Legislature(2009 - 2010)BARNES 124
03/17/2009 08:00 AM House COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| Denali Commission | |
| HB161 | |
| HB150 | |
| HB156 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 161 | TELECONFERENCED | |
| += | HB 150 | TELECONFERENCED | |
| += | HB 156 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE
March 17, 2009
8:05 a.m.
MEMBERS PRESENT
Representative Bob Herron, Co-Chair
Representative Cathy Engstrom Munoz, Co-Chair
Representative Wes Keller
Representative Charisse Millett
Representative Sharon Cissna
Representative Berta Gardner
MEMBERS ABSENT
Representative John Harris
COMMITTEE CALENDAR
OVERVIEW(S): DENALI COMMISSION
- HEARD
HOUSE BILL NO. 161
"An Act relating to the Alaska Mental Health Trust Authority
Subport Office Building; authorizing the issuance of
certificates of participation for construction of the building
and authorizing the use of up to $25,000,000 from the mental
health trust fund for construction of the building; approving
leases of all or part of the building by the Department of
Administration; and providing for an effective date."
- MOVED CSHB 161(CRA) OUT OF COMMITTEE
HOUSE BILL NO. 150
"An Act repealing certain provisions relating to modifying the
factors that apply to calculate the amount of power cost
equalization; providing for an effective date by repealing the
effective date of sec. 3, ch. 2, 4SSLA 2008; and providing for
an effective date."
- MOVED OUT OF COMMITTEE
HOUSE BILL NO. 156
"An Act relating to municipal fees charged for disposal of waste
material from the substantial rehabilitation, renovation,
demolition, removal, or replacement of a structure on
deteriorated property."
- MOVED OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 161
SHORT TITLE: CERTIFICATES OF PARTICIPATION FOR SUBPORT
SPONSOR(s): REPRESENTATIVE(s) MUNOZ
02/27/09 (H) READ THE FIRST TIME - REFERRALS
02/27/09 (H) CRA, FIN
03/12/09 (H) CRA AT 8:00 AM BARNES 124
03/12/09 (H) Heard & Held
03/12/09 (H) MINUTE(CRA)
03/17/09 (H) CRA AT 8:00 AM BARNES 124
BILL: HB 150
SHORT TITLE: POWER COST EQUALIZATION
SPONSOR(s): REPRESENTATIVE(s) AUSTERMAN
02/25/09 (H) READ THE FIRST TIME - REFERRALS
02/25/09 (H) CRA, FIN
03/12/09 (H) CRA AT 8:00 AM BARNES 124
03/12/09 (H) Heard & Held
03/12/09 (H) MINUTE(CRA)
03/17/09 (H) CRA AT 8:00 AM BARNES 124
BILL: HB 156
SHORT TITLE: ALLOWING CERTAIN LANDFILL FEE WAIVERS
SPONSOR(s): REPRESENTATIVE(s) LYNN
02/25/09 (H) READ THE FIRST TIME - REFERRALS
02/25/09 (H) CRA
03/12/09 (H) CRA AT 8:00 AM BARNES 124
03/12/09 (H) Scheduled But Not Heard
03/17/09 (H) CRA AT 8:00 AM BARNES 124
WITNESS REGISTER
GEORGE CANNELOS, Federal Co-Chair
Denali Commission
Anchorage, Alaska
POSITION STATEMENT: Provided an overview of the Denali
Commission.
KEVIN BROOKS, Deputy Commissioner
Department of Administration (DOA)
Juneau, Alaska
POSITION STATEMENT: During hearing of HB 161, answered
questions.
HARRY NOAH, Executive Director
Trust Land Office
Alaska Mental Health Trust
Anchorage, Alaska
POSITION STATEMENT: Testified in support of HB 161.
BOB CHARLES, Energy Coordinator
Association of Village Council Presidents
Bethel, Alaska
POSITION STATEMENT: Testified in support of HB 150.
ERIN HARRINGTON, Staff
Representative Alan Austerman
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke on behalf of the sponsor of HB 150,
Representative Austerman.
REPRESENTATIVE BOB LYNN, Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Spoke as the sponsor of HB 161.
KATHRYN DODGE, Economic Development Specialist
Fairbanks North Star Borough;
Director, Alaska Regional Development Organization (ARDOR)
Fairbanks, Alaska
POSITION STATEMENT: Testified that she has no objection to HB
156.
MARK MARLOW, Principal
Marlow Corporation
Anchorage, Alaska
POSITION STATEMENT: Encouraged the committee's favorable vote
for HB 156.
ACTION NARRATIVE
8:05:19 AM
CO-CHAIR BOB HERRON called the House Community and Regional
Affairs Standing Committee meeting to order at 8:05 a.m.
Representatives Herron, Munoz, Keller, Millet, Cissna, and
Gardner were present at the call to order.
^Denali Commission
Overview: Denali Commission
8:05:48 AM
CO-CHAIR HERRON announced that the first order of business would
be the presentation from the Denali Commission.
