:
"* Sec. 7. AS 19.75.221(a) is amended to read:
(a) In the discretion of the authority, an issue
of bonds may be secured by a trust indenture or trust
agreement between the authority and a corporate
trustee, by a secured loan agreement or other
instrument, or by a resolution giving powers to a
corporate trustee, by means of which the authority may
(1) make agreements with the trustee or the
holders of the bonds that the authority determines to
be necessary or desirable, including agreements as to
the
(A) application, investment, deposit, use,
and disposition of
(i) the proceeds of bonds of the authority;
(ii) money or other property of the
authority; or
(iii) money or other property in which the
authority has an interest;
(B) fixing and collecting of fees, rents,
tolls, rates, or other charges;
(C) assignment by the authority of its
rights in any contract with respect to the Knik Arm
bridge or tollway access road or in a mortgage or
other security interest created with respect to the
Knik Arm bridge or tollway access road to a trustee
for the benefit of bondholders;
(D) terms and conditions under which the
authority may issue additional bonds;
(E) vesting in a trustee of rights, powers,
duties, money, or property in trust for the benefit of
bondholders, including the right to enforce payment,
performance, and all other rights of the authority or
of the bondholders, under a lease, power of contract,
contract of sale, mortgage, security agreement, or
trust by injunction or other proceeding or by taking
possession by agent or otherwise, and operating the
Knik Arm bridge and tollway access road and collecting
rents or other consideration and applying the same in
accordance with the trust agreement;
(2) pledge, mortgage, or assign money,
leases, agreements, property, or other rights or
assets of the authority either presently in hand or to
be received in the future, or both; and
(3) provide for any other matters that
affect the security or protection of the bonds.
* Sec. 8. AS 19.75.221(b) is amended to read:
(b) Notwithstanding any other provisions of this
chapter, the trust agreement must contain an agreement
by the authority that the authority will at all times
maintain fees, rents, tolls, rates, or other charges
sufficient to
(1) pay the costs of operation and
maintenance of the Knik Arm bridge, [AND] its
appurtenant facilities, and the tollway access road
and the principal of and interest on bonds issued
under the trust agreement as the bonds severally
become due and payable;
(2) provide for debt service coverage as
considered necessary by the authority for the
marketing of its bonds; and
(3) provide for renewals, replacements, and
improvements of the Knik Arm bridge and tollway access
road, and to maintain reserves required by the terms
of the trust agreement."
Renumber the following bill sections accordingly.
Page 4, following line 13:
Insert a new bill section to read:
"* Sec. 11. AS 19.75.251 is amended to read:
Sec. 19.75.251. Pledge of the state. The state
pledges to and agrees with the holders of bonds issued
under this chapter and with a federal agency that
loans or contributes money with [IN] respect to the
Knik Arm bridge and tollway access road that the state
will not limit or alter the rights and powers vested
in the authority under this chapter to fulfill the
terms of a contract made by the authority with the
holders or federal agency or in any way impair the
rights and remedies of the holders until the bonds,
together with the interest on them, with interest on
unpaid installments of interest, and all costs and
expenses in connection with an action or proceeding by
or on behalf of the holders, are fully met and
discharged. The authority may include this pledge and
agreement of the state, insofar as it refers to
holders of bonds of the authority, in a contract with
the holders and, insofar as it relates to a federal
agency, in a contract with the federal agency."
Renumber the following bill sections accordingly.
Page 5, following line 8:
Insert a new section to read:
"* Sec. 13. AS 19.75.291 is amended to read:
Sec. 19.75.291. State appropriations for Knik Arm
bridge, [AND] appurtenant facilities, and tollway not
affected. This chapter does not prevent the state from
making appropriations for or in aid of the
acquisition, design, construction, or operation of the
Knik Arm bridge, [AND] its appurtenant facilities, and
the tollway access road."
Renumber the following bill section accordingly.
Page 5, line 25:
Delete "Crossing"
Insert "bridge and tollway access road"
REPRESENTATIVE GATTIS objected for the purpose of discussion.
1:27:56 PM
REPRESENTATIVE FEIGE stated that Amendment 2 would require
KABATA to consider financing the road to connect the bridge to
the Parks Highway. He said that the KABATA project has been
touted as being important to Interior Alaska; however, freight
can only move north if a roadway exists to the Parks Highway.
Thus, building the KAC means a new road must also be built in
order to use the bridge. He suggested this new roadway should
be supported with a toll, similar to the bridge. Further,
Amendment 2 would also require KABATA to use its toll revenue to
help finance the road, which must be built at the same time as
the bridge. He understood that the state is somewhat committed
to build the road using the State Transportation Improvement
Plan (STIP) funds; however, in order to make the bridge generate
as much revenue as possible to reduce the cost to the state,
means trucks and passenger vehicles must travel to the Interior
from Anchorage and use the bridge on their return trips.
Therefore, it requires the additional road be in place upon
completion of the bridge. If the state pays for this road using
STIP funds it will reduce the availability of those funds for
other transportation projects throughout the state. The
priority of this road is much lower if the bridge is not
constructed, he said.
