Legislature(2009 - 2010)HOUSE FINANCE 519

02/11/2009 01:30 PM House FINANCE


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01:35:11 PM Start
01:37:09 PM Overview and Update: Municipality of Anchorage – Port of Anchorage; Mat-su Borough – Port Mackenzie
03:06:28 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview & Update: TELECONFERENCED
Municipality of Anchorage - Port of
Anchorage Dir. Governor Bill Sheffield
Mat-Su Borough - Port MacKenzie
Dir. Marc VanDongen
Related Projects
+ Bills Previously Heard/Scheduled TELECONFERENCED
                  HOUSE FINANCE COMMITTEE                                                                                       
                     February 11, 2009                                                                                          
                         1:35 p.m.                                                                                              
                                                                                                                                
1:35:11 PM                                                                                                                    
                                                                                                                                
CALL TO ORDER                                                                                                                 
                                                                                                                                
Co-Chair Stoltze  called the House Finance  Committee meeting                                                                   
to order at 1:35 p.m.                                                                                                           
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bill Stoltze, Co-Chair                                                                                           
Representative Bill Thomas Jr., Vice-Chair                                                                                      
Representative Allan Austerman                                                                                                  
Representative Harry Crawford                                                                                                   
Representative Anna Fairclough                                                                                                  
Representative Richard Foster                                                                                                   
Representative Les Gara                                                                                                         
Representative Mike Kelly                                                                                                       
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Mike Hawker, Co-Chair                                                                                            
Representative Reggie Joule                                                                                                     
Representative Woodie Salmon                                                                                                    
                                                                                                                                
ALSO PRESENT                                                                                                                  
                                                                                                                                
Bill  Sheffield,  Port  Director,  Port  of  Anchorage;  Marc                                                                   
VanDongen, Port Director, Port MacKenzie                                                                                        
                                                                                                                                
PRESENT VIA TELECONFERENCE                                                                                                    
                                                                                                                                
None                                                                                                                            
                                                                                                                                
SUMMARY                                                                                                                       
                                                                                                                                
^Overview and  Update:  Municipality  of Anchorage -  Port of                                                               
Anchorage; Mat-Su Borough - Port MacKenzie                                                                                  
                                                                                                                                
1:37:09 PM                                                                                                                    
                                                                                                                                
BILL  SHEFFIELD, PORT  DIRECTOR, PORT  OF ANCHORAGE,  related                                                                   
details of  a handout entitled  "Port of Anchorage"  (copy on                                                                   
file.) He began with page 3, the  Economic Impact.  He stated                                                                   
that  the  Port  of  Anchorage   serves  85  percent  of  the                                                                   
population,  providing 90  percent  of consumer  goods.   The                                                                   
total  economic impact  is estimated  at $663  million.   The                                                                   
freight activity  at the Port contributes to  $137 million in                                                                   
household earnings  and 4,142 jobs.  Ninety-seven  percent of                                                                   
freight  shipments   between  Puget  Sound  and   Alaska  are                                                                   
waterborne.    He  observed that  46,000  jobs  are  directly                                                                   
dependent  on  Alaska  trade  and shipping.    The  Port  was                                                                   
classified  as  a  Port  of  National   Significance  by  the                                                                   
Department of Transportation - Maritime Administration.                                                                         
                                                                                                                                
Mr. Sheffield highlighted the  map on page 4, which shows the                                                                   
regional  and  statewide  importance  of  the  transportation                                                                   
supply routes from the Port of Anchorage.                                                                                       
                                                                                                                                
1:41:05 PM                                                                                                                    
                                                                                                                                
Mr. Sheffield turned  to page 5, the business at  the Port of                                                                   
Anchorage.   He  gave  examples of  the  types of  businesses                                                                   
served by the Port.                                                                                                             
                                                                                                                                
Mr.  Sheffield   related  the  importance  of   the  Port  of                                                                   
Anchorage and the  U.S. Military, as depicted on  page 6.  He                                                                   
described  the   method  the   military  uses  to   transport                                                                   
equipment.  Page  7 shows pictures of the Port  as the supply                                                                   
hub for the U.S. Military in Alaska.                                                                                            
                                                                                                                                
