Legislature(2021 - 2022)BELTZ 105 (TSBldg)
01/27/2022 01:30 PM Senate TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| SB166 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | SB 166 | TELECONFERENCED | |
| + | TELECONFERENCED |
SB 166-G.O. BONDS FOR INFRASTRUCTURE PROJECTS
1:34:15 PM
CHAIR MYERS announced the consideration of SENATE BILL NO. 166
"An Act providing for and relating to the issuance of general
obligation bonds for the purpose of paying the cost of state
infrastructure projects, including construction, major
maintenance, and port and transportation projects; and providing
for an effective date."
1:34:47 PM
NEIL STEININGER, Director, Office of Management and Budget,
Office of the Governor, Juneau, Alaska, on behalf of the
administration, stated that SB 166 would support General
Obligation (GO) Bonds: State Infrastructure Projects for
communities throughout the state. This GO Bond package is part
of the governor's proposal for capital expenditures for the
state. This bill fits in with the governor's priorities, timing,
and staging of projects to prepare the state for incoming
federal infrastructure funds. It would also help ensure that
community projects move forward. The administration plans to
finance capital projects via the capital budget, supplemental
appropriations, issuance of GO Bond, and the federal
infrastructure funding in the next several years. All the
projects fit into the midterm GO Bonds and represent needs
brought to the governor by communities throughout Alaska.
1:36:59 PM
SENATOR SHOWER recalled that the committee discussed a GO Bond
bill last year. He asked if SB 166 contained the same projects.
MR. STEININGER answered that this GO Bond list was new, although
it contains some of the same projects, including the Bartlett
and Moore Hall and Craig Harbor projects. He said the
administration used a different approach when selecting projects
for this bill, but it is similar to the overall GO Bond issuance
proposed.
SENATOR SHOWER said he thought it had changed.
1:38:21 PM
MR. STEININGER offered that the state has $1.3 billion in
overall debt capacity. This proposal would issue $325,000,000 in
GO Bonds, definitely within the state's debt capacity. He
advised that the debt service in the out years would be
approximately $20,600,000 to $20,700,000 annually. This would
provide the state with an affordable option and the means to
leverage low-interest rates when the state's savings could earn
considerably more.
1:39:49 PM
SENATOR KIEHL asked if he had an overall sense of what portion
of the projects would be under construction in one, three, or
five years.
1:40:15 PM
MR. STEININGER estimated roughly 50 percent of the projects
would be constructed in the near term, such as fire halls. He
stated that, as with other GO Bond packages, some projects would
take time to execute fully.
1:41:11 PM
SENATOR SHOWER referred to the $10,000,000 slated for the Port
of Nome - Deep Draft Port. He recalled this project is a high-
interest project regarding national security and fisheries
development in the Arctic. He recalled the state would need to
provide significantly more than $10,000,000 to receive
$280,000,000 from the federal government. He asked for
clarification on what funds were required to develop the
project.
MR. STEININGER said he did not recall the total project cost. He
explained that the $10 million was for federal matching funds.
He recalled a recent announcement from the US Army Corps of
Engineers about funding for this project. These matching funds
will help leverage the project now that the US Army Corps of
Engineers funds are forthcoming.
SENATOR SHOWER stated he was interested in the status of the
state's allocation process. He acknowledged the importance of
the Port of Nome project.
1:43:09 PM
SENATOR KIEHL explained he was interested in the timing because
interest rates were beginning to climb. He said he has questions
on private activity and interest rates on bonds.
1:43:35 PM
CHAIR MYERS said the committee could discuss that matter now.
1:43:39 PM
SENATOR KIEHL said he did not recall the state issuing GO bonds
that had a private activity qualifier in the past. He asked if
that was something the state had previously done.
MR. STEININGER deferred to Mr. Mitchell, the state's debt
manager.
1:44:28 PM
DEVEN MITCHELL, State Debt Manager, Treasury Division,
Department of Revenue, Juneau, Alaska, answered that the fiscal
note relates to an analysis that must occur for all municipal
bond issues under consideration for tax exemption. He stated
that private use issues could lead to a bond issue being
categorized as something other than being fully tax-exempt. For
example, one would expect a public school or a road open to any
traveler always to be tax-exempt. However, a facility that has
private entities leasing, such as a boat harbor, such that
private activity could lead to bonds being subject to the
Alternative Minimum Tax (AMT). This means certain investors
would need to pay income tax on the income from those bonds,
which would lead to a higher interest rate.