1:28:25 PM
CHAIR P. WILSON restated that Amendment 1 failed with a vote of
2-5.
1:28:41 PM
REPRESENTATIVE NEUMAN said he does not support Amendment 2. He
explained that the Matanuska-Susitna Borough had originally
proposed a road from Big Lake to Burma Road, which was estimated
at $57 million some time ago so he surmised the project would
now cost $80 million. He said he had secured $250,000 for the
Big Lake community to consider a plan and, in fact, the
community is currently finalizing that plan. The bridge would
traverse Burma Road - currently a dirt road - and either cut
left to create a new access road north to Milepost 73 or it
would use the 800-foot utility corridor to the port, which is
anticipated for use for a proposed gas pipeline. Thus the road
could follow that pathway. He offered his belief that this
project will save lives, since the Glenn Highway is currently at
capacity and it will cost $4.5 billion to upgrade it. Further,
the 33 miles to the port to Mile 73 is all government land
except for the last half-mile. Absent the KAC, the state would
need to spend $55 million every five years for rut
rehabilitation. Basically, the proposed traffic will be heavy
traffic carrying freight that will not need to travel on the
Glenn Highway. He recalled Jeff Ottesen, DOT&PF, characterized
the KAC as one of the most cost-reducing projects the state
could have. Further any excess funds - especially after seven
years - could be used to fund other transportation projects. He
cautioned that the state is currently facing a $1 billion
shortfall so expanding the opportunities to diversify income and
revenue streams is important. He predicted this toll bridge
will bring in billions of dollars of excess revenue to the state
within the first 35 years. In doing so, the state could fund
other STIP programs. Again, a lot of the land necessary for the
project is virgin government-owned land, which eliminates land
acquisition, and it would takes traffic off the Knik-Goose Bay
(KGB) Road, which is the second most dangerous highway in the
state. Additionally, due to Wasilla's road congestion, it
frequently can currently take an hour to travel the 12 miles
from Wasilla to the Big Lake cutoff. However, all of this
congestion would be eliminated since the trucks would [use the
KAC]. In conclusion, he said the KAC will save money and put
money back into the general fund revenue.
1:32:48 PM
REPRESENTATIVE GATTIS highlighted that just yesterday another
fatal car accident occurred in the Wasilla area. She emphasized
the importance of roads in the Matanuska-Susitna area, which is
the fastest growing area in Alaska. She said, "Those of us who
live it and drive it - we know that - and for those who don't go
there daily, may I remind you that this infrastructure is way
behind schedule."
REPRESENTATIVE JOHNSON expressed his concern about making the
road a toll road, since it would make it a limited access
roadway, which would close off the area to development.
Further, it may take an additional road to access subdivisions.
He remarked he is not fond of limited access roads so he
couldn't support turning the road into a "one way on, one way
off" corridor. Finally, he concluded that a lot of opportunity
exists between Big Lake and the proposed KAC.
1:34:15 PM
REPRESENTATIVE GATTIS maintained her objection.
A roll call vote was taken. Representatives Feige and Kreiss-
Tomkins voted in favor of Amendment 2. Representatives
Isaacson, Gattis, Johnson, Lynn, and P. Wilson voted against it.
Therefore, Amendment 2 failed by a vote of 2-5.
1:35:00 PM
REPRESENTATIVE FEIGE moved to adopt Amendment 3, labeled 28-
LS0141\A.3, Martin, 3/20/13, which read, as follows [original
punctuation provided]:
Page 1, line 1:
Following "Act"
Insert "relating to membership on the board of
directors of the Knik Arm Bridge and Toll Authority;"
Page 1, following line 5:
Insert a new bill section to read:
"* Section 1. AS 19.75.031(a) is amended to read:
(a) The authority shall be governed by a board
of directors consisting of the following:
(1) the commissioner of transportation and
public facilities or the commissioner's designee;
(2) the commissioner of revenue or the
commissioner's designee;
(3) one public member, appointed by the
governor, who is a state resident and United States
citizen, and who is not a resident of and does not
have a business interest in the Municipality of
Anchorage or the Matanuska-Susitna Borough;
(4) one public member, appointed by the
governor, who is a resident of the Municipality of
Anchorage and who has knowledge of local
transportation issues;
(5) one public member, appointed by the
governor, who is a resident of the Matanuska-Susitna
Borough and who has knowledge of local transportation
issues;
(6) one nonvoting member who is a member of
the state house of representatives appointed by the
speaker of the house and who serves at the pleasure of
the speaker of the house; the speaker of the house
shall consider the appointment of a legislator elected
from a house district that lies entirely or partially
within the Municipality of Anchorage or the Matanuska-
Susitna Borough for appointment under this paragraph;
and
(7) one nonvoting member who is a member of
the state senate appointed by the president of the
senate and who serves at the pleasure of the president
of the senate; the president of the senate shall
consider the appointment of a senator elected from a
senate district that lies entirely or partially within
the Municipality of Anchorage or the Matanuska-Susitna
Borough for appointment under this paragraph."
