Legislature(2013 - 2014)HOUSE FINANCE 519
04/25/2014 08:00 AM Senate FREE CONFERENCE COMMITTEE ON HB 23
| Audio | Topic |
|---|---|
| Start | |
| HB23 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| HB 23 | |||
HB 23-KNIK ARM CROSSING; AHFC
8:03:25 AM
CO-CHAIR AUSTERMAN announced the only item on the calendar would
be the Free Conference Committee on HB 23. He explained the
goal of the Free Conference Committee on is to reach consensus
agreement on the Free Conference Committee substitute (FCCS) for
HB 23 and recommend it to both bodies for approval. Pursuant to
Uniform Rule 42, the Free Conference Committee was appointed by
the House on April 23, 2014 and the Senate on April 24, 2014. A
Free Conference Committee may suggest any amendments that are
clearly germane to the original bill. Adoption of the
conference committee report requires an affirmative vote by a
majority of members from each house.
8:04:11 AM
CO-CHAIR MCGUIRE moved that the Free Conference Committee on HB
23 adopt the proposed Free Conference Committee Substitute
(FCCS) for HB 23, labeled 28-LS0141\H, Martin, 4/24/14.
CO-CHAIR AUSTERMAN objected for discussion purposes.
8:04:57 AM
PETE ECKLUND, Staff, Representative Alan Austerman, Alaska State
Legislature, provided an overview of the proposed Free
Conference Substitute (FCCS) for HB 23 on behalf of
Representative Austerman, Co-Chair, Free Conference Committee on
HB 23. He explained that members have the Free Conference
Committee Substitute (FCCS) for HB 23 and an accompanying
sectional analysis [included in members' packets]. He provided
a broad overview of the FCCS HB 23, stating that the bill strips
many of the powers and duties from the Knik Arm Bridge and Toll
Authority (KABATA). It removes KABATA's ability to bond and
exercise the power of eminent domain, but allows KABATA to be a
toll authority and collector once the project is constructed.
He said that this leaves KABATA some ability to operate and
maintain the bridge structure after completion; however,
KABATA's powers and duties have very much been curtailed.
Additionally, the FCCS HB 23 also instructs the Department of
Transportation & Public Facilities (DOT&PF) to seek a
Transportation Infrastructure Finance and Innovation Act (TIFIA)
loan.
8:06:40 AM
MR. ECKLUND provided a section-by-section analysis of the HCCS
HB 23. He said Section 1 authorizes the Department of
Transportation & Public Facilities (DOT&PF) to incur
indebtedness to the Federal Highway Administration, U.S.
Department of Transportation for a TIFIA loan.
8:06:56 AM
MR. ECKLUND related that Section 2 amends the purpose of the
Knik Arm Bridge and Toll Authority (KABATA). Section 3 provides
that KABATA may not be terminated if it has obligations
outstanding, including an obligation to the state under AS
37.15.225. Section 4 would apply the Executive Budget Act to
the operating budget of KABATA. Section 5 would amend the
powers of KABATA and removes the authority to incur
indebtedness, issue bonds, apply for permits, perform
engineering and design studies, and exercise the power of
eminent domain. Section 6 would remove language authorizing
KABATA to plan, design, construct, and operate the Knik Arm
Bridge and appurtenant facilities. It also would remove
language giving KABATA the exclusive authority to determine and
fix fees, rents, tolls, rates, and other charges. Section 7
would remove language related to bonds from AS 19.75.261.
Section 8 would remove "acquisition, design, construction" from
AS 18.75.291.
8:08:11 AM
MR. ECKLUND related that Section 9 requires the department to
transfer control of the Knik Arm Bridge and appurtenant
facilities to KABATA after construction of the bridge. It also
would authorize KABATA to operate the bridge and appurtenant
facilities but retains ownership of the bridge, appurtenant
facilities, and real property; and the power to reconstruct,
equip, extend, maintain, or improve the bridge and appurtenant
facilities with the DOT&PF. He stated that Section 10 makes
conforming changes to AS 19.75.915 and Section 11 would permit
the department to set fees, rents, tolls, or other charges for
the use of the Knik Arm Bridge and appurtenant facilities in
excess of operating costs.