1:45:34 PM
MR. MITCHELL explained that some of the GO Bond projects on the
list might have private activity, but it would be a small
percentage of the total.
1:45:52 PM
SENATOR KIEHL asked whether historically state GO bonds have
been subject to the Alternative Minimum Tax (AMT). He asked for
the interest rate delta.
MR. MITCHELL explained that the private activity rules have
evolved. There has been a tightening of the projects classified
as subject to the AMT. Thus, the state has avoided having AMT
series bonds on the GO Bond level. For example, the Alaska
International Airport System terminal projects, where private
airlines or concessions lease space, would be subject to the
AMT, just as for harbor projects. However, several airport
projects in SB 166 for airport improvements would be fully tax-
exempt.
1:47:08 PM
MR. MITCHELL related that although the state has not had a
pattern of issuing AMT bonds in the past, it is not unusual for
municipal port, harbor, and bond projects to be subject to the
tax. The US has experienced an extraordinarily low-interest-rate
environment. Interest rates are at the bottom quartile of all
time and probably in the bottom 10 percent. He acknowledged the
trend of rising interest rates over the last year was focused on
the short end of the yield curve. He elaborated that when bond
issues are sold, the principal matures each year throughout the
bond issue. Each one has an interest rate correlated to its year
of maturity. Generally, the interest rates rise from the yield
curve. On the short end, interest rates have raised one-half a
percent, and on the long end of 30 years, it would be more like
15 to 20 basis points or 15 percent. He said the expectation is
that rates could rise over the next year. Banks and financial
institutions predict increased interest rates of 1 to 1.5
percent and 25 to 50 basis points on the long end. The fiscal
notes reflected interest rates that were 50 basis points higher
than what could be achieved today to hedge against future rising
interest rates.
1:49:31 PM
SENATOR SHOWER asked what the bottom 10 percent of interest
rates meant. He wondered about the effect world events, such as
Ukraine or the dollar losing its status as the world reserve
currency, would have on GO Bonds. He expressed reluctance in
issuing GO Bonds when the world continues to be in turmoil.
MR. MITCHELL answered that being in the bottom 10 percent means
that interest rates would be higher 90 percent of the time. The
state is in a unique position in terms of world events since the
Alaska Permanent Fund provides a broad-based, diverse asset
allocation fund invested for the long term. Thus, Alaska is
naturally hedged against world events in some ways. Even if
subject to the AMT, issuing bonds that qualify for tax exemption
provide a significant advantage. On its face, if the state had
the money in the bank and invested in similar securities that
were taxable, the state would make more money than it would pay
in interest expenses. He acknowledged that would take fiscal
discipline, but it is a smart financial move to have a debt
program when the state has access to tax-exempt financing.
1:52:37 PM
SENATOR SHOWER asked when the interest rate would become locked
in.
MR. MITCHELL answered that the interest rate is not locked in
until the bonds are sold. Thus, the state would be exposed to
interest rates, credit ratings, and tax risks to the extent of
future changes. Still, in his experience, GO Bonds take a long
time to realize maturity regarding project development and
expenditure of proceeds. For example, the 2002 Transportation
Act sold the last issue of over $100,000,000 in 2010. It took a
decade to spend the money. He agreed that interest rates could
change drastically in 5 to 10 years. He characterized the GO
Bonds as a thoughtful way to accommodate a capital program with
a financial tax advantage versus cash. He opined that it was
worth considering on a conservative basis. He cautioned against
overborrowing, but certainly, the state is not in that position.
SENATOR SHOWER said he wanted the record to reflect this.
1:54:19 PM
CHAIR MYERS turned to the specific General Obligation Bond (GO)
projects in SB 166, beginning with Craig Harbor, [Reference No.
63333 for $8,300,000].
SENATOR KIEHL asked what process the committee would use to
consider these GO Bond projects.
1:54:59 PM
MR. STEININGER offered to briefly explain each project.
CHAIR MYERS agreed that would be sufficient.
