Legislature(1993 - 1994)
03/31/1994 03:38 PM TRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
CHAIRMAN SHARP brings up SB 343 (COURTESY CARS OPERATED AT AIRPORTS) as the next order of business before the Senate Transportation Committee meeting. The chairman calls the first witness. Number 127 DAN COFFEY, Co-Owner, Dollar Rent-a-Car, testifying from Anchorage, states Dollar Rent-a-Car supports SB 343. Mr. Coffey supports the changes being worked on in the house legislation, which would state the department would not be able to impose a charge or a fee based on the revenue of a business located outside the terminal area which operates a courtesy car. Dollar Rent-a-Car supports those changes because they think a tax of 8% of the gross revenue of their business from the airport is a confiscatory rate of taxation. For comparison, in-terminal rental agencies receive a counter, covered parking for rental vehicles, uncovered parking, and all the benefits associated with being on-terminal for a fee of approximately 9.1% of their gross revenues. For only a 1.1% higher fee, the in-airport agencies receive disproportionately higher benefits. The off-airport rental agencies would not be opposed to a permitting system or a fee system, if it were imposed relative to the benefits received. We view SB 343 as an effort by the airport and the on-airport agencies to protect their turf. MR. COFFEY states the airport is, unfortunately, looking towards small business to make up their revenue shortfall, and is doing it in a manner which is very onerous to the small business operator. Number 198 CHAIRMAN SHARP asks if there are any questions for Mr. Coffey from committee members. Hearing none, the chairman calls a representative from the Department of Transportation & Public Facilities (DOT) to testify. Number 212 HELVI SANDVIK, Deputy Commissioner, Department of Transportation, states she is representing the airports in this particular case. Ms. Sandvik states DOT has submitted a position paper and a zero fiscal note on SB 343. In reanalyzing SB 343, Ms. Sandvik has concluded that there will probably be a slight fiscal impact of about 6,000$ per year to collect the fees with an initial start-up cost of about 25,000$. DOT is opposed to the bill, primarily because they believe it interferes with the airports responsibility to assess fees to those companies that derive a benefit from the airport. MS. SANDVIK states this issue has been upheld in every court of law, including the United States Supreme Court that this is a fee, and is distinct from a tax. Her basic understanding of the distinction, as determined by the U.S. Supreme Court, is that a tax applies to revenues that would be thrown into the general fund, whereas a fee, as in this particular case, would go into the International Airport Revenue Fund for payment of the maintenance and operations of the airport or public facility. Number 232 MS. SANDVIK states SB 343 would essentially expand the definition of a courtesy car to include car rental vehicles that pick up customers at the airport. Across the country there has been significant competition by off-airport agencies. She believes it is inappropriate to say that the benefit derived by off-airport operators is limited to the curb where they pick up customers. They do advertise in the airport. Currently, there is a 25$ per year permit fee assessed to courtesy vehicles. That fee is paid by all courtesy vehicles, airport, car rental agencies, etcetera. Number 263 CHAIRMAN SHARP asks Ms. Sandvik if there will be room for an expanded number of car rental agencies to bid and receive on- airport counter space. MS. SANDVIK replies the Anchorage Airport is expanding from six counter spaces to seven for the next bid period. There is room in the airport to expand the counter space, but DOT does not believe it would be appropriate to create space to fill all the demand. Ms. Sandvik thinks it would be appropriate to delay the creation of more space at least a year or two, because it comes into play with a competitive environment. Number 274 CHAIRMAN SHARP asks Ms. Sandvik if the present on-airport rental agencies pay the same percentage of gross revenues. MS. SANDVIK responds they do not. It is her understanding the amount is based on a sliding scale according to their level of business. She is not familiar with the details. She trusts Mr. Coffey's figure of an average amount being about 9.1% of gross revenue. Number 281 CHAIRMAN SHARP asks if there is any indication how many agencies plan to submit bids for counter space during the next bid period. MS. SANDVIK replies DOT's assessment of demand is that the seven counter spaces will adequately address those companies interested in bidding for on-airport space in Anchorage. She will add that the Fairbanks counter spaces were up for bid recently, and there is now a vacant counter space there because a rental agency that was formerly on airport, chose to move off-airport during the last bidding period. Number 295 CHAIRMAN SHARP asks how the sliding scale works. MS. SANDVIK responds there is a lesser fee for off-airport agencies, and DOT intends to impose a fee of 8% of gross revenues. That is directly applied to those passengers the agencies pick up at the airport. The off-airport agencies will need to distinguish between business originating from the airport, and business originating from another source. Number 301 SENATOR SHARP asks if there are further questions from committee members. The chairman announces he does not intend to move SB 343 from committee until he can see what work was done on the subject in the house. The chairman calls the next witness. Number 313 GARY ZIMMERMAN, Alaskan Rent-a-Car Inc., which is the Alaska franchise for Avis, testifying from Anchorage, reads a prepared statement. Number 351 SENATOR KELLY asks Mr. Zimmerman if Avis pays rent for counter space and or parking spaces. Number 354 MR. ZIMMERMAN responds that they do pay rent for their space on a sliding scale of a percentage of their revenue, and also pay a fee for counter space based on square footage. For parking space, it is 55$ per space per month. SENATOR KELLY asks if Mr. Zimmerman pays a separate rental fee for the space in the airport building. MR. ZIMMERMAN replies they do pay a rental fee separate from the percentage of their gross revenue that they pay to the airport. The on-airport rental agencies are basically paying three different fees. SENATOR KELLY asks Mr. Zimmerman if it wouldn't be advantageous, with all the fees his company has to pay to the airport, to move off airport. Number 365 MR. ZIMMERMAN responds his company does not feel it would be advantageous to be off airport. CHAIRMAN SHARP thanks Mr Zimmerman for his testimony and calls the next witness. Number 373 GLENN HOLDAHL, Representative for Hertz Corporation, testifying from Anchorage, reads a prepared statement. SENATOR KERTTULA adds that airports are not entirely self- supporting and do get considerable government subsidies. Number 413 CHAIRMAN SHARP asks if there are any questions for Mr. Holdahl. Hearing none, he calls the next witness. Number 415 TERESA WINTER, Budget Rent-a-Car, testifying from Anchorage, states Budget Rent-a-Car is opposed to SB 343. Budget feels that the airport generates customers for off-airport rental agencies, and they should pay a fee for that. It is unfair for on-airport agencies. Number 420 CHAIRMAN SHARP thanks Ms. Winter for her testimony and notes there is no one else who wishes to testify. Number 427 SENATOR KELLY makes an observation that when he rents a car in Anchorage, he goes directly to the airport rental agencies, and never goes to an off-airport agency. It is easier for him to do so. SENATOR KERTTULA adds he also rents only from on-airport agencies. Number 433 CHAIRMAN SHARP thanks people for their testimony and announces the committee will hold SB 343 to work on possible amendments.