Page 1, line 6:
Delete "Section 1"
Insert "Sec. 2"
Renumber the following bill sections accordingly.
Page 5, following line 27:
Insert a new bill section to read:
"* Sec. 9. The uncodified law of the State of
Alaska is amended by adding a new section to read:
TRANSITION. (a) The amendment to AS 19.75.031(a)
in sec. 1 of this Act applies to appointments made to
the board of directors of the Knik Arm Bridge and Toll
Authority when the member currently occupying the seat
under AS 19.75.031(a)(3) leaves the board or at the
end of the member's term, whichever comes first.
(b) A member appointed under AS 19.75.031(a)(3)
may not be reappointed unless the member meets the
requirements of AS 19.75.031(a)(3), as amended by sec
1 of this Act."
REPRESENTATIVE GATTIS objected for the purpose of discussion.
1:35:25 PM
REPRESENTATIVE FEIGE stated that this project has been touted by
the bill's sponsor and KABATA's staff as a project of statewide
significance, yet all of the board members are from Southcentral
Alaska. Amendment 3 would change the composition of the board
to restrict one public member of the board [from residence or
business interest] in the Municipality of Anchorage (MOA) or the
Matanuska-Susitna Borough (MSB). The change would not take
place until the current unrestricted public member's term
expires, he said.
1:35:46 PM
REPRESENTATIVE GATTIS failed to see the value of the Amendment 3
and what it would bring to the bill or the project.
REPRESENTATIVE FEIGE said if this is a statewide project, then
the state's interests needs to be represented, not just the
interests of the MOA or the MSB. He offered his belief that it
seems reasonable to have at least one KABATA board member from
outside this area.
REPRESENTATIVE NEUMAN said Senator John Coghill from Fairbanks
currently serves on KABATA's board. He suggested that Amendment
3 makes changes that would be unprecedented. Further, the
governor's appointees serve at the will of the governor and can
be replaced. In fact, having people from the community serve in
that capacity is important since local residents can bring the
concerns of the community to the board and the local public is
most affected by the project. Although the KAC is a statewide
project, Senator Coghill serves on the board [and brings a
perspective outside the MOA and the MSB to the board].
REPRESENTATIVE LYNN agreed the people close to the bridge would
be the most familiar with the bridge and can make the best
decisions, plus [Senator Coghill] brings a statewide perspective
[to the KABATA board].
1:37:49 PM
REPRESENTATIVE FEIGE asked the sponsor which seat Senator
Coghill holds, since he believes he serves as a non-voting
member.
REPRESENTATIVE NEUMAN agreed Senator Coghill is a non-voting
member just as he is also a non-voting member; however when the
discussions come forth, he and Senator Coghill are able to
participate and bring value to the committee. He was unsure
anyone who lives outside the communities has expressed any
interest in serving on the KABATA board, although the governor
could certainly appoint such a person.
1:38:40 PM
REPRESENTATIVE JOHNSON said he does not a problem with Amendment
3; however, he expressed concern that it might be difficult to
find someone who does not have some type of business interest in
the MOA or the MSB. He did not wish to imply that the MOA or
the MSB is the center of universe, but the area represents 60-70
percent of the population in the state. He questioned whether
someone could be selected.
REPRESENTATIVE GATTIS maintained her objection.
1:40:01 PM
A roll call vote was taken. Representatives Feige, Kreiss-
Tomkins, and P. Wilson voted in favor of Amendment 3.
Representatives Isaacson, Gattis, Johnson, and Lynn, voted
against it. Therefore, Amendment 3 failed by a vote of 3-4.
1:40:46 PM
REPRESENTATIVE FEIGE moved to adopt Amendment 4, [labeled 28-
LS0141\A.4, Martin, 3/20/13], which read, as follows [original
punctuation provided]:
Page 2, line 17:
Following "that":
Insert
"(1) the bonds are rated in one of the two
highest rating categories of at least one nationally
recognized rating agency without taking into
consideration any further appropriations of state
money to the authority;
(2)"
Delete "other revenue available to"
Insert "funds held in the name of"
Page 2, line 21:
Delete "and that"
Insert "; and
(3)"
REPRESENTATIVE GATTIS objected.
1:40:58 PM
REPRESENTATIVE FEIGE said the state enjoys an AAA bond rating
and there is no logical reason for revenue from a project of the
state, a subdivision of the state, or an entity financially
supported by the state to pay anything but the lowest interest
rate. He said the rates for bonds for the KABATA project will
be based on the financial position of KABATA and on the analysis
of the data KABATA has presented. In essence, this represents
the ability that investors believe KABATA will have to repay the
debt.