8:08:56 AM
MR. ECKLUND stated that Section 12 authorizes the state to issue
revenue bonds to build the Knik Arm Bridge and appurtenant
facilities. More specifically, Section 37.15.255 would
authorize the state to issue toll revenue bonds. It also would
require the proceeds of the sale of the bonds to be deposited in
the Knik Arm construction fund and requires notice to the
legislature before issuance of bonds. He indicated this
provision prevents the state from issuing bonds until the
Federal Highway Administration (FHWA), U.S. Department of
Transportation (US-DOT) has approved a loan to the state of at
least 30 percent of the total project cost under TIFIA. Section
37.15.230 would establish the Knik Arm construction fund to be
used for the construction of the Knik Arm Bridge and appurtenant
facilities. He stated that Section 37.15.235 limits the toll
bridge revenue bonds to $300 million. Section 37.15.240 would
create the toll bridge revenue fund. The reserve fund may only
be used to pay the bonds, redeem the bonds, and pay indebtedness
under TIFIA. Section 37.15.245 would create the toll bridge
revenue bond redemption fund to pay the principal and interest
and redemption premium on the bonds.
8:10:23 AM
MR. ECKLUND stated that Section 37.15.250 allows the state bond
committee to set the amounts or series, price, terms,
conditions, and maturity date on the bonds. Section 37.15.255
would require the state bond committee to authorize the issuance
of bonds by adopting a resolution. Section 37.15.260 would
create the bond reserve fund to pay interest on and principal of
the toll bridge revenue bonds. The money may not be withdrawn
if it would reduce the amount in the reserve fund to an amount
less than the required debt service. It would also require the
commissioner of the department of revenue (DOR) to certify to
the governor and the legislature the amount necessary to restore
the fund to an amount equal to the required debt service
reserve.
8:11:18 AM
MR. ECKLUND said Section 37.15.265 allows the trustee for the
holders of the bonds to bring appropriate proceedings in the
superior court. Section 37.15.270 would require the state bond
committee to certify to the commissioners of revenue and
administration the amounts required in the current and next
fiscal year to be paid out of toll revenue into a reserve fund
or other fund. He related that Section 37.15.275 allows the
state bond committee to refund the bonds or any part of the
bonds before their maturity or redemption date and AS 37.15.280
declares the bonds to be legal investments. He related that
Section 37.15.285 states that AS 37.15.225-37.15.290 shall be
construed liberally in order to carry out the purposes for which
they were enacted. Proposed AS 37.15.290 defines the terms for
AS 37.15.225-37.15.290. He indicated that Section 13 repeals
various KABATA statutes mostly related to bonding and Section 14
requires KABATA to transfer all rights, titles, and interests to
the DOT&PF and Section 15 adds an effective date of July 1,
2014.
MR. ECKLUND highlighted one issue that was not addressed in the
section-by-section analysis. He explained that the "Buy
America" section was removed. After conferring with the DOT&PF,
it was determined that most of the "Buy America" sections are
covered under federal highway laws, which were intended to cover
the broad aspects of purchasing steel. The language inserted
into HB 23 by the other body went further than that and some
problems arose that could result in increased costs to the
project so that section was removed.
8:13:40 AM
SENATOR MCGUIRE confirmed that the fundamental financing
structure remains the same even though it has been transferred
to DOT&PF. She referred to the funding as a "three-legged
stool" such that the requirement to apply for the TIFIA loans
and the project is contingent upon the issuance of the TIFIA
loan, and the project won't move forward to issue state bonds
without the aforementioned approval.
MR. ECKLUND answered yes; that is correct. The TIFIA loan must
be secured before the revenue bonds can be issued and the TIFIA
loan must be a minimum of 30 percent of the total Knik Arm
Bridge project cost.
8:14:32 AM
SENATOR MICCICHE asked whether the National Environmental Policy
Act of 1969, Department of Natural Resources (DNR) and
Department of Environmental Conservation (DEC) permitting that
has already been accomplished will be fully transferable to the
DOT&PF.
MR. ECKLUND answered that he spoke to the commissioners of
DOT&PF, DEC and it was their belief that those permits - whether
midstream or complete - were transferable.