1:44:58 PM                                                                                                                    
                                                                                                                                
Mr. Sheffield showed  a film, "Port of Anchorage  - A Mission                                                                   
of Service"  that depicts the assets  of the Port.   The film                                                                   
described  the mission and  uses of  the Port and  emphasized                                                                   
the importance of the Port to the military.                                                                                     
                                                                                                                                
1:53:41 PM                                                                                                                    
                                                                                                                                
The film highlighted the expansion  of the Port of Anchorage,                                                                   
which is now in its middle phase.                                                                                               
                                                                                                                                
1:56:22 PM                                                                                                                    
                                                                                                                                
Mr.  Sheffield showed  pages 9  -  12 of  the handout,  which                                                                   
depict  the intermodal  expansion  project  of  the Port  and                                                                   
showed the various  phases of the expansion.   He pointed out                                                                   
that $20  million a  year for six  years has been  requested.                                                                   
The Port of  Authority's current request is  for $120 million                                                                   
in advanced funding to complete the project.                                                                                    
                                                                                                                                
1:58:20 PM                                                                                                                    
                                                                                                                                
Mr. Sheffield  turned  to construction  costs and funding  on                                                                   
pages 13 - 18.  He showed expenses  with and without the $120                                                                   
million funding in  2009.  He listed the  advantages realized                                                                   
with  advanced funding  such as  contracts completed  earlier                                                                   
and  materials ordered  in  advance.   He  shared the  Port's                                                                   
website where more information can be accessed.                                                                                 
                                                                                                                                
Mr.  Sheffield  reiterated  that  the  request  is  for  $120                                                                   
million  to finish  the Port's  construction.   There is  $10                                                                   
million  currently in  the capital budget  for that  purpose.                                                                   
He  did  not  expect any  funds  from  the  Federal  Stimulus                                                                   
Package.  He opined  that seeking funding for the  Port is an                                                                   
uphill battle.                                                                                                                  
                                                                                                                                
2:01:54 PM                                                                                                                    
                                                                                                                                
Representative  Crawford asked  how  much would  be saved  by                                                                   
buying steel  now for  the projects.   He  also asked  if the                                                                   
cruise  ship initiative  funds  could be  used  for the  Port                                                                   
expansion.                                                                                                                      
                                                                                                                                
Mr.  Sheffield observed  that  cruise ship  initiative  money                                                                   
could be  accessed in  the future  since there  is a  plan to                                                                   
have  a  dedicated  cruise  ship   space.  He  described  the                                                                   
requirements to put a cruise ship  dock in place.  Addressing                                                                   
Representative  Crawford's  first   question,  Mr.  Sheffield                                                                   
understood that steel  prices have recently leveled  off.  He                                                                   
thought  such  a  purchase might  qualify  for  the  Stimulus                                                                   
Package  because steel  is  made in  the  U.S.   He spoke  of                                                                   
potential savings due to shipping methods.                                                                                      
                                                                                                                                
2:05:59 PM                                                                                                                    
                                                                                                                                
Representative Gara  shared that he  does not have  a problem                                                                   
with the  Port of Anchorage's  need, but questioned  the cost                                                                   
and the  lack of  fiscal support  by the  City of  Anchorage.                                                                   
Mr. Sheffield reported  that the funds consist  of 50 percent                                                                   
federal,  25  percent  state,  and  25  percent  port  funds.                                                                   
Representative  Gara   reiterated  that  Anchorage   has  not                                                                   
contributed any money  to the project.  Mr.  Sheffield agreed                                                                   
that Anchorage has not contributed funds.                                                                                       
                                                                                                                                
2:08:33 PM                                                                                                                    
                                                                                                                                
Representative Gara questioned  if the state match was needed                                                                   
in order to receive federal funds.   Mr. Sheffield said there                                                                   
is no  required state match,  but it is  a good deal  for the                                                                   
federal government because the  state pays 25 percent and the                                                                   
port pays 25  percent.  Representative Gara asked  if a state                                                                   
match  is  required in  order  to  get  federal funds.    Mr.                                                                   
Sheffield explained  that a match is required  on some monies                                                                   
such as  for federal highways  and that money is  provided by                                                                   
the Port Authority.                                                                                                             
                                                                                                                                