8:06:53 AM
GEORGE CANNELOS, Federal Co-Chair, Denali Commission, reminded
the committee that the regional commissions have been around for
many years, of which the Appalachian Regional Commission was the
genesis of the Denali Commission. However, the Appalachian
Regional Commission enjoys the support of 26 senators and 13
governors. He pointed out that although the Denali Commission
has enjoyed [congressional support], Alaska is one state versus
the large regions [that makeup the other commissions].
Therefore, the politics are very different. He noted that the
Delta Regional Commission is the newest commission, and the Farm
Bill last year created four new regional commissions. The
concept of the regional commission in order to focus resources
and produce better government is ascending, which he
characterized as a healthy occurrence.
MR. CANNELOS clarified that the Denali Commission is a federal
agency and is part of the federal administration, which is
challenging in terms of funding. He highlighted that the Denali
Commission has a good record of transparency and accountability
with one of the best web sites and databases in the government.
Over the past 10 years the Denali Commission has invested close
to $1 billion and leveraged that to about $2 billion. The focus
has been on basic community infrastructure across Alaska, but
primarily in rural Alaska. He further highlighted that the
Denali Commission has created some really good grant-making and
accountability systems. Mr. Cannelos then turned to how the
Denali Commission can be more effective and work more closely
with the state, particularly in regard to capital projects and
planning and capital projects delivery as well as maintaining
and sustaining the Denali Commission in the future. Mr.
Cannelos then directed attention to the slide of the seven
commissioners of the Denali Commissioner, and pointed out that
these individuals wouldn't normally sit down together. The
aforementioned has been a healthy process. The Denali
Commission, he explained, is the group that's supposed to
strategically work together to achieve parity for those
communities and take advantage of opportunities in rural Alaska.
He related that the Denali Commission is a small organization
that's open to the public and has limited overhead. In fact, in
10 years there's probably only been about six four-year
requests. Furthermore, over the past three years, there have
been no project earmarks from Congress. He related that the
Denali Commission's appropriations come from six different
committees, which means that decisions for the various
appropriations are made in the state. For example, there's a
general appropriation for health and decisions for health
facilities are made in the state through the health steering
committee and the legislature.
MR. CANNELOS opined that much of rural Alaska resembles the
Third World, which is inexcusable. He related that he has
educated a couple of groups from the United Nations and several
hundred delegates from around the world regarding the forgotten
North, which includes the circumpolar North, Canada, Russia,
some of Scandinavia, and much of Alaska. Using the data from
the United Nations, much of Alaska resembles [Third World
nations]. He recalled being in Rampart last summer and
observing that its school had closed. The closure of a school,
he noted, is often the death knell of a community. Mr. Cannelos
then directed attention to the pie chart entitled "Funding Uses
FY99-FY08," which relates that since the inception of the Denali
Commission over half of the funding has been used for energy, a
third of the funding has been used for health accounts, and the
remainder of the funding has been used for training, teacher
housing, and transportation. The bar graph entitled "Denali
Commission Funding Sources FY99-FY09" relates almost $80 million
in funding for FY09. Mr. Cannelos credited U.S. Senator
Murkowski, Senator Begich, and Congressman Young for keeping
[the funding] at its current level because often the U.S. House
of Representatives will try to zero out the Denali Commission,
but the U.S. Senate comes to the rescue. The Denali
Commission's transportation funding is whole, but the health,
training, and energy funding has [been cut in] half. "If we can
hold this line or even start up in [2010], I think for the long
term the Commission will be fine," he remarked. However, he
characterized the long-term viability of the Denali Commission
as uncertain. He then moved on to energy, which has been a good
story in terms of replacing bulk fuel systems, upgrading power
plants, leading the way for renewable energy, much capacity
building, and working with the private sector on sustainability.
8:15:44 AM
REPRESENTATIVE GARDNER inquired as to how many people a facility
such as Buckland's bulk fuel facility serve.
MR. CANNELOS answered that it would serve villages in the range
of 200-1,500 people. The notion is to provide a facility at
which a barge can make one trip in the season and have enough
[goods] for the winter.
8:16:44 AM
CO-CHAIR HERRON asked if the U.S. House of Representatives
attempts to zero out other commissions similar to the Denali
Commission.
MR. CANNELOS responded that he isn't sure about other
commissions, but reiterated that it's the case for the Denali
Commission. He opined that the congressional attempts to zero
out the funding are the result of Alaska's inability to
communicate its story well. Furthermore, he suggested that when
former U.S. Senator Ted Stevens was a powerful member, the
situation was one of a game of politics. He related his
optimism that in the future if more relationships can be built
in those House committees, the Denali Commission will be more
successful.
8:17:50 AM
REPRESENTATIVE CISSNA turned to the issue of flying in fuel to
an area, and opined that flying in the fuel likely saved some
money because the cost of fuel decreased drastically.
