Legislature(1995 - 1996)
04/25/1995 09:15 AM House FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HOUSE FINANCE COMMITTEE
April 25, 1995
1:30 P.M.
TAPE HFC 95-97, Side 2, #027 - end.
TAPE HFC 95-98, Side 1, #000 - #100.
CALL TO ORDER
Co-Chair Mark Hanley called the House Finance Committee
meeting to order at 9:15 a.m.
PRESENT
Co-Chair Hanley
Co-Chair Foster Representative Mulder
Representative Grussendorf Representative Navarre
Representative Kelly Representative Parnell
Representative Martin Representative Therriault
Representative Kohring and Brown were absent from the
meeting.
ALSO PRESENT
Arlis Sturgulewski, Interim Executive Director, Alaska
Science and Technology Foundation; H. Pat Ladner, Executive
Director, Alaska Aerospace Development Corporation; Randy
Simmons, Development Finance Manager, Alaska Industrial
Development and Export Authority;
SUMMARY
HB 315 An Act relating to the financing of technological
developments by public corporations of the state;
and relating to the financing of the Kodiak launch
complex, the Fairbanks satellite ground station
space park, and a low-rank coal water fuel
technology project.
HB 315 was HELD in Committee for further
discussion.
HOUSE BILL NO. 315
"An Act relating to the financing of technological
developments by public corporations of the state; and
relating to the financing of the Kodiak launch complex,
the Fairbanks satellite ground station space park, and
a low-rank coal water fuel technology project."
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PAT LADNER, EXECUTIVE DIRECTOR, ALASKA AEROSPACE DEVELOPMENT
CORPORATION (AADC) testified in support of HB 315. He
stressed that the legislation is a combination of efforts
between the Alaska Industrial Development Export (AIDEA),
Alaska Aerospace Development Corporation (AADC), Alaska
Science and Technology Foundation, the Governor's Office and
a bipartisan group of legislators. He emphasized that since
September 1992, AADC has won $1.85 million dollars from the
U.S. Air Force for the construction of a satellite launch
facility in Kodiak and a ground station in Fairbanks. He
reviewed accomplishments of AADC in regards to implementing
plans for the launch facility and ground station. He
emphasized the interest of private industry.
Mr. Ladner provided members with charts demonstrating
Alaska's favorable position as a launch site and ground
station (copy on file). He emphasized that Fairbanks is the
northern most location in the United States to control and
data down link satellites. He maintained that Fairbanks has
everything that is required for a ground station.
Mr. Ladner noted that interest has been expressed by
representatives of Lockheed-Martin, NASA, U.S. Air Force,
TRW Corporation, and PSLP/Minuteman System. He assured
members that financial and business support exists. He
asserted that the legislation allows Alaska to enter into
the high technological world of the 21st century.
In response to a question by Representative Martin, Mr.
Ladner observed that the State has not supplied any capital
funding. He acknowledged that state support through the
operating budget is $1.7 million dollars.
Representative Martin expressed support for an amendment
requiring 50 percent participation by industry. He
emphasized the need for private funding. He asked if there
is a payback schedule from AIDEA. He questioned if funding
would be provided by the Alaska Science and Technology
Foundation.
Co-Chair Hanley clarified that section 6 states that the
board of the Alaska Science and Technology Foundation may
award up to $5.0 million dollars for the Kodiak launch
complex and the Fairbanks satellite ground station and up to
$4.0 million dollars to AIDEA for low-rank coal water fuel
technology.
ARLIS STURGULEWSKI, INTERIM EXECUTIVE DIRECTOR, ALASKA
SCIENCE AND TECHNOLOGY FOUNDATION clarified that the low-
rank coal water fuel technology has been granted phase I
status by the Alaska Science and Technology Foundation. She
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explained that the Alaska Science and Technology Foundation
has committed $3.6 million dollars to the project. She
emphasized that business conditions must be met before the
project continues.
Ms. Sturgulewski stressed that the Alaska Science and
Technology Foundation is committed to directing 50 percent
of their funding to small projects.
Ms. Sturgulewski noted that the Legislative Budget and Audit
Committee recommended in a letter dated September 29, 1994,
that the Alaska Science and Technology Foundation's strategy
of supporting applied research and development to be
appropriate and in conformity with the legislative intent
that led to its creation. The auditor found ambiguities in
the enabling legislation and recommended revisions.
Ms. Sturgulewski reviewed the legislation. She noted that
section 1 adds "development and commercialization of
technology." She explained that sections 2 and 3 address
larger projects. She observed that section 3 would place in
statute the requirement that 50 percent of the endowment
income is distributed to small projects. Section 4
clarifies when it is appropriate for the Foundation to act
in executive session. Section 5 allows for additional
return to the principal of the endowment. Section 6 allows
the transfer of funding to AIDEA and the Alaska Aerospace
Development Corporation for the launch facility and ground
station and to AIDEA for low-rank coal water fuel
technology.
In response to a question by Representative Martin, Ms.
Sturgulewski stated that the legislation codifies current
practices of the Alaska Science and Technology Foundation.
Representative Martin asserted that the Legislative Budget
and Audit Committee concluded that the Alaska Science and
Technology Foundation had gone too far from the original
legislative intent.
Ms. Sturgulewski disagreed with Representative Martin's
conclusion. She asserted that most meritorious projects
have been funded. She noted that there is a peer review
policy. She added that projects must include private money
and commitment.
Representative Martin maintained that the projects contained
in the legislation will utilize the available funding.
RANDY SIMMONS, DEVELOPMENT AND FINANCE MANAGER, ALASKA
INDUSTRIAL DEVELOPMENT AND EXPORT AUTHORITY spoke in regards
to the financing for the projects. He explained that AIDEA
has completed a feasibility review of the legislation. A
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cursory financing plan was reviewed to assess whether the
facility could pay for itself. The operating expenses,
revenue sources, construction cost estimates, and
construction time were reviewed. He concluded that the
business plan by AADC is reasonable and has merit. He noted
that the next step would require a comprehensive review
including statutory findings to conclude that the project is
economically advantageous to the State and will provide or
retain employment for the State. He noted that actual
contracts with users would have to be in place. He noted
that there would be a third party review of the construction
costs and time line. He asserted that AIDEA would not
provide funding for the project's construction without the
demonstration of financial feasibility.
Representative Navarre questioned the return to the State in
terms of jobs as offset by demands on the State's
infrastructure. Mr. Ladner stated that 25 to 30 local
persons would be trained initially for med-tech jobs. He
estimated that there would be a $5.0 million dollar a year
positive impact on the community. He stressed that launch
functions would be operated by locally trained individuals.
Representative Navarre acknowledged that the project has the
potential to have a positive impact.
Mr. Ladner emphasized that the legislation contains checks
and balances.
Representative Martin provided members with Amendment 1
(Attachment 1). Amendment 1 would require that the
appropriation be "conditioned upon at least 50 percent
private enterprise matching funds being made available".
(Tape Change, HFC 95-98, Side 1)
Mr. Ladner spoke against Amendment 1. He reassured the
committee members that all the business arrangements and
contracts will be in place before funding is spent.
Representative Therriault stressed that nothing will be
built until the contracts are in place to provide the
payback through use. He stated that contracts for payback
through use may not be construed as fulfilling the private
match.
Representative Navarre spoke against the amendment.
HB 315 was HELD in Committee for further consideration.
ADJOURNMENT
The meeting adjourned at 10:00 a.m.
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