REPRESENTATIVE FEIGE explained that Amendment 4 would change the
criteria the state bond committee would use to require KABATA or
its partner to secure bonds comparable to those that the state
can secure independently. Amendment 4 would also change the
requirement that the state bond committee uses to approve the
bond offering to include the bridge and private partner's
revenue as stated in the bill. This changes the requirement,
"other revenue available to the authority" which should only be
bridge revenue, and instead insert "funds held in the name of"
which means to also consider funds held by the authority. He
explained that this would provide the bond committee a process
to expect KABATA's funds, presumably appropriated by the state,
along with any bridge revenue that will be sufficient to repay
the debt without further appropriation by the state. This would
place KABATA in a position to have to justify and obtain
sufficient funds from the state or other sources in advance,
instead of putting future legislators in the position which
would necessitate funding moral obligations created by passage
of HB 23 in its current form.
REPRESENTATIVE NEUMAN responded. First, this project financing
does not go to the state bonding committee. Next, the state is
not obtaining the financials since the private partner has the
responsibility for funding the project. Since the state will
not finance bonds, Amendment 4 does not make any sense, he said.
He referred to page 2, lines 22-23 of HB 23, which relates to
payment and principal. He read, "... issuance of the bonds by
the authority would not be expected adversely to affect the
ability of the state or its political subdivisions to market
bonds."
REPRESENTATIVE FEIGE replied he has a different viewpoint.
REPRESENTATIVE GATTIS maintained her objection. She offered her
belief that Amendment 4 would prevent KABATA from using the $600
allocation in private activity bonds (PAB) from the U.S. DOT for
the project. She further suggested this would run counter to
KABATA's mission to achieve the best value for the state.
1:44:26 PM
A roll call vote was taken. Representatives Feige and Kreiss-
Tomkins voted in favor of Amendment 4. Representatives
Isaacson, Gattis, Johnson, Lynn, and P. Wilson voted against it.
Therefore, Amendment 4 failed by a vote of 2-5.
1:45:03 PM
REPRESENTATIVE FEIGE moved to adopt Amendment 5, [labeled 28-
LS0141\A.5, Martin, 3/20/13], which read, as follows [original
punctuation provided]:
Page 1, lines 1 - 2:
Delete "relating to reserve funds of the
authority;"
Page 2, line 24, through page 4, line 13:
Delete all material.
Renumber the following bill sections accordingly.
REPRESENTATIVE GATTIS objected.
1:45:19 PM
REPRESENTATIVE FEIGE read AS 19.75.211 (c), which states in
part:
(c) For the purpose of securing one or more
issues of its bonds, the authority may establish one
or more special funds, called "capital reserve funds,"
and shall pay into those capital reserve funds the
proceeds of the sale of its bonds and any other money
that is available to the authority for the purposes of
those funds.
REPRESENTATIVE FEIGE said that existing statute appears to
provide an avenue for KABATA to secure bonds through its revenue
and other funding sources. Therefore, no reason exists for
KABATA to need additional reserve fund authority for operating
expenses as indicated on page 3, line 14 of HB 23. He stated
that KABATA, in its joint presentation to the joint House and
Senate Transportation Committees indicated financing operations
and maintenance are the private partner's responsibility.
Instead, the private partner should finance operating costs
against projected payments to the partner. In fact, KABATA
needs operating funds and the state treasury will make funding
available through availability payments to the private partner
for debt service. The legislature should review KABATA's
spending just as it does for any other department of state
government, instead of receiving a request for an availability
payment.
1:46:49 PM
REPRESENTATIVE NEUMAN indicated that the reserve fund was
established several years ago during discussions about the
traffic build up on the north side of the bridge or the Point
MacKenzie side. He recalled yesterday a bill passed to allow
AHFC to finance stores with housing above them. In fact,
housing in Anchorage is not available and is very expensive.
Thus, the opportunity to build out the area will increase
traffic revenue. He estimated that by year seven [the tolls
will be used] to cover the availability payments. He referred
to page 3, lines [14-16], to the administration costs and
asserted that the state normally covers administrative costs for
projects. Finally, the reserve fund would be paid back since it
is not a grant, but is a loan. He concluded that he does not
support Amendment 5.
MR. FOSTER commented that the reserve fund is being created
initially to handle the shortfall in the initial years of the
project, which is the primary purpose of the reserve fund. He
pointed out that the governor put $10 million in his FY 14
budget, with an additional $35 million for the next four years
to fund the reserve fund to $150 million, which is based on
KABATA's estimated funds needed to meet the availability
payment. After that point, the reserve fund provides the
mechanism by which revenue comes into the public corporation of
KABATA. The reserve fund is the mechanism which will be used to
transfer revenue for Title 23 services, which will consist of
STIP eligible projects statewide. He understood the
transportation fund is not yet created; however, ideally a
transportation fund would be established to receive the funding,
which could be used statewide. He characterized this as an
opportunity to forward fund projects and the money flowing into
the reserve would eventually end up funding STIP projects.
1:50:12 PM
REPRESENTATIVE JOHNSON asked if Amendment 5 were to pass, where
the governor's requested funds [in the proposed FY 14 Capital
Budget] would be directed or whether the funding would be lost.