8:18:37 AM
MR. CANNELOS, referring to the bar graph entitled "Bulk Fuel
Progress Report," pointed out that it relates that after 10
years the Denali Commission is about halfway through the bulk
fuel program. However, he estimated that it would cost about
$200 million to complete [the goal of the bulk fuel program],
which is why the Denali Commission intends to review the
universal need to assess the situation. He then directed
attention to the bar graph entitled "Rural Power System Upgrade
Progress Report." The bar graph illustrates that about a
quarter of the rural power systems are complete and it will take
a large effort to complete the upgrade of rural power systems.
Mr. Cannelos then shared a photograph of the three wind towers
in Hooper Bay, which he said is a good example of combining
efforts and achieving much. The wind towers in Hooper Bay were
funded by the Alaska Village Electric Cooperative, Incorporated
(AVEC) and the [Denali Commission's] training dollars were used
to send young people to become certified as wind operators. The
[Denali Commission's] transportation dollars funded the road
shown in the slide. Mr. Cannelos informed the committee that he
would distribute to the committee a study NANA Pacific, LLC,
performed on distributing Alaska's power. NANA Pacific, LLC,
reviewed the last 30 years of interties across the state. He
opined that if there could be grids, then the stand-alone
redundant systems could be eliminated and scale up renewable
energy and consider renewable development. There will be a
second phase of the aforementioned study, which will review real
costs and priorities.
MR. CANNELOS told the committee that the transportation program
came out of the Safe, Accountable, Flexible, Efficient
Transportation Equity Act: A Legacy for Users (SAFETEA-LU). The
transportation program focused on the circulation needs of
villages, including docks and harbors, dust control, and
connecting villages where it makes sense. He highlighted the
situation in Mekoryuk where there was the need to dredge the
harbor, the need for a transportation program, and the need to
install a bulk fuel system. Normally, the aforementioned
would've been an expensive project because the rock would've
come from Nome. However, someone decided to put the projects
together and it was determined that the dredge materials from
the harbor were suitable for the foundation. For this project,
the Denali Commission is spending about $483,000, $120,000 is
coming from the general fund, and $30,000 from AVEC. The
aforementioned is a good example of the right way to get things
done. He recalled two years ago when the legislature passed a
$5 million appropriation for the Department of Transportation &
Public Facilities (DOT&PF) for unspecified transportation
projects. Referring to the construction of teacher housing, Mr.
Cannelos related that there is evidence that [rural] districts
are able to retain teachers. The hope, he opined, is that the
aforementioned will result in improved student performance. The
construction of the teacher housing was in performed in
partnership with the Alaska Housing Finance Corporation (AHFC).
With regard to health care [in rural Alaska], the staff of rural
health clinics are overworked and under paid. "But health care
is a really good story, when it's provided at the local level by
local people," he remarked. He then directed attention the
slide of Buckland clinic, a $6.6 million project that included
funds from the following entities: Denali Commission, U.S.
Department of Housing and Urban Development (HUD), United States
Department of Agriculture (USDA) Rural Development, Rasmuson
Foundation, City of Sand Point, Aleutian East Borough, Shumagin
Corporation, and the Alaska Mental Health Trust Authority.
Having all these partners provides more certainty and
sustainability of the project. Mr. Cannelos opined that one of
the Denali Commission's legacies will be government
coordination, [the success of which] he credited to Bob
Pawlowski, the legislature's liaison to the Denali Commission.
He then shared a photo of the MOU group meeting, which is all
state commissioners and most all federal agency heads. This
group of people is very interested in the opportunity to network
with their peers and this concept is being pursued. He
expressed interest in convening a meeting with federal staff in
order to discuss the stimulus package. Mr. Cannelos highlighted
that the Denali Commission spends a lot of time traveling to
rural Alaska and pointed out that government coordination
requires listening, trust, and respect. He noted that Mr.
Pawlowski has represented the Denali Commission on the Immediate
Action Working Group (IAWG) for Climate Change. The IAWG
recommends that a group continue to carry on government
coordination regarding climate change. Although the Denali
Commission isn't named specifically, it's willing to dialogue
regarding the Denali Commission's role in that matter. The
Denali Commission commissioned the Institute of Social and
Economic Research (ISER) study regarding changing demographics
that illustrate long-term population decline in rural Alaska.
In closing, Mr. Cannelos stated, "Rural Alaska is an American
treasure. The future is uncertain."
8:26:41 AM
REPRESENTATIVE CISSNA, recalling her visits to rural areas,
related her observation that many rural Alaska residents are
really in denial. The communities she visited were making
suggestions to address the high fuel prices. For instance,
there was a suggestion to move health clinics to the schools
that have extra space.