SENATOR MICCICHE asked whether any right-of-way already
purchased will also transfer with the authority if this
conference bill passes.
MR. ECKLUND referred to page 16 to the transition section of the
FCCS HB 23, which instructs KABATA to transfer all of the items
listed in proposed Section 14 to the DOT&PF.
8:15:49 AM
SENATOR GARDNER referred to page 4, line 10 of proposed
[paragraph] (10) and asked whether this means KABATA retains the
power to issue bonds.
MR. ECKLUND answered he did not believe so. He explained that
there are many repealers in the proposed FCCS, such that the
proposed Free Conference Committee Substitute repealed all the
sections related to KABATA's ability to bond. He deferred to
the DOR and the legislative legal counsel to answer.
8:16:50 AM
REPRESENTATIVE AUSTERMAN expressed his appreciation for the
legislative legal counsel's efforts on the FCCS.
8:17:18 AM
HILARY MARTIN, Attorney, Legislative Legal Counsel, Legislative
Legal Services, Legislative Affairs Agency, explained that
[Section 5] provides KABATA the ability to pledge tolls to pay
off bonds of the state. Thus, it doesn't refer to KABATA's
bonds, but to any revenue bonds the state may issue. In
response to Senator Gardner, she indicated that the power of
eminent domain is language that is repealed.
CO-CHAIR MCGUIRE further clarified that the language pertaining
to eminent domain was repealed.
8:18:25 AM
REPRESENTATIVE DRUMMOND asked what remains for KABATA to do if
all the operating features are removed.
MR. ECKLUND related his understanding that KABATA would collect
tolls, which could be transmitted to the state. He said that
KABATA can also operate and manage Knik Bridge once it is
constructed, and KABATA could own or lease property for offices
or toll facilities. He summarized that KABATA's authority has
been pared back significantly.
MS. MARTIN related that Mr. Ecklund appropriately covered it.
8:19:30 AM
REPRESENTATIVE DRUMMOND, assuming it would take time to build
the Knik Arm Bridge, asked what KABATA would do during the
interim period since it is limited to operate and collect tolls
once the bridge is completed.
MR. ECKLUND answered that [under the FCCS for HB 23] KABATA is
subject to the Executive Budget Act so the legislature can
decide on KABATA's budget and its mission.
8:20:00 AM
CO-CHAIR AUSTERMAN indicated that obviously this proposal
represents quite a transition and change and the deliberations
included considering activities during the transition period.
He said it's important to not "cut KABATA off" today since lots
of interactions will be needed during the next year to make this
project happen. He acknowledged that at any point in the
future, the legislature can make a determination on KABATA's
role; however, having KABATA involved during the transition is
important.
CO-CHAIR MCGUIRE reinforced that the transition is important due
to the rights-of-way activities, pending permits, and the
overall knowledge base. She acknowledged some disagreement
exists between the bodies on KABATA's team; however, she offered
her appreciation for KABATA's good work to date, noting many are
volunteers. She also noted collecting tolls should be a
function of KABATA, but not the state or the DOT&PF, so it is
important for KABATA to gain the knowledge necessary to conduct
its toll function even though KABATA's role is significantly
pared down.
8:21:45 AM
REPRESENTATIVE DRUMMOND related her understanding that there
will also be significant costs "post-bridge" for all the
connecting roads and the transition to reroute traffic to
Gambell and Ingra Streets instead of the traffic being routed to
"A" and "C" streets in downtown Anchorage. She asked for
clarification on how that will be handled and funded.
MR. ECKLUND answered that those issues are not addressed in the
bill.
REPRESENTATIVE DRUMMOND remarked that [the funding for "post-
bridge" infrastructure] seems to be a significant omission.
8:22:26 AM
SENATOR MICCICHE noted Alaskans have a tendency to reinvent
systems. He asked whether any comparison model exists from
other states that operate toll infrastructure for business or
construction.
MR. ECKLUND answered that he did not have any examples; however,
the DOT&PF commissioner may have examples.
REPRESENTATIVE STOLTZE commented that the best qualified
individuals to answer this were cut out of today's process.