Representative  Gara   recalled  previous  requests   of  $10                                                                   
million  and  $20 million  by  the  Port Authority;  now  the                                                                   
request  is  for  $180  million.   He  voiced  concern  about                                                                   
escalating costs.  Mr. Sheffield returned to page  12 to show                                                                   
the difference  between 2009 and 2010 construction  costs and                                                                   
the  stages needed  to complete  the  project. He  emphasized                                                                   
that forward funding  makes sense due to the  yearly increase                                                                   
in costs.                                                                                                                       
                                                                                                                                
2:14:13 PM                                                                                                                    
                                                                                                                                
Vice-Chair  Thomas   asked  how  many  containers   would  be                                                                   
shipped.   Mr. Sheffield  replied that  there would  be about                                                                   
2,000 containers  a week.  He  explained that charges  are by                                                                   
the ton.   There is estimated  to be a 1 percent  increase in                                                                   
tonnage this  year.  Shipping  grosses about $14-$15  million                                                                   
in  revenue now,  and  by 2019,  it will  pull  in about  $20                                                                   
million a year.                                                                                                                 
                                                                                                                                
Vice-Chair  Thomas  asked about  revenue  from  haul back  to                                                                   
Seattle.  Mr.  Sheffield reported that there  was very little                                                                   
haul back; rental cars, military, or private shipping.                                                                          
                                                                                                                                
2:16:45 PM                                                                                                                    
                                                                                                                                
Representative   Foster  thanked   Mr.   Sheffield  for   his                                                                   
presentation and said he is in favor of the project.                                                                            
                                                                                                                                
2:18:43 PM                                                                                                                    
                                                                                                                                
MARC  VANDONGEN, PORT  DIRECTOR,  PORT MACKENZIE,  emphasized                                                                   
that he was not before the Committee  to request funding.  He                                                                   
stressed that the Ports create  jobs and economic development                                                                   
in  Alaska.   He  shared  his  background.   He  stated  full                                                                   
support for the Port of Anchorage.                                                                                              
                                                                                                                                
2:21:17 PM                                                                                                                    
                                                                                                                                
Mr.  VanDongen   referred  to   a  handout  entitled,   "Port                                                                   
MacKenzie -  Gateway to the Matanuska-Susitna  Borough" (copy                                                                   
on file.) He shared  the Port's mission and vision  - pages 1                                                                   
and  2.    He  emphasized  that  Port  MacKenzie  is  not  in                                                                   
competition with  the Port of  Anchorage and has  a different                                                                   
function.   Port MacKenzie's  mission is  to develop  a world                                                                   
class   Alaskan  deepwater   port  capable   of  safely   and                                                                   
efficiently transporting people  and commodities.  The vision                                                                   
is  to   create  new   employment  opportunities,   stimulate                                                                   
economic development and establish  a transportation link for                                                                   
exporting  natural resources from  the State  of Alaska.   He                                                                   
pointed  out that  the railroad  is key  to Port  MacKenzie's                                                                   
development.                                                                                                                    
                                                                                                                                
Mr. VanDongen  reviewed the Port  MacKenzie's main  goals for                                                                   
regional improvement  on pages 3 and 4.  He  began by listing                                                                   
the five initial goals:  to construct  utilities to the Port,                                                                   
to  construct  docks,  to  complete   road  improvements,  to                                                                   
develop a  year-round ferry system,  and to construct  a rail                                                                   
line from the Parks Highway to the Port.                                                                                        
                                                                                                                                
2:24:45 PM                                                                                                                    
                                                                                                                                
Co-Chair  Stoltze  asked the  origin  of the  Port  MacKenzie                                                                   
project.   Mr. VanDongen  related that in  1999, there  was a                                                                   
$7.2  million  railroad grant  for  the development  of  Port                                                                   
MacKenzie.  A road  was put in and an initial  barge dock was                                                                   
built.  That phase  was completed for $7.2 million.   Next, a                                                                   
permit was  acquired to construct  the deep-draft dock.   The                                                                   
state provided  $10 million for  that $14.7 million  project.                                                                   
Then, a  ferry terminal building  was completed.   Now, there                                                                   
is  a permit  on the  Port MacKenzie  side to  build a  ferry                                                                   
landing.   Co-Chair  Stoltze  added  that there  were  voter-                                                                   
approved bonds  to support the project during  the deep-draft                                                                   
dock phase.                                                                                                                     
                                                                                                                                