MR. CANNELOS said that there are many examples of communities
that have [made suggestions regarding high fuel prices. For
example, in Mekoryuk the Denali Commission funded the power
house and clinic in the old downtown area. In the meantime,
there is a school about five miles away and an airport another
five miles away. Therefore, a community that is 10 miles across
and thus requires vehicles and fuel to be a community has been
created. Stevens Village is an example in which the $10 million
water and sewer project was denied because it amounted to over
$250 per month per family forever. Therefore, community leaders
and agency representatives decided not to move forward with the
water and sewer project. Instead, a limited system connecting
the school and the health clinic has been constructed and
village residents will maintain outhouses. The aforementioned
decision requires honest talk from all parties. He related his
surprise with the large atrium at the Hooper Bay School, which
he opined must be hard to heat. He then expressed his
understanding that there are no school construction standards,
although they would be really important to have.
8:31:40 AM
CO-CHAIR HERRON mentioned that there is an effort in the
legislature to develop a prototype, build schools based on one
plan with slight modifications. He asked if Mr. Cannelos will
be making presentations to other groups today.
MR. CANNELOS reviewed the meetings he has planned for this week.
In further response, he related that the Denali Commission is
meeting Wednesday and Thursday at which it will review its work
plan. The Denali Commission has some difficult decisions to
make because the work plan out for public comment was predicated
on a continuing resolution of level funding that didn't occur.
Therefore, the Denali Commission will have to tackle the
decision as to what to do with the limited base funding. The
Denali Commission will also discuss strategic planning and an
internal working document on roles and responsibilities at the
aforementioned meeting.
CO-CHAIR HERRON inquired as to the legislature's role with the
Denali Commission.
MR. CANNELOS said he would like to figure that out. He did
point out that in the administration's budget there is about $28
million in capital projects that compliment Denali Commission
projects. The funding is in transportation, health, and energy
and will go to those agencies. The aforementioned, he said, is
a good path toward solidifying a federal-state partnership while
sending a message to Congress that the state is engaging. Mr.
Cannelos opined that he would like to determine how to include
the legislature in the MOU working group because the legislature
has the pulse of the districts, including in regard to capital
projects.
8:35:07 AM
CO-CHAIR HERRON asked if the Denali Commission is the agency
that holds the database specifying where the stimulus funds are
going. If not, is there such an agency, he asked.
MR. CANNELOS replied no to both. He added that the Denali
Commission isn't named in the stimulus per se, although the
Denali Commission is looking at opportunities in which it can
be.
8:36:08 AM
CO-CHAIR HERRON inquired as to the unintended consequences Mr.
Cannelos, as a citizen, would fear with the stimulus package.
MR. CANNELOS said he wasn't sure he knew enough about the
stimulus package. However, he related that when there's a
"pulse" [in funds] such as that of the stimulus package, there's
a risk of projects being less than ideally coordinated.
Furthermore, such situations stress the labor community and the
construction community. He opined that there will be unintended
consequences with the stimulus package.
CO-CHAIR HERRON highlighted that the House Special Committee on
Energy is already doing a lot of good work, and therefore he
suggested Mr. Cannelos meet with the co-chairs of the House
Special Committee on Energy.
MR. CANNELOS specified that he met with them yesterday.
8:37:31 AM
REPRESENTATIVE CISSNA expressed concern with the influences from
all the different governmental and philanthropic forces that
change the character of a community. The existing period of
time has caused folks to take pause. She asked if the Denali
Commission will ensure that there's funding and programs that
help communities ensure that whatever it's given fits the
community through good training.
MR. CANNELOS confirmed that the aforementioned will be part of
the Denali Commission's process. He then recalled "The Gift
Givers" by Harold Sparks who expressed that communities don't
have to accept the gifts coming from outside of the community.
8:40:04 AM
REPRESENTATIVE GARDNER, referring to the bulk fuel and power
system upgrade programs, inquired as to how they are impacted by
the current focus on renewable energy. She then inquired as to
how the suspended work figures tie into [renewable energy].
MR. CANNELOS explained that those lists were derived from a
deficiency list created eight to nine years ago by the Alaska
Energy Authority (AEA), AVEC, and the Denali Commission. This
year it's time to review the list and determine where things
stand. The renewable energy piece is part of it in terms of the
notion of doing no harm such that as new systems are utilized
and renewable opportunities are available in the future, not
much retrofitting is required. The switching technology allows
that now. The renewable energy piece also has to do with the
size and scale of the facility being put in. He noted that he
recently signed a grant for a power line intertie between Bethel
and Napakiak. Napakiak is due for a bulk fuel upgrade, and
therefore the goal for AEA is to ensure that the size and scale
makes sense. He said he would have to get back with the
committee on the suspended work figures.
8:41:46 AM
REPRESENTATIVE GARDNER asked if there are any preliminary
results from the "Distributing Alaska's Power" study that could
be shared with the committee.
MR. CANNELOS related that the study recognizes that no entity in
the state has oversight on power line interties. Therefore, the
recommendation, as part of the broad energy strategy, is that
the aforementioned be taken into consideration. The study
concluded, he related, that interties bring a lot of positive
benefits despite the permitting and other processes.
8:43:02 AM
The committee took an at-ease from 8:43 a.m. to 8:46 a.m.
