Legislature(2001 - 2002)
04/25/2002 04:30 PM Senate STA
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 444-ALASKA PUBLIC BUILDING FUND
REPRESENTATIVE JEANNETTE JAMES, sponsor of HB 444, said the
Alaska Public Building Fund (PBF) was established a couple of
years ago for a trial period. The buildings listed in that
legislation were the Alaska Office Building in Juneau, the Robert
B. Atwood Building in Anchorage, the Fairbanks Regional Office
Building, the Juneau Community Building, the Juneau Public Safety
Building and the State Office Building in Juneau. The PBF
establishes a methodology for charging rent to the various
agencies and/or other outside interests that use space in these
buildings including an amount for depreciation. After paying for
heat, light and other minor maintenance items, the additional
money from the fund could be used to keep up the maintenance.
She noted that the State has a deferred maintenance lag, meaning
that virtually no major maintenance was being done. She said the
fund gives the State a little more money to keep things from
running down over a period of time. She noted that this two-year
trial period has been successful. HB 444 would allow all of the
buildings that have been transferred from the Department of
Transportation (DOT) to the Department of Administration (DOA) to
be "covered buildings." HB 444 would also keep the PBF as a
permanent program. The State would be able to move forward with
the fund and allow the same process on other buildings that may
be transferred to DOA.
SENATOR HALFORD asked if HB 444 only applied to buildings that
have come from DOT to DOA.
REPRESENTATIVE JAMES said yes.
SENATOR HALFORD noted that the fiscal note said HB 444 allows for
the expansion of the PBF approach. The way he reads the
definition, he is concerned that HB 444 may mandate the PBF
approach. He wanted to make sure that the process was
permissive.
REPRESNTATIVE JAMES said DOA went through another process to
reach the decision.
RECESS UNTIL 4:55 P.M.
CHAIRMAN THERRIAULT called the Senate State Affairs Committee
back to order. He asked if Representative James had concluded
with her comments.
REPRESENTATIVE JAMES said she had.
CHAIRMAN THERRIAULT asked if somebody from the State could
explain how the PBF worked and how the money came into and went
out of the fund.
CHRIS PARCE, Director of the Division of General Services,
Department of Administration, said one of her duties was to
manage the PBF. She said DOA determines the cost of running the
buildings including the depreciation of the facilities. Those
costs are spread over the total rentable square feet and the rent
is collected from the tenants. Those funds are used to pay for
utility bills, general janitorial services and other items of
that nature. She noted that one of the main goals of the PBF was
to be able to collect the depreciation dollars and be able to use
them on major maintenance projects. She pointed out that the
Alaska Office Building was being roofed at the moment. She said
the PBF was working marvelously.
CHAIRMAN THERRIAULT asked how much money was earned.
MS. PARCE said the eight buildings brought in about $6-7 million.
CHAIRMAN THERRIAULT asked if that showed up in the capital
budget.
MS. PARCE said the money comes into the operating budget. The
PBF is a sub-fund of the general fund and is a dedicated fund.
DOA pays the bills out of the PBF and takes care of major
projects as they can afford to.
5:00 p.m.
CHAIRMAN THERRIAULT asked how DOA got authorization for the
expenditures.
MS. PARCE said the Legislature approved the expenditures through
the operating budget in the first two years of the PBF. In the
budget that is before the Legislature now, she has requested that
the depreciation dollars be called CIP funds so they can be used
throughout the construction season. She said major construction
projects don't get started until April or May. If she had to
th
stop these projects on June 30, the money can't be used
effectively. The depreciation purposes of the PBF have been
moved to be able to roll over the year.
SENATOR HALFORD asked how many more buildings or how much more in
value HB 444 would add to the PBF.
MS. PARCE said HB 444 wouldn't add any more buildings. HB 444
would allow more buildings to be added if they became attractive
to the PBF. She noted that one of the main missions of the PBF
is to replace general fund dollars with other kinds of revenue
streams. In order for a facility to be attractive for PBF uses,
it would need to bring in new money for the State. If a building
were housed totally by the general fund, it wouldn't be quite as
attractive because it wouldn't bring in new money.
SENATOR HALFORD said he thought it would lose money.
MS. PARCE agreed.
SENATOR HALFORD said it would have an operating budget impact if
there was the cost of operation that was normally in the
operating budget plus the reserve for maintenance. That would
cost more than it would otherwise.
MS. PARCE said DOA wouldn't just take all of the buildings.
SENATOR HALFORD said saving reserves for maintenance might not be
a bad idea.
MS. PARCE said DOA looked at the makeup in the tenants of each
building.
REPRESENTATIVE JAMES said originally, Retirement and Benefits had
not been paying rent. She said that was collected in a different
fund. The State also cannot collect rent from the federal
agencies in the facilities unless all of the agencies in the
building are charged rent. She said when DOA was making its
decisions, those federal agencies needed to be included to make
it a benefit financially. She said the kinds of maintenance the
PBF was able to achieve wouldn't get done otherwise without a
special appropriation.
CHAIRMAN THERRIAULT asked if the federal agencies housed in the
state buildings had been paying rent.
MS. PARCE said they had not. Their costs had been covered
through the regular operating budget of DOT. DOT was managing
these buildings and would put forth a proposal to pay for the
bills of the buildings. She said she supposed DOT could have
asked for funds for depreciating items. However, she didn't
think that they had done so because there is a great deal of work
that never got done.
There was no further testimony.
SENATOR DAVIS moved HB 444 from committee with attached zero
fiscal note and individual recommendations.
There being no objection, HB 444 moved from committee with
attached fiscal note and individual recommendations.
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