Legislature(2003 - 2004)
05/03/2004 01:36 PM Senate CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 396-INTERIOR RIVERS PORT AUTHORITY
CHAIR STEDMAN announced SB 396 to be up for consideration. He
didn't intend to move the bill that day and there would likely
be a committee substitute offered at the next hearing.
PAUL FUHS introduced himself and said:
At the request of Representative Morgan I helped draft
this legislation and helped him work on it. It was his
idea to provide a regional approach to providing
economic development and provision of some services in
the Interior rivers area.
I'll hold up a map for you to see. It's all pretty
much small communities. They're all 80 to 300 people.
They all face a lot of the same issues of high cost of
energy, limited transportation, limited economic
development opportunities although there are some
pretty good mineral developments in the area.
In studies on the area for its municipal government,
there isn't enough there to really justify it so
they've really been looking for the ways how can they
do some of the things that local government would do
especially in the economic development area. They're
looking for transportation - with the Donlin Creek
Mine going in - to help facilitate that - some of the
other mines. Transportation in the area, the bill
would allow them to do bulk fuel purchases. It would
allow them to look at inter-ties if that made more
sense and could provide power cheaper or could help
develop some of the mining properties. Also look at
tourism development in the area.
In your packet you'll see that all the major
landholders and agencies in the area have supported
this and are looking for a way to try and lift the
whole region up.
Port authorities have been used around the world
because they really provide a clear focus for economic
development or whatever purpose they're put up for.
We've seen a couple of others. The Prince of Wales
Island Port Authority that's doing the ferry
transportation down here has been real successful
[and] we've got the Knik Arm Crossing. There's also
been a proposal for airport authority at the
international airports.
It provides a legal framework for providing financing
for economic development projects and I think one of
the most important provisions that you want to look at
in the legislation is on page 15. And if I was sitting
in your seat, this is one of the things I'd be
concerned about. You're setting up an authority that
has the ability to issue bonds and go into debt and
yet it's set up as a state corporation and that's
necessary because there is no local government there.
Alaska's port authority legislation, which authorizes
municipalities to form it - which I worked on in '93
with Drew Pearce - you have to have municipalities to
do it. The reason state legislation is needed here is
because this is an unorganized section of the state.
And I would say that this is probably one of the first
times that the Legislature is really acting as the
borough assembly for the unorganized borough, which is
one of your mandates under the constitution. So it is
one of those steps.
The question would be if they take on debt, is that
something that the state is going to end up being
responsible for? And under this section, the credit of
the state is not pledged. If they go out and issue
revenue bonds, they are dependant upon the revenues of
the project. They have to pass an independent third
party independent evaluation by both investment
banking firm to take the deal to Wall Street and then
for Wall Street to buy the bonds so it would have to
be pretty strong. If the project failed, it would be
the bondholders who would be responsible, not the
State of Alaska. So we gave that protection.
Other than that, the authority has pretty broad powers
to act in the interests of its residents. It is
permissive legislation. The only thing that they have
to do is on page 23. They really have to come back
with a development plan and say: 'Here's the
transportation under regional development plan -
energy and tourism related.'
The Department of Environmental Conservation has been
very interested in is regional landfills and things
like this where it can be more efficient. We've got a
lot of uncovered landfills out there that are creating
some serious health issues and they'd really like to
have a regional entity to look at to do it more
efficiently and to do it better.
So I would leave it at that Mr. Chairman. I would be
glad to answer any questions that you may have. I
would just say that part of the reason that
Representative Morgan asked me to do this is I've been
involved in the writing of almost every authority in
the state so far and I also served as chairman of the
AIDA Board, the Energy Authority, and the State Bond
Committee so I could answer questions concerning
financing also.
SENATOR GARY STEVENS remarked that the governor appoints a board
of directors, but that board could be making communities liable
for bonds. He asked how the communities buy into what the board
has decided to do.
MR. FUHS told him that because the communities aren't organized,
this would be the debt of the authority as a whole not of those
communities. The entire region would take on the debt as the
authority and go out with revenue bonds or whatever else.
There's no municipal tax base or general obligation taxing
authority in the area.
CHAIR STEDMAN questioned whether it would be just revenue bonds.