8:46:18 AM
HB 161-CERTIFICATES OF PARTICIPATION FOR SUBPORT
8:46:20 AM
CO-CHAIR HERRON announced that the next order of business would
be HOUSE BILL NO. 161, "An Act relating to the Alaska Mental
Health Trust Authority Subport Office Building; authorizing the
issuance of certificates of participation for construction of
the building and authorizing the use of up to $25,000,000 from
the mental health trust fund for construction of the building;
approving leases of all or part of the building by the
Department of Administration; and providing for an effective
date."
8:46:28 AM
CO-CHAIR MUNOZ, speaking as the sponsor of HB 161, welcomed
those who are present to testify today.
8:47:47 AM
KEVIN BROOKS, Deputy Commissioner, Department of Administration
(DOA), pointed out that the committee packet should include a
letter and answers to questions from Representative Millet. He
also pointed out that attachment 3 entitled "Briefing Paper
AMHTA Subport Office Building" addresses many of the 12
questions from Representative Millet. Mr. Brooks explained that
DOA approached The Alaska Mental Health Trust ("The Trust") a
year or so ago regarding possible space due to the upcoming
sunset of the Department of Labor & Workforce Development's
(DLWD) lease of the current aging facility. Absent progress
with The Trust by July 2009 a Request for Proposals (RFP) will
have to be put out to procure new space. Mr. Brooks emphasized
that new space in the amount of 68,000 square feet needs to be
procured and be moved into by July 2012. Currently, the state
is paying $2.33 a square foot for the DLWD building, which is
reflective of the condition of the building. With regard to the
backup on the lease, DLWD has been a tenant of the building for
27 years and the thick files are available to anyone interested.
He mentioned that the water intrusions, mold, and necessity to
move staff from the building are a matter of record. Mr. Banks
acknowledged that the costs for a new building will be more than
the current costs for the existing aging facility. Current
estimates of the market in Juneau for the downtown core are
$3.80-$4.00 range. He noted that The Trust has been told that
any facility has to be competitive with the market and the best
deal for the state will be sought. The Trust, he opined, has
developed a plan and financing mechanism that make their
proposal competitive. The Trust, he further opined, is a good
partner because it holds land in the downtown corridor and holds
cash in the amount of $22.7 million in its fund. The Trust will
borrow the remainder. The documents in the committee packet
relate various scenarios, including repaying the bonds after 20
years at which point there would be a fairly significant
reduction in the state's lease obligations because the debt
would be retired and the state would deal with only the return
on the equity for The Trust. He noted that the aforementioned
isn't dissimilar from other lease arrangements the state holds.
He then informed the committee that DOA's analysis is performed
over 30 years, specifically a 20-year initial term with 2 10-
year renewals. If the state stays in the lease and renews for
the second 10-year period, the lease would look even more
favorable in terms of a cost benefit analysis.
MR. BANKS reminded the committee that the DLWD building alone
wasn't a large enough project for The Trust to build the
facility. A larger footprint was necessary, and thus the
Douglas Island building that houses the regional offices for the
Alaska Department of Fish & Game (ADF&G) and the Department of
Corrections as well as the Department of Public Safety building
was included. The aforementioned buildings are older and in
such disrepair that a fairly significant investment would be
required. The cost analysis includes what DOA charges state
agencies, which is about $1.30 per square foot, and the
currently identified deferred maintenance. Although some of the
needs of these older buildings are known, there isn't a
comprehensive list of everything that's wrong. For instance,
there is knowledge that the DPS building needs a new roof and
the ADF&G building needs a new envelope. Therefore, the
analysis doesn't include additional costs that would be required
in order to bring the buildings up to a tenantable position or
to replace them. The aforementioned are anticipated costs, but
they're not included in the analysis in order to avoid
inappropriately padding the numbers.
8:56:43 AM
CO-CHAIR HERRON directed focus on question number 10: "Does the
Governor support HB 161?"
MR. BROOKS explained that the governor's office has been
provided the same analysis as the committee. Ultimately, [the
governor's office] has expressed the need for the project to
pencil out. Therefore, the governor is likely reviewing this
proposed project in terms of needs throughout the state. Mr.
Brooks said that any project the state undertakes has to be
fiscally sound. He related that DOA will continue working with
the governor's office and hopes to return to the committee with
a more definitive position. He then related his understanding
that the sponsor of the legislation has had a discussion with
the governor regarding this proposal. In further response to
Co-Chair Herron, Mr. Brooks confirmed that DOA's comfort level
is fairly good.
CO-CHAIR MUNOZ confirmed that she met with the governor, who she
said likes the project. However, the governor wants to ensure
that the project makes financial sense for the state. Co-Chair
Munoz opined that the proposed new facility is a better deal for
the state when compared to the existing lease costs and the
costs to upgrade existing infrastructure. Furthermore, The
Trust will have great benefit over the long-term as it will
receive a steady revenue stream to support mental health
programs.