8:23:52 AM
SENATOR MICCICHE recalled using passes while traveling on toll
roads via car rentals He asked whether this business will be
similar to how it is done by places that have had toll bridges
for 80 years.
PAT KEMP, Commissioner, Department of Transportation & Public
Facilities (DOT&PF), answered yes; that a number of ways exist
to fund megaprojects and tolls are an active part of that
process. He acknowledged that similar projects are done
nationwide using design-build concept; however, there is
generally a lot more traffic to generate the tolls. He
emphasized that this process is not new. He offered his belief
that the design-build process should be fine.
8:25:02 AM
SENATOR MICCICHE related one advantage to being new to the
KABATA project is that he doesn't have any emotions tied to the
[evolving] KABATA project. He wondered if the previous
arrangement for the project was less typical than projects in
the Lower 48 or elsewhere.
COMMISSIONER KEMP said, "I believe it's a mixed bag nationwide.
Projects are funded and constructed in many different ways." He
said that the [public, private, partnership] "P3" model
introduced earlier this session is frequently used across the
nation; however, in Alaska, Commissioner Rodell found a better
way to fund the project to save funds. He suggested that either
KABATA or the department could follow through with the current
model.
8:26:20 AM
CO-CHAIR MCGUIRE asked whether the commissioner is comfortable
executing the requirements included in FCCS HB 23 and all the
provisions that are being transferred to the DOT&PF.
COMMISSIONER KEMP answered yes.
8:26:52 AM
CO-CHAIR MCGUIRE asked for insights on how well the department
works with KABATA and how comfortable the relationship between
KABATA and the DOT&PF is in terms of the transition, including
rights-of-way, permitting, and other tasks.
COMMISSIONER KEMP characterized the department's relationship as
good, noting it continues to improve. He acknowledged he has
not had an opportunity to talk to the chair or anyone at KABATA
in the past couple of days, but he offered his belief the
transition will be smooth.
CO-CHAIR MCGUIRE recalled an innovative funding structure. She
asked for clarification on the "P3" model.
8:27:55 AM
ANGELA RODELL, Commissioner, Department of Revenue (DOR),
expressed concern about the "P3" model since the state was
taking 100 percent of the financing risk; however, she said the
department determined a less expensive way to finance the
project. The department worked over the interim with DOT&PF to
develop an alternative plan that is contained in the bill before
members today. She said the "P3" model became expensive due to
a number of changes in the market. Additionally, since this
project is considered a "Greenfield project," without any
history, so the financing became more expensive.
8:29:17 AM
REPRESENTATIVE STOLTZE, with respect to the transition for the
commissioners, asked for confirmation that both commissioners
are voting members of the KABATA board and how that may help
during the transition process.
COMMISSIONER KEMP answered yes; that he and Commissioner Rodell
have served on the five-member KABATA board.
REPRESENTATIVE STOLTZE pointed out that this is not a new
project for the DOT&PF or the DOR.
COMMISSIONER KEMP agreed. He said that he has been on the
periphery of the project, but he believes the DOT&PF will work
well with the board.
REPRESENTATIVE STOLTZE clarified that Commissioner Kemp is a
member of the KABATA board of directors.
COMMISSIONER KEMP answered yes.
8:30:35 AM
SENATOR GARDNER asked whether KABATA can receive funds but not
be indebted directly under the current arrangement.
COMMISSIONER RODELL related her understanding the state will be
able to transfer funds to KABATA for very specific activities
that have been authorized. For example, KABATA could receive
funds to purchase the software to run the tolling operation.
She pointed out that will come through the DOT&PF or the DOR to
conduct specific tasks.
8:31:57 AM
SENATOR GARDNER referred to the capital budget, which currently
contains $55 million for KABATA. She asked whether that funding
will be line-item vetoed.
CO-CHAIR AUSTERMAN anticipated an amendment to change the
language from KABATA to the Knik Arm Bridge.
8:32:28 AM
SENATOR GARDNER, in reference to the socio-economic data in the
Legislative Budget & Audit on KABATA, recalled the raw data has
been provided but it has not yet been put into the traffic
model. She asked who will be responsible to put the data into
usable form and when will it be available to the legislature.