REPRESENTATIVE NEUMAN answered that any unspent funds are
typically swept. He pointed out that the fiscal note for HB 23
is still a zero fiscal note. In short, once the project reaches
final design and construction, if the private partner does not
agree or the state does not agree, the project won't happen and
the funds would be reappropriated or swept.
1:51:10 PM
REPRESENTATIVE FEIGE referred to the current statute related to
a capital reserve fund. He asked whether the bill would create
a separate reserve fund or if it will be the same capital
reserve fund.
MR. FOSTER answered that it is the same fund. He pointed out
the fund will have two components since under the P3 process,
part of the fund will be held in a trust to cover the
availability payments. Thus, a portion of it would be
unsubordinated to the availability payment.
REPRESENTATIVE NEUMAN offered his belief that this represents a
capital reserve fund in case capital funds will be deposited to
the project fund.
1:52:18 PM
REPRESENTATIVE FEIGE said he understood. He asked whether it
would make more sense on page 2, line 29 of HB 23, to state
deposits made to a capital reserve fund or if it is the
sponsor's intent to establish a second fund.
MR. FOSTER answered it would be KABATA's intent to establish a
reserve fund, which is not yet created. He offered to check
with DOR to assess whether the department has any objection to
changing the name or keeping it as a reserve fund. The funds
being appropriated through the governor's capital budget would
be directed to the DOR to be held in trust for the reserve fund.
The committee took an at-ease from 1:53 p.m. to 1:54 p.m.
1:54:17 PM
REPRESENTATIVE FEIGE referred to AS 19.75.221 (c), which read,
as follows:
(c) For the purpose of securing one or more
issues of its bonds, the authority may establish one
or more special funds, called "capital reserve funds,"
and shall pay into those capital reserve funds the
proceeds of the sale of its bonds and any other money
that is available to the authority for the purposes of
those funds.
REPRESENTATIVE FEIGE was unsure why an additional fund would be
necessary.
REPRESENTATIVE NEUMAN referred to the title, which is related to
reserve funds of the authority. He said the intent is to have a
reserve fund, but his assumption is that one would not want to
mix funding from tolls and other sources. He assumed it would
be a mechanism for accounting.
1:55:47 PM
REPRESENTATIVE FEIGE was unsure of the necessity to establish so
many funds. He asked to withdraw Amendment 5. He then said he
did not intend to offer amendments in members' packets referred
to as A.6 and A.7.
1:56:43 PM
REPRESENTATIVE FEIGE moved to adopt Amendment [6], [labeled 28-
LS0141\A.8, Martin, 3/20/13], referred to as A.8, which read, as
follows [original punctuation provided]:
Page 1, line 2, following "Authority;":
Insert "requiring legislative approval of a
financial plan before the authority may issue bonds or
enter into a public-private agreement for construction
of the Knik Arm bridge or appurtenant facilities;"
Page 1, following line 5:
Insert new bill sections to read:
"* Section 1. AS 19.75.111(a) is amended to read:
(a) Except as otherwise explicitly made
applicable to the authority, the performance of the
authority's duties and the exercise of its powers,
including its powers to issue bonds and otherwise
incur debt, shall be governed exclusively by this
chapter. In furtherance of its purposes, the authority
may
(1) own, acquire, construct, develop,
create, reconstruct, equip, operate, maintain, extend,
and improve the Knik Arm bridge and its appurtenant
facilities;
(2) sue and be sued;
(3) adopt a seal;
(4) adopt, amend, and repeal regulations
under AS 44.62 and establish bylaws;
(5) make and execute agreements, contracts,
and all other instruments with any public or private
person, governmental unit or agency, corporation, or
other business entity lawfully conducting business in
the United States for the exercise of its powers and
functions under this chapter and for the financing,
design, construction, maintenance, improvement, or
operation of facilities, properties, or projects of
the authority, including making and executing
contracts with any person, firm, corporation,
governmental agency, or other entity for the purpose
of
(A) incurring indebtedness, obtaining
investments in the authority's projects, acquiring or
granting lump sum payments for services in advance or
in arrears, grants, and other financing; and
(B) entering into public-private
partnerships or service contracts in any form; the
authority may not enter into a partnership or contract
for construction of the Knik Arm bridge unless the
authority has obtained the approval of the legislature
of a financial plan as provided in (c) of this
section;
(6) in its own name acquire, lease, rent,
sell, or convey real and personal property;
(7) issue and refund bonds in accordance
with this chapter, in order to pay the cost of the
Knik Arm bridge and its appurtenant facilities; the
authority may also secure payment of the bonds as
provided in this chapter;
(8) incur other indebtedness, including
lines of credit and indebtedness to the Federal
Highway Administration, United States Department of
Transportation, under 23 U.S.C. 601 - 610
(Transportation Infrastructure Finance and Innovation
Act of 1998), as amended, and secure that indebtedness
as provided in this chapter;
(9) apply for and accept gifts, grants, or
loans from a federal agency or an agency or
instrumentality of the state, or from a municipality,
private organization, or other source, including
obtaining title to state, local government, or
