Legislature(1993 - 1994)

03/31/1994 03:38 PM TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= 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               
 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$.  DOT is opposed to the bill, primarily                 
 because they believe it interferes with the airports responsibility           
 to assess fees to those companies that derive a benefit from the              
 MS. SANDVIK states this issue has been upheld in every court of               
 law, including the United States Supreme Court that this is a fee,            
 and is distinct from a tax.  Her basic understanding of the                   
 distinction, as determined by the U.S. Supreme Court, is that a tax           
 applies to revenues that would be thrown into the general fund,               
 whereas a fee, as in this particular case, would go into the                  
 International Airport Revenue Fund for payment of the maintenance             
 and operations of the airport or public facility.                             
 Number 232                                                                    
 MS. SANDVIK states SB 343 would essentially expand the definition             
 of a courtesy car to include car rental vehicles that pick up                 
 customers at the airport.  Across the country there has been                  
 significant competition by off-airport agencies.  She believes it             
 is inappropriate to say that the benefit derived by off-airport               
 operators is limited to the curb where they pick up customers.                
 They do advertise in the airport.  Currently, there is a 25$ 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                
 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               
 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           
 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                  
 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              
 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.                    

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