COMMISSIONER KEMP answered that he has not seen the socio-
economic information. He noted that there will be a new process
with the receipt of federal aid, since one-third of the project
is anticipated to be funded via federal funds. He recalled that
will go through the large project office in Washington, who will
conduct a thorough review of the financing plan, the
construction estimate and other estimates will be vetted by the
FHWA. In fact, any project over $500 million undergoes this
type of scrutiny, he said.
8:33:54 AM
SENATOR GARDNER expressed an interest in the [legislative budget
and audit] LB&A report that indicated KABATA's toll traffic
numbers were overestimated and need to be redone. She recalled
that is why the upwards of $100 million investment is
anticipated in Phase 1 of the project. She offered her belief
that it is important to have a realistic estimate of the traffic
patterns now and into the future, the estimated tolls, and any
debt the tolls can support.
CO-CHAIR AUSTERMAN explained that today's discussion revolves
around the changes in FCCS HB 23. He said he also understands
the issues and desire for justification; however, these issues
are not in this proposed Free Conference Committee Substitute or
the discussion being held today. He asked members to try to
stick to the proposed Free Conference Committee Substitute.
8:35:30 AM
SENATOR GARDNER asked to put on the record that the information
is forthcoming. She understood the time constraints, but would
like to know who will be providing this information in the
future.
CO-CHAIR MCGUIRE referred to page 16, to proposed Section 14,
noting the transition language includes a transfer of all
studies and intellectual property. She agreed that this was a
subject of earlier conversation, but the report is due back in
July and the language is specifically in the FCCS HB 23.
8:36:20 AM
SENATOR MICCICHE asked how this megaproject will affect the
current statewide transportation improvement program (STIP)
schedule. He remarked he has received questions from
constituents concerned about how the Knik Arm Bridge project
will affect the current project schedule.
COMMISSIONER KEMP referred to the STIP and impacts to the 10-
year snapshot of projects. He reminded members he has
previously testified that the new FHWA funding program, MAP 21,
has shifted funding from local roads to urban roads and the
National Highway System (NHS), such as the Seward Highway, Parks
Highway, and Egan Drive. He said that this change has dove-
tailed well and the DOT&PF can accommodate this project in the
NHS side of the STIP. He acknowledged that a problem exists in
backfilling the surface transportation system (STP) side. He
characterized the progress thus far as being "pretty good" so
"all in all" he did not believe there would be any impacts.
8:38:13 AM
SENATOR MICCICHE asked for clarification whether the $18 million
in authority KABATA has would be transferred to DOT&PF.
MR. ECKLUND did not think this is in the bill. Further, he
suggested there could be an amendment to the capital budget if
an appropriation is necessary; otherwise he deferred to the
commissioner.
8:39:01 AM
COMMISSIONER RODELL answered that she was not sure she has a
good answer. She understood that the KABATA board has approved
its operating budget for next year. She related her
understanding that this funding has been encumbered. She
offered to look into the issue.
REPRESENTATIVE STOLTZE reported that KABATA falls under the
Executive Budget Act so the executive branch has authority to
work with the DOT&PF on the transfers. Additionally, the
administration has the flexibility and authority over the
spending process. He emphasized that it is very significant
that KABATA was put under the Executive Budget Act.
8:40:14 AM
REPRESENTATIVE DRUMMOND expressed concern the Commissioner Kemp
said, "We'll have to backfill the STIP." She said there is
significant additional cost to the Knik Arm Bridge. She
expressed concern that statewide transportation needs will be
set aside in the interests of building the Knik Arm Bridge. She
said, "We don't build a bridge in isolation. We have connecting
roads. We have roads to Big Lake. We have the Ingra-Gambell
connection that has to be made at the request of the
Municipality of Anchorage. I'm curious if the commissioner is
aware of just how much is not addressed by this project that
looks like it will be bumping projects from the STIP."
COMMISSIONER KEMP answered that the department is aware of the
additional costs on both sides of the bridge. This has been
discussed internally through the liaison with KABATA. He
indicated the DOT&PF will need to accommodate the projects in
the regular STIP process, with general fund appropriations, or
by other means. He acknowledged that transitions will occur and
anticipated the department will need to deal with them.