9:00:07 AM
REPRESENTATIVE MILLETT pointed out that in the memorandum of
agreement (MOA) there's no talk of cost overruns. Therefore,
she questioned whether the state has planned any contingency for
cost overruns. She further questioned whether cost overruns
would impact the lease.
MR. BROOKS remarked that the MOA was entered into as a manner in
which to work collaboratively toward a solution. He noted that
there's a contingency built into construction, which he recalled
was 20 percent of the total construction cost. The Trust, he
opined, is bearing some risk to make the project competitive,
which is reflected in The Trust's rate of return. He noted that
there are some variables, including the rate on bonds for the
portion being financed. The responsible steps expected with a
project of this magnitude have been built in through
contingencies and other factors.
9:02:18 AM
REPRESENTATIVE MILLETT inquired as to what occurs if cost
overruns are in excess of 20 percent.
MR. BROOKS deferred to representatives from The Trust. However,
he opined that The Trust is taking a risk and the state isn't
subject to any cost overrun that would drive the lease rate
beyond the market rate of $3.80-$4 being discussed.
9:03:27 AM
HARRY NOAH, Executive Director, Trust Land Office, Alaska Mental
Health Trust, related his understanding that when the lease is
signed, cost overruns would be the responsibility of The Trust.
He explained that The Trust has estimated the project at a high
point in terms of cost, with a fairly significant contingency.
He informed the committee that The Trust has some additional
work that's necessary in terms of geotechnical work and
information regarding foundation characteristics. The Trust
will also perform additional work on the design of the building.
Mr. Noah said that often with state buildings, the [costs] reach
the budget and the size of the building is decreased [in an
effort to not have cost overruns]. However, with this proposal,
The Trust will lease a specific amount of space.
9:05:45 AM
MR. NOAH related that he is in favor of HB 161 as there are
benefits to The Trust, the state, and Juneau. He opined that
it's unusual that the aforementioned would occur at one time,
which he attributed to various factors occurring at once. Those
factors include the demolition of the subport building, The
Trust wanting to develop its waterfront parcel, and DLWD's lease
becoming available. He said he hoped the committee can support
[HB 161].
9:06:52 AM
REPRESENTATIVE GARDNER asked if The Trust anticipates any
problems with regard to zoning and variances from the City of
Juneau.
MR. NOAH related that last night the City & Borough of Juneau
Assembly unanimously passed the zone change. However, he
anticipated that once the process reaches the variance stage, it
will certainly elicit comments. In terms of the location of the
parking, he characterized it as a calculated move. He explained
that building the parking garage added $20 million to the
process without any revenue, and therefore that cost to the
state would be too high as part of this agreement. The Trust
didn't want to use the land for parking, but did so in order to
allow an agreement to be made. The aforementioned places the
land in a holding position and the intent is for The Trust to
take over the DPS building and ultimately build a parking garage
on that property. At some point, something will come along and
allow that property to be developed and push the parking to the
parking garage, he said.
9:09:05 AM
CO-CHAIR MUNOZ commented that the location of the proposed
building will cause more use of that portion of the waterfront
once the building is constructed.
9:09:36 AM
MR. NOAH, in response to Representative Millet, offered to
provide the committee with a copy of The Trust's cost estimate.
Construction is scheduled to begin in 2010, he related. He
further related that eight months ago The Trust engaged an
architectural firm in Juneau and has done quite a bit of work
including cost estimates of the building. Furthermore, The
Trust has already started the process of obtaining a Department
of Transportation & Public Facilities (DOT&PF) project manager
and is in the process of developing a design-build type of
contract in case this legislation passes. He offered to provide
the committee with the work that has been done to date.
9:11:49 AM
MR. BROOKS, in response to Representative Millet, clarified that
the DLWD building is a leased facility whereas the Douglas
Island building that houses ADF&G and Department of Corrections
and the Department of Public Safety (DPS) building are owned by
the state. The DPS building is potentially a site of a future
parking garage. He noted that at a minimum those two facilities
would be moth-balled or be used in another fashion. Once the
proposed facility seems to be moving forward, the state would
earnestly try to determine an alternate use for the buildings.
In the most extreme case, the buildings could be leveled.
9:13:54 AM
CO-CHAIR HERRON, upon determining no one else wished to testify,
closed public testimony.
9:14:12 AM
CO-CHAIR MUNOZ moved to report CSHB 161, Version 26-LS0605\T,
Cook, 3/11/09, out of committee with individual recommendations
and the accompanying fiscal notes. There being no objection,
CSHB 161(CRA) was reported from the House Community and Regional
Affairs Standing Committee.
HB 150-POWER COST EQUALIZATION
9:14:38 AM
CO-CHAIR HERRON announced that the next order of business would
be HOUSE BILL NO. 150, "An Act repealing certain provisions
relating to modifying the factors that apply to calculate the
amount of power cost equalization; providing for an effective
date by repealing the effective date of sec. 3, ch. 2, 4SSLA
2008; and providing for an effective date."