MR. STEININGER said the Craig Harbor project for $8,300,000
would provide matching funds to complete the project.
CHAIR MYERS asked whether this project was underway.
1:55:42 PM
MR. STEININGER explained that the city purchased the property
and has access to some money but it needs an additional
$8,300,000 to commit and complete the project. He stated that
other funds support the overall project cost.
1:56:07 PM
SENATOR KIEHL recalled that this project was included in the GO
Bond package for $4.5 million last year, but the figures have
almost doubled in cost. He asked what changed in the overall
cost and the administration's position on the project.
MR. STEININGER replied that the administration proposes to fully
fund the project. As the committee may recall, the governor's GO
Bond proposal last year contained significantly more projects,
but not every project received full funding. This would provide
the total amount needed.
MR. STEININGER said, as Mr. Mitchell mentioned, the state has an
opportunity to take advantage of low-interest rates. He
explained that capital projects supported by unrestricted
general funds were not taking advantage of the low-interest
rates. He said the administration supports the financing
mechanism to achieve the projects but does not believe it is
prudent to spend unrestricted general funds (UGF) that could be
earning money to pay down the debt. He summarized that it came
down to the financing mechanism rather than any issue with the
project.
1:58:27 PM
SENATOR SHOWER asked him to provide specific project timelines,
including when he anticipated that the GO bond funds would be
allocated and the construction timeframe. He wondered why the
state was considering issuing $300 million in GO bonds when
federal infrastructure funding is forthcoming.
1:59:23 PM
MR. STEININGER stated that he would not give a robust view of
the project timeline, but he offered to report back to the
committee with supporting documents. While the federal
infrastructure bill will bring substantial funds to the state,
including projects the US Army Corps of Engineers recently
identified, these projects are primarily federal government
priorities, except for the Surface Transportation Program or
Village Safe Water Program. He related that the state could not
provide input to prioritize the projects. Thus, the GO Bond
package allows the administration to make Alaska-centric
prioritizations. Another benefit is that the GO Bond proposal
can include projects ready to be executed, whereas the federal
allocations will take time to work through the process. He
stated that the state was staging projects and funding in the
regular capital budget, the GO Bond package, and some projects
at the federal level.
2:02:09 PM
SENATOR SHOWER wondered whether it was wise to bond for $300
million since the state does not know which projects will be
funded in the federal Infrastructure and Investment and Jobs Act
(IIJA).
2:03:06 PM
CHAIR MYERS turned to the Craig Mariculture Infrastructure
project, [Reference No. 64164 for $5,000,000].
2:03:16 PM
MR. STEININGER explained that this would provide matching funds
for a federal grant to fund the Craig Mariculture Processing
Facility. It also helps address policy considerations for future
food security in Alaska to help build a more sustainable future.
2:03:57 PM
CHAIR MYERS asked whether this would fall under the AMT or if
the project would be tax-exempt.
MR. STEININGER deferred to Mr. Mitchell.
2:04:32 PM
MR. MITCHELL responded that to the extent the mariculture
industry for-profit businesses were using the facility, it could
be subject to an AMT. He characterized it as similar to a boat
harbor that leases its slips to private parties or businesses.
The private activity would result in the tax status being
slightly worse than if the building was a fully governmental
public building.
2:05:19 PM
CHAIR MYERS turned to the Kenai River Bluff Stabilization,
[Reference No: 64165 for $6,500,000].
MR. STEININGER explained that this would provide match
assistance to the City of Kenai for a federal grant to support
the Kenai Bluff Stabilization Project. In addition, the City of
Kenai has secured $4 million for this $30 million project.
2:05:52 PM
SENATOR KIEHL asked for an overview of the project, including
the number of river miles and materials needed.
MR. STEININGER said he was unsure of the number of miles of
riverbank that this project would stabilize.
2:06:34 PM
CHAIR MYERS turned to the Ketchikan International Airport
Terminal, [Reference No. 64163 for $7,500,000].
MR. STEININGER explained that the state owns the runway, but the
City of Ketchikan manages the airport terminal. This would
provide a grant to the city to enhance capacity and improve the
safety and efficiency of travel and operations at the Ketchikan
International Airport. He said the City of Ketchikan also
provides funding for this project. He related his understanding
that the project was in progress.