8:41:40 AM
REPRESENTATIVE DRUMMOND understood tolls would take care of all
the additional roads required.
COMMISSIONER KEMP said he was unsure. He understood that at one
point capacity will require four lanes, but he was unsure how
that dovetails with the additional needs shore side. He said he
has heard the explanation, but cannot recall the details today.
8:42:13 AM
SENATOR GARDNER recalled that eminent domain could not be used
any further in the Senate version of the bill, but she was
unsure if the provision is included in the FCCS HB 23.
MS. MARTIN explained that the language was removed since KABATA
will transfer all its property to DOT&PF so there isn't any
reason to stop them from transferring the property. She said it
would be a conflict in the bill to tell them not to transfer the
property and then tell them to transfer the property.
8:43:05 AM
SENATOR GARDNER asked whether any "stop/go" issues exist or if
this is a "green" light all the way.
COMMISSIONER KEMP responded that authorities to proceed (ATP)
are part of the FHWA process. The state can't proceed to
construction until all the right-of-way is completed and the
environmental permits and U.S. Corps of Engineering permits are
obtained. He reported that checklists for the FHWA exist, which
the project has been under from the beginning with the funding
of the environmental document.
REPRESENTATIVE AUSTERMAN removed his objection.
8:44:24 AM
CO-CHAIR MCGUIRE moved to report the FCCS for HB 23, labeled 28-
LS0141\H, Martin, 4/24/14 out of the Free Conference Committee,
with two fiscal notes: one forthcoming conference committee
fiscal note and the [SCS 2nd CSHB 23(FIN)] fiscal note #7
[prepared by the DOT&PF dated 4/14/14].
8:45:04 AM
SENATOR GARDNER objected. She offered her belief that the FCCS
is a tremendous improvement. She congratulated Commissioner
Rodell since [this bill] will serve the state much better.
However, like Representative Drummond, she maintained she is
very concerned about the costs, the impacts on the rest of the
state, and the costs not included in the proposal. She said she
planned to oppose the bill on the floor but did not wish to hold
it up in committee.
CO-CHAIR MCGUIRE thanked the co-chair, and members of the free
conference committee. She acknowledged that it is difficult to
have something significant arise at the end of the legislative
session. She offered her belief that significant project
improvements are included and the chances of success for the
project have greatly improved.
REPRESENTATIVE STOLTZE thanked the bill sponsor, Representative
Neuman, the sponsor of HB 23. He also thanked Senator Huggins
and Co-Chair McGuire. He said that without their work the
committee would not likely be moving forward with this
compromise. He said, "We like to build bridges and there's
often more than one way to do it. Thank you."
CO-CHAIR AUSTERMAN offered his belief that this project wouldn't
be moving forward without everyone's efforts. He recognized the
long hours by Ms. Martin, legislative legal counsel, and his
staff, Pete Ecklund, have put in on this bill.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 23 CC Letter - 4 23 2014-signed.pdf |
JHB23 4/25/2014 8:00:00 AM |
HB 23 |
| HB 23 CC Presentation Knik Arm Crossing.pdf |
JHB23 4/25/2014 8:00:00 AM |
HB 23 |
| SCS 2D CSHB 23(FIN) AM S vers 28-LS0141-I A Summary of changes 04 18 2014.pdf |
JHB23 4/25/2014 8:00:00 AM |
HB 23 |
| HB 23 SCS 2D CSHB 23(FIN) AM S vers 28-LS0141-I A Summary of changes 04 18 2014.pdf |
JHB23 4/25/2014 8:00:00 AM |
HB 23 |
| HB 23 Free CS 28-LS 0141-H.pdf |
HFIN 4/25/2014 8:00:00 AM JHB23 4/25/2014 8:00:00 AM |
HB 23 |
| HB 23 CC CS Sectional.pdf |
HFIN 4/25/2014 8:00:00 AM JHB23 4/25/2014 8:00:00 AM |
HB 23 |
| HB 23 Revised #2 CC HB023CC-DOR-KABATA-04-25-14.pdf |
JHB23 4/25/2014 8:00:00 AM |
HB 23 |