9:15:07 AM
BOB CHARLES, Energy Coordinator, Association of Village Council
Presidents, noted that he provided written testimony to the
committee entitled "AVCP Calista Region's Energy Costs." He
informed the committee that the Calista region's residential
heating oil and regular gasoline prices have increased well over
100 percent in the last couple of years. In fact, when home
heating fuel was delivered in the spring of 2008, the cost had
risen to $8.00 a gallon. He pointed out that he provided the
committee with a table specifying fuel prices at the end of
February ranging from $6.00-$8.00 per gallon. As 2009 began,
electric utility rates in the region were between $.53 and $.65
per kilowatt hour (kWh). Electric bills in the region have
averaged $342-$360 per month prior to power cost equalization
(PCE). With PCE, the electric rates are around $.33-$.44 per
kWh and the billings amount to $176 to $200. Usage has ranged
from 530 kWh to 750 kWh per household. Local utility
administrators have observed that a number of households have
much lower usages, in the range of 200 kWh to 400 kWh and the
billings ranging from $120-$150 per month. The increases in the
rates are reflective of the higher delivered fuel costs in
recent years, he said. The PCE program has been paramount in
helping to make electric rates affordable. He recalled
testimony at a prior hearing that Newtok had one of the highest
rates prior to PCE with billings around $150-$400. The usage in
Newtok ranges from 300-400 kWh [per month]. Mr. Charles opined
that energy costs account for a large portion of a household's
disposable income, with it amounting to 60-70 percent. The
aforementioned can primarily be attributed to the price hikes in
the energy costs. Any further increases in electric rates or
fuel costs will result in fuel and electricity becoming
unaffordable. He related that recent energy studies conducted
by Nuvista Light and Power 2002 and 2004 have illustrated that
lower income residents devote larger amounts of their disposable
income to energy and use less.
MR. CHARLES then related that the unemployment rates in the
Bethel and Wade Hampton census districts currently range from
16.6-22.8. However, the jobless rate is a more significant and
relevant indicator of the economic condition in the region. In
the Bethel and Wade Hampton districts the jobless rate is 38.5
percent and 43.3 percent, respectively. The median income in
the Bethel census district is about $45,200, which amounts to an
average monthly income of about $2,700. In the Wade Hampton
census district the median income is about $36,600, which
amounts to an average monthly income in the amount of $1,750.
He then noted that the fish income in the [Kuskokwim] area
doesn't provide much income for the year. In the Kuskokwim area
about 500,000 salmon were caught, which amounts to about $1.5
million and about $3,200 per permit holder. He reminded the
committee that in 2007 there wasn't much of a fishery, save a
couple of coho fishing periods that provided about $300,000 for
the entire region. The Yukon didn't have a summer chum king
salmon fishery, but did have a fall chum coho fishery that
caught 312,513 salmon by 444 permit holders. The aforementioned
totaled about $1.4 million and broke down to about $3,000 per
permit holder. Comparing the aforementioned income to fuel,
electric, and food costs, one can see that lower income people
can't afford many groceries and have to use less energy. He
opined that this is an indicator that populations throughout the
region are very vulnerable to increasing energy costs.
Moreover, the region's economy is fragile and susceptible to
further increases to fuel and electric rates. Mr. Charles
concluded by relating support for HB 150, specifically keeping
the eligible cost rate at $1 and continuing the PCE program.
9:24:11 AM
ERIN HARRINGTON, Staff, Representative Alan Austerman, Alaska
State Legislature, speaking on behalf of the sponsor of HB 150,
explained that the purpose of HB 150 is to perpetuate the $1.00
ceiling in order to reflect the true cost of power generation in
Alaska. With the continuation of the ceiling, the program will
continue to reflect the true costs of power generation in
Alaska. By keeping the ceiling at $1.00, the state isn't
obligated to anything during times of low energy prices.
However, when prices are high, the $1.00 ceiling provides power
cost equity for rural communities that haven't been able to
benefit from the long-term investments in power generation
infrastructure in certain areas of the state.
9:26:11 AM
REPRESENTATIVE GARDNER inquired as to how much power an average
household uses in rural Alaska as compared to urban Alaska.
MS. HARRINGTON explained that PCE covers the first 500 kWh in a
residential area. Typical power usage in rural areas is around
500 kWh per household, but it's a bit higher for urban areas
where the electrical usage is closer to 700 kWh.
9:27:13 AM
CO-CHAIR HERRON, upon determining no one else wished to testify,
closed public testimony.
9:27:18 AM
CO-CHAIR MUNOZ moved to report HB 150 out of committee with
individual recommendations and the accompanying fiscal notes.
There being no objection, it was so ordered.
HB 156-ALLOWING CERTAIN LANDFILL FEE WAIVERS
9:27:44 AM
CO-CHAIR HERRON announced that the final order of business would
be HOUSE BILL NO. 156, "An Act relating to municipal fees
charged for disposal of waste material from the substantial
rehabilitation, renovation, demolition, removal, or replacement
of a structure on deteriorated property."