2:07:08 PM
SENATOR KIEHL wondered if the runway resurfacing listed on the
backup was appropriate for GO Bond or if it was eligible for
Airport Improvement Program (AIP) funds.
MR. STEININGER deferred to Commissioner Designee Anderson.
2:07:53 PM
RYAN ANDERSON, Commissioner Designee, Department of
Transportation and Public Facilities (DOTPF), Juneau, Alaska,
explained that runway or taxiway projects were typically
eligible for AIP funds. It can be advantageous to use state
funds since the state can accomplish the projects quicker in the
state process by combining steps and working them concurrently,
but the federal process is more cumbersome.
2:08:40 PM
SENATOR KIEHL wondered if GO Bonding was the best way to finance
the airport projects.
2:08:52 PM
CHAIR MYERS turned to the Knik Arm Port Infrastructure project,
[Reference No. 55043 for $175,000,000].
2:08:58 PM
MR. STEININGER explained that Knik Arm Port Infrastructure would
provide $175 million for the Knik Arm Port Infrastructure
Project, which includes the Port of Alaska, Port Mackenzie, and
connecting transportation links. He said this project does not
provide a specific distribution between the two ports. The state
would look to the two ports to coordinate the port
infrastructure in a manner best for the region.
2:09:40 PM
SENATOR SHOWER emphasized that the two entities have ongoing
issues and have not agreed on the project allocation. He
highlighted that he questions this funding allocation since no
port authority exists. He related that each entity needs
approximately $1 billion to accomplish the waterfront
infrastructure. He acknowledged that the project is necessary,
but the committee might need to drill down to figure out the
allocation. He asked if the administration had any suggestions.
MR. STEININGER answered that the administration would like the
two entities to come together and decide what is best for the
entire region, including goal-oriented collaboration between the
two entities. He commented that the committee's suggestion to
hold a hearing to talk through the solutions is one reason the
project was included.
2:13:28 PM
SENATOR SHOWER suggested that the administration delete the
language that refers to a nonexistent regional port authority
and require a Memorandum of Understanding (MOU) between the
entities to determine how to divvy up the $175 million. He
expressed concern that this proposal would create tension
between the two entities.
2:14:22 PM
CHAIR MYERS turned to the Kodiak Fire Station, [Reference No:
AMD 64199 for $15,000,000].
MR. STEININGER explained that this would provide $15,000,000 to
replace the Kodiak Fire Station damaged in the 2018 Southcentral
earthquake. He related that it was located within the tsunami
hazard zone. The City of Kodiak has funded site selection, pre-
development, concept design, and geotechnical site analysis for
a new fire station.
2:15:05 PM
SENATOR SHOWER asked if the funds were enough for the total
project.
MR. STEININGER offered to research this and respond back to the
committee.
2:15:39 PM
CHAIR MYERS turned to the Nenana Fire Hall, [Reference No. 64169
for $5,000,000].
MR. STEININGER said this would provide $5 million to construct a
new fire hall.
CHAIR MYERS noted that the City of Nenana also contacted him
about the project.
2:16:00 PM
SENATOR SHOWER remarked that the Nenana Fire Hall, located in a
remote area on the Parks Highway, is falling apart.
2:16:28 PM
SENATOR KIEHL concurred. He said the photos show the fire hall
is worn out. He asked how the administration compiled the list
of public safety facilities for GO Bonding. He noted that the
fire hall in Haines also needed to be replaced.
MR. STEININGER explained that the administration reviewed public
safety needs regionally, staying within a target range of
bonding capacity. He acknowledged that the administration was
not trying to solve every public safety need in this GO Bond
package.
2:17:29 PM
CHAIR MYERS turned to the Port of Nome - Deep Draft Port,
[Reference No. 62451, for $10,000,000].
MR. STEININGER explained that the overall cost for all three
phases of the Port of Nome project was $642 million, with $417
million in federal funding and $225 million in non-federal
receipts. He reported that Phase 1 estimates were $397 million,
with $250 million in federal receipts. The state would use this
funding in collaboration with the US Army Corps of Engineers to
achieve the required match. He added that the state is
investigating whether it can accommodate some matching funds
with in-kind activities.