privately owned land, directly or through a department
of the state having jurisdiction of the land;
(10) fix and collect fees, rents, tolls,
rates, or other charges for the use of the Knik Arm
bridge and appurtenant facilities, or for a service
developed, operated, or provided by the authority;
notwithstanding AS 37.10.050(a), fees, rents, tolls,
rates, and other charges fixed and collected under
this paragraph may exceed the actual operating cost of
the use of the bridge, facility, or service;
(11) bring civil actions, refer criminal
actions to the appropriate authority, and take other
actions or enter into agreements with law enforcement
and collection agencies to enforce the collection of
its fees, rents, tolls, rates, other charges,
penalties, and other obligations;
(12) pledge, encumber, transfer, or
otherwise obligate revenue derived by the authority
from the ownership, use, or operation of toll
facilities, including fees, rents, tolls, rates,
charges, or other revenue of the authority or money
that the legislature may appropriate, except a state
tax or license, as security for bonds or other
indebtedness or agreements of the authority;
(13) deposit or invest its funds, subject
to agreements with bondholders;
(14) procure insurance against any loss in
connection with its operation;
(15) contract for and engage the services
of consultants, experts, and financial and technical
advisors that the authority considers necessary for
the exercise of its powers and functions under this
chapter;
(16) apply for, obtain, hold, and use
permits, licenses, or approvals from appropriate
agencies of the state, the United States, a foreign
country, and any other proper agency in the same
manner as any other person;
(17) perform reconnaissance studies and
engineering, survey, and design studies with respect
to the Knik Arm bridge and its appurtenant facilities;
(18) exercise powers of eminent domain or
file a declaration of taking as necessary for the Knik
Arm bridge and appurtenant facilities under
AS 09.55.240 - 09.55.460 to acquire land or an
interest in land; the authority's exercise of powers
under this paragraph may not exceed the permissible
exercise of those powers by the state;
(19) confer with municipal and other
governments, metropolitan planning organizations, and
the department, concerning the Knik Arm bridge;
(20) do all acts and things necessary to
carry out the powers expressly granted or necessarily
implied in this chapter; nothing in this chapter
limits the powers of the authority that are expressly
granted or necessarily implied.
* Sec. 2. AS 19.75.111 is amended by adding a new
subsection to read:
(c) The authority may not enter into a public-
private partnership or service contract for
construction of the Knik Arm bridge or appurtenant
facilities unless the authority submits to the
legislature a financial plan including all projected
construction, maintenance, and operation costs for the
first 40 years of the project and the financial plan
has been approved by the legislature by law."
Page 1, line 6:
Delete "Section 1"
Insert "Sec. 3"
Renumber the following bill sections accordingly.
Page 2, line 6:
Delete "a new subsection"
Insert "new subsections"
Page 2, lines 6 - 23:
Delete all material and insert:
"* Sec. 5. AS 19.75.211 is amended by adding new
subsections to read:
(e) Before issuing bonds for the Knik Arm bridge
under this section, the authority shall submit to the
state bond committee a description of the bond issue,
a copy of the resolution of the board of directors of
the authority supporting the bond issue, a report
setting out the sources and amounts of revenue that
will be used for payment of the principal of and
interest on the bonds and the effect the issuance of
the bonds by the authority would have on the ability
of the state or political subdivision of the state to
market bonds, and a preliminary prospectus, offering
circular, or official statement relating to the bond
issue.
(f) Bonds may not be issued unless
(1) the state bond committee finds, based
on the information submitted by the authority under
this section and other information that is reasonably
available to or requested by the committee, that
either the Knik Arm bridge revenue and other revenue
available to the authority or the revenue of the
private person or enterprise under a public-private
partnership agreement entered into by the authority
under AS 19.75.111(a) can be reasonably expected to be
adequate for payment of the principal of and interest
on the bonds to be issued and that issuance of the
bonds by the authority would not be expected adversely
to affect the ability of the state or its political
subdivisions to market bonds; and
(2) the authority submits to the
legislature a financial plan including all projected
construction, maintenance, and operation costs for the
first 40 years of the project and the financial plan
has been approved by the legislature by law."
1:56:56 PM
REPRESENTATIVE GATTIS objected.
REPRESENTATIVE FEIGE explained Amendment [6] referred to as A.8.
He said the state is responsible for guarantying the KAC project
through legislative appropriations so it makes sense that the
state should also have the ability to review the KABATA's
financial plan. Amendment [6] would require KABATA to submit a
financial plan to the legislature for approval. In fact, this
process is the same process TIFIA and other bond users
essentially require in order risk funding on projects.
[Amendment 6] contains a significant amount of conforming
language. He referred page 2, line 7 and page 5, line 6 to
substantive language and highlighted that Amendment [6] would
delete material beginning on [page 2, lines 6-23 of the bill].