9:27:53 AM
REPRESENTATIVE BOB LYNN, Alaska State Legislature, speaking as
the sponsor of HB 161, explained that the legislation permits
municipalities to waive dumping fees, tipping fees, for material
taken to municipal landfills from deteriorated properties. The
aforementioned doesn't cost the state anything. Furthermore, it
can make it economically feasible to renovate deteriorating
properties.
9:30:06 AM
KATHRYN DODGE, Economic Development Specialist, Fairbanks North
Star Borough; Director, Alaska Regional Development Organization
(ARDOR), said that she was sure that each legislator could think
of a deteriorated property in their community that they would
desire to be redeveloped. She said she was equally certain that
legislators recognize the value of renovating and rehabilitating
the deteriorated property. Ms. Dodge pointed out that adoption
of this change requires assembly approval, and therefore public
comment will be taken on the value of granting waivers to
deteriorated properties, presumably for each waiver considered.
Therefore, Ms. Dodge encouraged the committee to support HB 156.
9:31:40 AM
MARK MARLOW, Principal, Marlow Corporation, opined that HB 156
would provide local governments another tool with regard to
economic development and urban renewal. Every property eligible
would have to go through a local public process per AS 29.45 to
identify and determine which properties meet the eligibility
requirements to be designated as deteriorated. He encouraged
the committee's favorable vote for HB 156.
9:32:50 AM
CO-CHAIR HERRON inquired as to why HB 156 is necessary.
MR. MARLOW related his understanding that without HB 156
extending the waiver to a property designated as deteriorated
may raise a constitutional challenge with regard to a local
government's ability to extend the benefit to address the
mitigation of blight based on an equal protection clause. This
legislation defines deteriorated property as a class of property
rather than an individual project and provides local governments
that own a landfill the authority to extend the aforementioned
benefit to help with economic development and mitigation of
blight.
9:34:39 AM
CO-CHAIR HERRON posed an example in which there was a
deteriorated 1,200 square feet home, and inquired as to how much
money that would be.
MR. MARLOW pointed out that a small home of 1,200 square feet
wouldn't meet the eligibility requirements of AS 29.45. To be
considered deteriorated the building would have to be at least
an 8-plex, at least 15 years of age, or a commercial property,
he recalled. He explained that the actual amount of money [in
terms of waived tipping fees] would depend largely on the size
of the property because tipping fees are a function of weight.
9:35:48 AM
REPRESENTATIVE LYNN, in closing, characterized HB 156 as good
public policy, and therefore he requested the committee's
favorable consideration.
9:35:54 AM
CO-CHAIR HERRON, upon determining no one else wished to testify,
closed public testimony.
9:36:03 AM
REPRESENTATIVE KELLER moved to report HB 156 out of committee
with individual recommendations and the accompanying zero fiscal
note. There being no objection, it was so ordered.
9:36:33 AM
ADJOURNMENT
There being no further business before the committee, the House
Community and Regional Affairs Standing Committee meeting was
adjourned at 9:36 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 150 - PCE One-Pager (3.12.09).doc |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 150 |
| Denali Commission Update - CRA 3-13-09.pdf |
HCRA 3/17/2009 8:00:00 AM |
Denali Commission |
| HB 150 Sectional Analysis.doc |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 150 |
| HB150 - SB4002Z.PDF |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 150 SB4002 |
| HB 156 Background Part 2 Support Letters.pdf |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 156 |
| HB 156 Sectional Summary.pdf |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 156 |
| HB 156 Sponsor Statement (2).docx.doc |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 156 |
| HB 150 Sponsor Statement.doc |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 150 |
| HB 161 legal memo.PDF |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 161 |
| HB 161 sponsor statement.PDF |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 161 |
| HB 150 Testimony Packet II.PDF |
HCRA 3/17/2009 8:00:00 AM |
HB 150 |
| HB 150 Bob Charles AVCP testimony.PDF |
HCRA 3/17/2009 8:00:00 AM |
HB 150 |
| HB150-CCED PCE Overview .pdf |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 150 |
| HB150-CED-AEA(Fund Cap) 03-06-09.pdf |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 150 |
| HB150-CED-AEA-03-06-09.pdf |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 150 |
| HB150TestimonyPacket.PDF |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 150 |
| HB156 Background Part 1 FNSB Ordinance.pdf |
HCRA 3/12/2009 8:00:00 AM HCRA 3/17/2009 8:00:00 AM |
HB 156 |
| HB156-Fiscal Note-CED-RCA-03-16-09.pdf |
HCRA 3/17/2009 8:00:00 AM |
HB 156 |
| HB161 Dept. Admin Briefing Paper.pdf |
HCRA 3/17/2009 8:00:00 AM |
HB 161 |
| HB161CS(CRA)-DNR-TLO-03-16-09.pdf |
HCRA 3/17/2009 8:00:00 AM |
HB 161 |