2:18:37 PM
SENATOR SHOWER asked whether this request would provide $10
million towards the non-federal funding.
2:18:42 PM
MR. STEININGER answered that is correct. He reported that the
non-federal portion of Phase 1 of this project is $147 million.
SENATOR SHOWER remarked that the state would still be $137
million short. He said he did not recall the amount contributed
by corporations, the unorganized borough, or the community.
MR. STEININGER responded that the $10 million GO Bond funds
would start the project, but he was unsure of the amount of
community funding for the project. He agreed that additional
funding would be needed to complete the project.
2:19:47 PM
SENATOR SHOWER asked for the Phase 1 federal match amount.
MR. STEININGER responded that the federal funding for Phase 1
was $250 million, and the remaining portion was $147 million.
SENATOR SHOWER requested more information on the federal, local,
and state funding breakdown for the Port of Nome - Deep Draft
Port project. He expressed concern that the state would invest
$10 million in the project, but the remaining matching funds
might not materialize. He characterized this project as economic
development that is good for the state regarding national
security issues. He predicted that this would be a 50-year
project. These are the types of projects the state should invest
in for many reasons, including national security, arctic
strategy, resource, and private development.
MR. STEININGER agreed to provide more information.
2:21:10 PM
CHAIR MYERS turned to Warren "Bud" Woods Palmer Municipal
Airport Taxiway, [Reference No: 64168 for $6,500,000].
MR. STEININGER explained that this would provide $6.5 million
for the Palmer Municipal Airport for taxiway work on runway 10-
28.
2:21:41 PM
SENATOR KIEHL pointed out that this project already includes
$500,000 in federal AIP funds. He asked what portion of the
project was eligible for federal AIP funds.
MR. STEININGER answered that the administration would like to
use GO Bonds for some airport projects because state money
allows more flexibility and expediency.
2:22:34 PM
SENATOR KIEHL asked whether the state retains that flexibility
when the project has already received some federal aviation
funding.
2:22:55 PM
COMMISSIONER DESIGNEE ANDERSON responded that the state still
has advantages even when the project funding is mixed funding.
He explained that the federally funded project requirements are
very strict. Thus, projects can be build faster using state
funds than the federal process since it might restart
environmental documents. He related that another advantage with
state funds was expanded flexibility. He was unsure where the
project was ranked in the overall availability of federal AIP
funding since over 230 airports in the state compete for these
funds. Using GO Bonds fund this project means that the Palmer
taxiway construction work will get done.
2:24:20 PM
SENATOR KIEHL asked whether the taxiway work would use AIP
competitive funding or AIP entitlement funding.
COMMISSIONER DESIGNEE ANDERSON responded that he was unfamiliar
with the specific AIP source. Still, typically there is some AIP
discretionary and entitlement funding, depending on the airport
project ranking on the list.
SENATOR KIEHL remarked that it might be worthwhile to determine
whether the project would use AIP competitive funding. He spoke
in support of the Palmer airport expansion project. However, as
Mr. Steininger remarked, these are projects best funded with GO
Bonds rather than UGF to allow the state to engage in arbitrage.
He emphasized that the difference between the 6 percent federal
AIP match and 100 percent of the project was too significant to
make up for arbitrage.
2:25:26 PM
SENATOR SHOWER recalled that during last year's GO Bond bill [SB
74] discussions, the committee discovered that some projects
were already funded. He asked whether every one of the GO
projects in SB 166 was currently unfunded.
MR. STEININGER responded that last year's issue arose when the
administration listed several airport projects already slotted
for AIP funding. However, that is not the case this year. He
explained that the City of Palmer requested the Palmer Municipal
Airport Taxiway Construction project. Some of the projects have
other sources of funding, such as the US Army Corps of Engineers
federal funding for the Port of Nome - Deep Draft Port project.
However, the GO Bond funds do not fully fund the projects. Most
of the projects in SB 166 are supplemented by other funds to
achieve the entire project rather than the GO Bonds fully
funding them.
2:27:22 PM
SENATOR SHOWER reiterated that last year the committee learned
that some of the GO Bond projects [in SB 74] were already slated
for funding. He asked for verification that this project needs
GO Bond funding and is not scheduled for other funding.
MR. STEININGER answered yes.