1:58:04 PM
CHAIR P. WILSON asked for clarification on whether Section 3 is
being removed or if a new bill section is being inserted.
REPRESENTATIVE FEIGE reiterated the language changes on page 2,
line 7 and page 5 of Amendment [6]. He stated page 2, line 7,
essentially would place a gate on the construction of the bridge
unless KABATA has approval of legislature for a financial plan.
The language on page 5, line 6, of Amendment [6] would require
KABATA to submit the plan for construction, operating and
maintenance costs for the first 40 years of the project.
2:00:02 PM
REPRESENTATIVE FEIGE offered his belief that Amendment [6] would
give the legislature the ability to better decide on whether to
move forward with the project after it reviews the KABATA's
financial plan.
REPRESENTATIVE NEUMAN suggested the legislature needs to keep
politics out of projects such as this one. In fact, the
legislature doesn't take these actions with projects such as the
proposed Alaska Gasline Development Corporation or other
projects. However, this process would give final approval of a
project planned by the commissioner of DOT&PF, DOR, and DOL and
eventually by the governor as the chief administrator of the
state. He said, "If we had to bring back projects like this and
go through the legislature for financing plans - like this - I
don't think we'd ever get anything done. That's why we have
experts that look at this, again, through the Department of Law.
They are the chief administrators of the state." He continued
by explaining that the department heads conduct the business of
the state daily, which is one reason commissioners or their
designees serve on KABATA's board and review all the materials
to ensure everything is in order. He admitted he is not an
expert, nor is anyone in the legislature an expert at building
roads, or executing bonds for financing. He offered his belief
that is the reason for the administration's involvement.
Specifically, KABATA is an entity of the state governed by the
Department of Administration, who have experts and monitor [the
project]. In conclusion, he said he does not support the
Amendment [6].
2:02:19 PM
REPRESENTATIVE GATTIS offered her belief that the legislature's
approval will not work for this project and will create a
chilling effect for this project and any other project in the
state that private developers are interested in, plus it will
set a dangerous precedent. She emphasized that legislators are
not the ones to oversee these large projects; instead, the
experts should be doing this.
2:02:55 PM
REPRESENTATIVE KREISS-TOMKINS understood the DOL testified that
the state has a moral obligation to make the availability
payments. It isn't a question of whether the bridge is
available for traffic or whether or not the state pays, but is a
question of how much the state must pay. He cautioned that the
full faith and credit of Alaska is on the line since the state
is morally obligated to make payments. In fact, if he was
morally obligated to make payments in the future he would want
to know how much he needed to pay and review the financial plan,
which would indicate the payment amount. He said the [state's
credit] seems very important to him so he will support Amendment
[6].
2:03:48 PM
REPRESENTATIVE JOHNSON said he has a deep philosophical problem
with development via the legislature and this project becoming a
"political football." He said the legislature has also been
considering a potential ballot initiative to approve or
disapprove a mine project and when the legislature politicizes
development, it creates an environment in which nothing will
happen. Granted, [Amendment 6] requires review, but he offered
his belief that it would likely mean approval. If so, the
approval process would entail a two-year period since any
legislator can stall a bill for a year or two. He questioned
the wisdom of delaying a project for two years for political
purposes. In essence, philosophically the specific project
doesn't really matter since the result will have a chilling
effect. If the legislature needed to approve every drill rig on
the North Slope, wells would never be drilled; so in conclusion,
he said he has a philosophical problem with leaving the final
approval with the legislature.
REPRESENTATIVE NEUMAN pointed out that the KABATA provides the
legislature with an annual report, which contains the financial
information, permitting information, and the future plan.
2:05:52 PM
REPRESENTATIVE FEIGE offered to entertain an amendment to
Amendment [6], to change approval to review. He said the
legislature creates statutes and allocate funding. He offered
his belief that the [KAC] could become an albatross in terms of
the availability payments. He acknowledged the legislature has
the option, under the proposal, to not make the payments, but at
great peril to the state. In fact, not making the availability
payments will severely affect the state's credit rating. He
said the legislature should have the best information possible.
The legislature will need to commit to the availability payments
so it is reasonable to ask the legislature for approval. He
emphasized he supports as much resource development and other
development in Alaska as possible. However, he cautioned this
project would commit the state to a considerable funding without
knowing the amount of availability payments necessary or the
interest to finance the KAC. Although the state will have
future opportunities to curtail the project, he did not think it
was unreasonable to ask for a financial plan in order to make
the funding decision.
2:07:53 PM
REPRESENTATIVE JOHNSON said he thinks it is ridiculous to go
through this process to build a bridge. He suggested the state
should fund the bridge and build it. He did not think this
process [Amendment 6] is preferable. In fact, the state is
responsible for building roads and public safety so he wondered
whether the state was shirking its responsibility by not
building the bridge today. The fact that the legislature is at
this juncture tells him the state doesn't want to do it.