MR. FUHS said yes and it also has the authority to receive funds
from federal, state and private sources. It could receive land
or enter into contracts with other entities. The Denali
Commission is also interested because they're looking for ways
to do deliver services more efficiently in that area so they
would welcome this and perhaps be able to provide technical
assistance grants or funding for projects. Also quite a lot of
federal money has been identified for the Donlin Creek Road,
which would connect the two rivers with a port on each side.
CHAIR STEDMAN remarked it's a good concept. It creates economic
development in the area and some inter-tie among the
communities, which might raise the standard of living for
everyone in the area.
SENATOR GARY STEVENS asked if this would ever have an
opportunity of moving outside that specific geographic area or
would it be limited to the one area.
MR. FUHS replied that it's limited to the described area unless
the state changes the statute to include other areas. "But it
could just by contract, memorandum of agreement or any other
mechanism have joint ventures or do things with other parts of
the state," he said.
CHAIR STEDMAN asked him to speak to the board structure.
MR. FUHS explained that it's a nine-member board. All land
owners and organizations in the area would propose a list of
people to the governor who would freely choose and then there
would also be a couple of public members chosen. They're trying
to get everyone in the area that has a stake in the authority to
be involved.
CHAIR STEDMAN said everyone should be represented.
MR. FUHS agreed.
SENATOR LINCOLN asked whether the administration supported the
legislation.
MR. FUHS said he didn't know whether the administration had
taken a formal position, but he knew that some of the
departments were interested in the regional approach.
SENATOR LINCOLN said perhaps Representative Morgan had an answer
and that she would like to hear from the departments that had
expressed support.
MR. FUHS told her the Department of Commerce, DOT and DEC had
expressed interest.
SALLY SADDLER with the Department of Community and Economic
Development stated, "the concept has merit particularly as we
talk about putting an economic development entity in place that
can help this region take control and charge of their economic
destiny." Currently they are evaluating the bill and if any
questions arise they pledge to work toward a resolution.
CHAIR STEDMAN asked Ms. Saddler to be at the next hearing of the
bill.
MS. SADDLER agreed to be at the next hearing.
REPRESENTATIVE CARL MORGAN, bill sponsor, first noted that some
were concerned that there was too much Native corporation
representation in the original board composition. He then
explained that the board has nine members; three seats are
public members appointed by the governor, one seat is an
industry member who is working in the area, and the rest are
Native corporation members.
CHAIR STEDMAN asked him to speak to the fiscal note.
REPRESENTATIVE MORGAN said the fiscal note is indeterminate.
CHAIR STEDMAN asked him to talk about the economic benefit this
would bring to the region.
REPRESENTATIVE MORGAN explained that this area has been studied
extensively and the conclusion is always the same. It's
difficult to do business in the region, it's impoverished, and
it's mineral rich. The Donlin Creek Mine holds much promise, but
it's held back because of a lack of infrastructure.
SENATOR WAGONER asked what kind of commercial enterprises are in
the area currently.
REPRESENTATIVE MORGAN told him that it's largely barge service
and air transportation freight currently. With the possibility
of the road corridor tying the Yukon and Kuskokwim rivers, it'll
basically be railroad to rivers to roads to resources.
SENATOR LINCOLN asked whether the public members would
specifically not be Native.
REPRESENTATIVE MORGAN said it would be up to the governor.
CHAIR STEDMAN stated that neither nationality nor ethnic or
religious backgrounds should preclude anyone from having access
into and benefit of the economic system.
SENATOR LINCOLN said she appreciates that very much and she
commended Representative Morgan for having put the bill together
at such a late date.
SENATOR WAGONER stated that, "just because they're Natives from
the Native corporations and the Native association sets out the
representation of those groups, it doesn't mean they have to be
a Native. ... It doesn't matter. I think if this thing happens,
I think it should be controlled by the people in that district."
REPRESENTATIVE MORGAN added that this is the first of its kind.
It has taken considerable time trying to get all the entities to
agree. The 25 villages and communities are scattered throughout
the region with populations that average 225 people. They can't
support a municipality, but getting them to work together was a
major step.
There were no further questions asked of Representative Morgan.
BOB CHARLES, the Calista Corporation president, testified via
teleconference in support of SB 396. The measure has a focused
approach to economic development and they look forward to its
passage so they can get to work.
There were no questions.
CHAIR STEDMAN announced he would hold SB 396 in committee and
adjourned the meeting at 3:15 pm.
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