2:28:33 PM
CHAIR MYERS turned to the next project, the Seward Freight Dock
Expansion and Corridor Improvements, Reference No: 62613 for
$5,000,000.
2:28:35 PM
MR. STEININGER explained that the existing Alaska Railroad dock
in Seward was constructed in 1966 and predicted to become
unusable by 2023 or 2024 without reconstructing portions of the
dock.
2:29:03 PM
CHAIR MYERS stated that some funds were put towards the project
in 2017 and 2019. He asked whether this was enough to make the
dock serviceable or if this would partially fund the overall
reconstruction.
2:29:28 PM
MR. STEININGER answered that some parts of the dock would be
reconstructed and expanded. He remarked that he could not
predict whether the dock would need additional work, but this GO
Bond funding will address significant repairs and enable the
dock to be used.
2:29:53 PM
SENATOR SHOWER highlighted that the state has food security
needs. He recalled briefings that raised concerns about whether
freight could be moved from Seward because the Alaska Railroad
lacked rail cars. He asked whether the GO Bond funds would be
spent, but the facility would not be usable. He wondered if the
funding was misallocated and would be better used at the Port of
Whittier.
2:31:40 PM
MR. STEININGER said he would research this and report back to
the committee. He characterized it as a much broader question on
how this project fits into the overall Seward structure.
2:32:10 PM
SENATOR SHOWER asked Commissioner Designee Anderson to comment
on this.
2:32:22 PM
COMMISSIONER DESIGNEE ANDERSON stated that enhancing the Seward
Dock would provide resiliency to the Alaska Railroad. He
acknowledged that he was not familiar with the project details,
but he characterized it as an actual, tangible project.
2:33:04 PM
SENATOR SHOWER maintained his interest in obtaining more
information and the assurance that rail traffic will happen if
the Seward Freight Dock Expansion project moves forward.
2:33:50 PM
SENATOR KIEHL recalled that the Seward [Cruise Ship Terminal],
the adjacent dock, plans to expand from 600 to 1000 feet. This
project would expand the Alaska Railroad dock from 700 to 1000
feet. He expressed concern that the Seward Cruise Ship Terminal
Project was $70,000,000, but this project cost funding is
$10,000,000. He recalled the Alaska Railroad dock received $5
million in prior funding, and SB 166 would provide an additional
$5 million. Although the projects seem comparably scaled, the
overall cost is substantially different. He asked for the scope
and scale of the Alaska Railroad doc project.
2:34:37 PM
MR. STEININGER responded that this project's scope would expand
the Alaska Railroad dock from 620 to 1,000 feet, bringing the
dock into deeper water. He advised members he could not compare
the two projects' costs since he was not familiar with the
Seward Cruise Ship project.
2:35:17 PM
SENATOR SHOWER asked whether the committee could obtain the
figures for the two projects.
CHAIR MYERS agreed to provide the information.
2:35:30 PM
CHAIR MYERS turned to the next project, the Wasilla Airport
Runway and Terminal, Reference No: 64167, for $14,100,000.
2:35:43 PM
MR. STEININGER explained that this project's scope would extend
the runway to 5,100 feet to accommodate larger aircraft. The
City of Wasilla owns and operates the airport, and the community
requested $14.1 million in funding. The Army National Guard
Aviation Group has recommended a runway of at least 5,000 feet
to accommodate aircraft used for pilot training and for use as
an alternate airport.
2:35:58 PM
SENATOR KIEHL stated that the project backup indicates that the
runway extension would serve larger military aircraft. However,
the federal Infrastructure Investment and Jobs Act (IIJA)
provides significant defense funds. He asked whether the state
has reviewed those funding categories.
MR. STEININGER offered to research this and report back to the
committee. He explained that the administration was assessing
the federal infrastructure funding. For example, the US Army
Corps of Engineers provided some funding for these GO Bond
projects. He advised that future releases of the infrastructure
bill could supplement these projects but may have match
requirements. Some of the GO Bond funds could be used for
matching funds. He related that as that information becomes
available, the administration will update the process and inform
the legislature of any changes. However, he was unaware of any
funds that would cover the project at this time.
2:37:25 PM
CHAIR MYERS asked Mr. Binder to weigh in on the Wasilla Airport
Runway and Terminal Project.