2:08:49 PM
REPRESENTATIVE KREISS-TOMKINS offered his belief two different
conversations exist for this project. He said, "Maybe I should
have worn my I love infrastructure shirt today...." He said he
does not have any issue with building bridges or other
infrastructure, in fact, he said he loves it. He highlighted
that if the state wants to [build the KAC] the legislature
should bring a bill forward to appropriate $2.5 billion or some
dollar figure to build the Knik Arm Bridge. He characterized
this bill an example of writing a blank check. He emphasized he
would like to know the state's obligation, which is not
available under this bill since the financing is unknown. He
indicated this is a different question than one in which the
state knows the financial obligation. In conclusion, even
though he'd like to build infrastructure in Alaska he wants to
know the cost first.
2:10:01 PM
CHAIR P. WILSON remarked she understood KABATA cannot provide
the financial answers right now even if it wanted to do so.
REPRESENTATIVE JOHNSON remarked that he first heard about a
potential bridge project, [KAC] in 1984. He thought at the time
it was a good idea; however, the state still doesn't have a
bridge. He said it means something when a project has to go to
these lengths to get built. He said he should focus on the
amendment, but remarked he is philosophically opposed to
projects being decided in the political process. He urged
members to build [the bridge].
2:11:30 PM
REPRESENTATIVE LYNN asked to underscore the previous speaker's
comments. He agreed the legislature has been analyzing this
project since 1984. He said he is in favor of studying issues,
but one can get to the point of "paralysis by analysis." He
also urged members to press ahead.
2:12:04 PM
REPRESENTATIVE FEIGE agreed there are two separate issues.
First, he said the issue is whether to build the bridge.
Second, the issue is how to finance the bridge project. He
acknowledged that he would like to build the [KAC] but he does
not want to use financing which is potentially more expensive or
at least holds a high degree of unknowns. He contrasted that
approach to one in which the state simply takes the funds out of
savings to build the bridge. To do so would turn cash in the
bank to a solid infrastructure investment that could generate
revenue immediately for the state. He acknowledged risks exist,
such as construction risks or risks that the population may not
support [a toll bridge] but at least the bridge will generate
benefits and tolls. In conclusion, he asserted there are too
many unknowns and it is appropriate for a legislature to have
some idea of the [cost] prior to committing funds to a project.
2:13:26 PM
[The committee treated it as though Representative Gattis
maintained her objection].
2:13:31 PM
A roll call vote was taken. Representatives Feige and Kreiss-
Tomkins voted in favor of Amendment [6]. Representatives
Isaacson, Gattis, Johnson, Lynn, and P. Wilson voted against it.
Therefore, Amendment [6] failed by a vote of 2-5.
2:14:11 PM
REPRESENTATIVE GATTIS suggested the committee move the bill.
REPRESENTATIVE JOHNSON said he has had an opportunity to speak
to numerous legislators who served during the 1980s. They
regret they didn't build the Susitna Dam and a bridge across
Knik Arm. He said he does not want his children or
grandchildren to know his biggest regret is the state did not
build the Knik Arm Crossing (KAC). He emphasized he does not
want to have those regrets. He acknowledged [the KAC] may be
risky. The current state funds are generating between 6-8
percent earnings and the bond would be for less than that
amount. Bonding makes some sense, but sharing the exposure
makes some sense, too. He said he will wholeheartedly support
advancing this bill. He said he wants to be here when the first
shovel of dirt is turned. In fact, he'd like to be the person
who pays the first $5 to cross the bridge. He concluded that he
hopes this project gets done while he is still in the
legislature and still alive since it could be 2024 before it
happens. "We have to develop this state," he said.
2:16:05 PM
REPRESENTATIVE JOHNSON moved to report HB 23 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 23 was reported from the
House Transportation Standing Committee.
The committee took an at-ease from 2:17 p.m. to 2:19 p.m.
2:17:21 PM
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB0131A.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 131 |
| HB 131 Sponsor Statement.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 131 |
| Washington State Derelict Vessel Program Brochure.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 131 |
| City of Homer resolution_13-026.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 131 |
| e-mail from Homer Harbormaster regarding Derelict Vessel problem.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 131 |
| HB 131 AAHPA Resolution.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 131 |
| HB 131 Cordova Article.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 131 |
| HB 131 Derelict vessels - DNR information.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 131 |
| HB 131 DNR Derelict Vessels Presentation.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 131 |
| HB 131 News articles on Derelict vessels in Alaska.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 131 |
| HB 131 Seattle Times article on Derelict vessel issue in Washington State.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 131 |
| HB 23 KABATA Questions from 3-12.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 23 |
| HB 23 Amendment A 1.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 23 |
| HB 23 Amendment A 3.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 23 |
| HB 23 Amendment A 4.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 23 |
| HB 23 Amendment A 5.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 23 |
| HB 23 Amendment A 7.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 23 |
| HB 23 Amendment A 8.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 23 |
| HB 23 Sectional Analysis.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 23 |
| HB 23 Amendment A 2.pdf |
HTRA 3/21/2013 1:00:00 PM |
HB 23 |