2:37:37 PM
JOHN BINDER, Deputy Commissioner, Executive Director, Alaska
International Airport System, Department of Transportation and
Public Facilities (DOTPF), Anchorage, Alaska, asked for
clarification that the committee was interested in whether the
Wasilla Airport Runway and Terminal Project was federal AIP
eligible.
CHAIR MYERS answered yes.
MR. BINDER noted that the state does not own this airport, so he
was not wholly familiar with the project. However, some items on
the capital request have several things that could be AIP
eligible, depending upon the type of activity at the Wasilla
Airport. He elaborated that extending the runway, adding lease
lots, and tie-downs may be AIP eligible, but the Federal
Aviation Administration (FAA) will determine that eligibility.
Typically, if airports have large aircraft attempting to land
but cannot land due to the runway length, or the airplane cannot
tie down due to a lack of apron space, those costs would be AIP
eligible. However, he stated he could not currently make that
assessment on the Wasilla Municipal Airport project.
2:38:53 PM
SENATOR SHOWER related his understanding that Palmer was not
interested in expanding its airport, but the City of Wasilla is
willing to do so. The Wasilla Airport does not currently have
any significant commercial operations, and it lacks a control
tower. He pointed out that Big Lake, located a few miles away,
has a dirt runway with a very high-frequency omnidirectional
range (VOR) short-range radio navigation system for aircraft, so
training occurs there. He characterized the Wasilla Municipal
Airport as a small, general aviation airport. The City of
Wasilla would like to expand the airport to attract larger
commercial aircraft. He was unsure of its standing on the FAA
AIP list. He surmised that the project would likely qualify for
federal AIP funding since the construction involves expanding
the apron, building a passenger terminal, and expanding the
runway to support larger aircraft such as the US Army National
Guard or commercial aircraft.
2:40:33 PM
CHAIR MYERS turned to the next project, the Juneau Access,
Reference No: 64162, for $25,000,000.
2:40:44 PM
MR. STEININGER stated that the following two projects were
directly managed by the Department of Transportation and Public
Facilities (DOTPF). He deferred to Commissioner Designee
Anderson to provide details. He explained that the Juneau Access
request for $25 million would improve transportation in and out
of Juneau.
2:41:21 PM
COMMISSIONER DESIGNEE ANDERSON characterized the Juneau Access
Project as a legacy project to consider transportation options
in the Northern Lynn Canal. These funds would explore options to
improve the transportation corridor. He related his
understanding that previous analysis considered all modes of
transportation, and he did not believe this would be any
different. The goal would focus on providing people with
additional transportation options, reducing state and user
costs, and reducing travel times. Again, state funds would
provide flexibility that federal funds lack due to restrictions.
He stated that the GO Bond funds could also be used as matching
funds.
2:42:46 PM
CHAIR MYERS asked whether these funds were to study the project
and get it up and running in anticipation of using federal IIJA
funds for construction.
COMMISSIONER DESIGNEE ANDERSON answered that he described one
scenario, but he did not believe the administration had made any
final decisions on the Juneau Access project.
2:43:20 PM
SENATOR KIEHL asked if GO bonds could be used for studies or if
the funding must be used for construction.
MR. STEININGER responded that the administration believes the
Juneau Access Project is bondable, noting that the bill went
through a legal review before introduction. The $25 million in
GO Bond funds would potentially support a construction project.
He deferred to the commissioner to speak to the Juneau Access
project phases. However, he pointed out that all projects
require some planning and coordination that attribute to the
overall project cost.
2:44:34 PM
SENATOR SHOWER asked if the funding for the Juneau Access
Project would provide a $25 million study for a "Bridge to
Nowhere" rather than actually laying steel or concrete.
COMMISSIONER DESIGNEE ANDERSON answered that first, the
department would ensure that the department completed the
appropriate work. He said DOT&PF would have no reason to
reproduce work. He maintained that state funding has different
requirements, and the department uses that flexibility to
provide cost-effective analyses. He acknowledged that the
department uses a process to ensure that it completes the
necessary planning, environmental, permitting, and right-of-way
work before any construction happens. He assured members that
the department intends to put the money to good use. He offered
his view that a substantial amount of work has already been done
on this project.
2:47:01 PM
SENATOR SHOWER responded that he must explain the funding to his
constituents. He emphasized that this project was challenging
since it would use GO Bonds and not construct the road. He
related his expectation that GO Bond projects would be shovel-
ready.
2:48:11 PM
CHAIR MYERS turned to the Northern Access to the University
Medical District (UMED) project, Reference No: 43056, for
$22,000,000.
2:48:18 PM
COMMISSIONER DESIGNEE ANDERSON explained that these funds would
get the Northern Access to the University Medical District
(UMED) project moving again. He stated that these funds could be
handed off to the Municipality of Anchorage (MOA) or the
University of Alaska for completion. He related that right-of-
way and utilities were sequential steps in the federal process
but using GO Bonds and the state process would allow the
department to combine processes. For example, the department can
reduce some project timelines from three to seven years to two
to three years using state funds. He anticipated cost savings by
coordinating the overall efforts.
2:49:39 PM
SENATOR KIEHL asked whether the Department of Transportation and
Public Facilities (DOTPF) has secured the right-of-way for this
project.
COMMISSIONER DESIGNEE ANDERSON answered no.
2:50:30 PM
SENATOR KIEHL asked for the status of the local municipal
approval and the roadway length.
COMMISSIONER DESIGNEE ANDERSON offered to research and report
back to the committee. He recalled substantial discussion on
whether the final roadway would be a 2 or 4 lane road and if it
would include pedestrian overpasses.
2:51:04 PM
SENATOR KIEHL said he heard the proposed roadway was short.
CHAIR MYERS surmised from viewing Google maps that the project
length was roughly a mile.
2:51:32 PM
CHAIR MYERS turned to the University of Alaska Fairbanks -
Bartlett Hall and Moore Hall Modernization and Renewal,
Reference No: 45644, for $18,650,000.
MR. STEININGER explained this $18.7 million project would make
significant upgrades throughout the Bartlett Hall and Moore Hall
buildings. He deferred to Chad Hutchison to respond.
2:52:09 PM
CHAD HUTCHISON, Director of State Relations, University of
Alaska, Fairbanks, Alaska, stated that this project would
renovate the two largest university residence halls. Bartlett
Hall and Moore Hall are approximately eight stories high and
house 650 undergraduate and graduate students. He explained that
the guts of the building are rotting from the inside out, and it
suffers from an imminent total water and sewer system failure.
He related that the department had done the design work, and
construction could occur after voter approval.
2:53:29 PM
SENATOR SHOWER asked whether there were any matching funds from
the University of Alaska Fairbanks or the local community. He
asked whether this represents the total project cost.
2:54:30 PM
MR. HUTCHISON answered that the project was wholly state-funded,
that there is no federal match or private funding. He offered to
provide any additional information members needed.
2:55:02 PM
SENATOR SHOWER asked whether UAF had any backup funding planned
if the GO Bond package failed.
MR. HUTCHISON answered that the university would consider the
capital budget as an avenue to explore. He characterized that
this project was the highest need throughout the UAF system. He
pointed out that the university houses wildfire firefighters
during the summer.
2:56:24 PM
SENATOR KIEHL related his understanding that this project would
completely replace the plumbing and lighting. He asked whether
this would bring the Bartlett Hall and Moore Hall residences up
to speed or if other repairs would be necessary.
MR. HUTCHISON answered yes; this project will completely
demolish the stacked restrooms renovate the ventilation,
electrical, and plumbing systems to ensure compliance with
building codes. He reported that the systems routinely fail, so
the facility's team has been scrambling to maintain minimum
standards. This project should adequately house students for
decades to come.
2:58:53 PM
CHAIR MYERS held SB 166 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB166 GO Bond Project Backup 1.27.22.pdf |
STRA 1/27/2022 1:30:00 PM |
SB 166 |
| SB166 GO Bond List 01.27.22.pdf |
STRA 1/27/2022 1:30:00 PM |
SB 166 |
| SB166 Fiscal Note REV.PDF |
STRA 1/27/2022 1:30:00 PM |
SB 166 |
| SB166 Version A.PDF |
STRA 1/27/2022 1:30:00 PM |
SB 166 |