2:27:50 PM                                                                                                                    
                                                                                                                                
Mr. VanDongen returned to detailing  goals 4 and 5 on page 3.                                                                   
He said  that construction of  a ferry vessel is  in progress                                                                   
in Ketchikan, a permit for the  ferry landing is in hand, and                                                                   
a  permit  for the  ferry  landing  at  Ship Creek  has  been                                                                   
applied for.  An  ice study is planned.  The  ferry should be                                                                   
running by November of 2010.   A key goal is to construct the                                                                   
rail line from the Parks Highway to the Port.                                                                                   
                                                                                                                                
                                                                                                                                
Mr. VanDongen reported  on the final three goals,  which were                                                                   
recently added: to  construct a rail loading  facility at the                                                                   
Port; to construct a fuel tank  farm and connect to Anchorage                                                                   
via pipeline; and to promote the  creation of a petrochemical                                                                   
facility or LNG  plant at Port MacKenzie.   He emphasized the                                                                   
importance of the latter goal.                                                                                                  
                                                                                                                                
Co-Chair Stoltze asked how much  acreage is available for the                                                                   
project.    Mr.  VanDongen clarified  that  8,940  acres  are                                                                   
available,  which  is a  big  advantage.   He  described  the                                                                   
advantages  of  the  Point  MacKenzie   project  and  lessons                                                                   
learned from experience.                                                                                                        
                                                                                                                                
2:33:11 PM                                                                                                                    
                                                                                                                                
Mr.  VanDongen   turned   to  page  5,   the  Port   District                                                                   
Boundaries.  He  pointed out the terminal moraine,  which has                                                                   
sand and  gravel available to  mine, and he described  how it                                                                   
would be developed.   He emphasized that his  project was not                                                                   
in competition with the Anchorage  port.  He showed where the                                                                   
rail would come in and where the Knik Arm Crossing was.                                                                         
                                                                                                                                
2:35:16 PM                                                                                                                    
                                                                                                                                
Mr. VanDongen  showed pictures of  the barge dock on  page 6,                                                                   
future expansion of  the barge dock on page 7,  and the barge                                                                   
at Port MacKenzie  on page 8.  He highlighted  the deep-draft                                                                   
dock on page 9.                                                                                                                 
                                                                                                                                
Mr. VanDongen  showed the future expansion of  the deep-draft                                                                   
dock on page 10.                                                                                                                
                                                                                                                                
2:39:11 PM                                                                                                                    
                                                                                                                                
Mr. VanDongen  discussed the Port  MacKenzie markets  on page                                                                   
11.  He  highlighted both import  and export products.   Page                                                                   
12 shows the Ferry Terminal Building.                                                                                           
                                                                                                                                
Mr. VanDongen explained  the design and function  of the Cook                                                                   
Inlet Ferry  on page 13.   He showed  pictures on page  14 of                                                                   
the  Alaska Ship  and Drydock  in Ketchikan  where the  ferry                                                                   
will be constructed.   Page 15 also illustrated  construction                                                                   
of the ferry.                                                                                                                   
                                                                                                                                
2:42:19 PM                                                                                                                    
                                                                                                                                
Mr. VanDongen showed  diagrams of the ferry  landings at Port                                                                   
Mack and at Ship Creek on pages 16 - 19.                                                                                        
                                                                                                                                
In  response  to  a  question   from  Co-Chair  Stoltze,  Mr.                                                                   
VanDongen  explained   the  permitting  process.     He  felt                                                                   
confident that  a permit can be  obtained for the  Ship Creek                                                                   
Landing.  He spoke of the cost  of building a trestle and the                                                                   
timeline involved.                                                                                                              
                                                                                                                                
2:47:38 PM                                                                                                                    
                                                                                                                                
Mr. VanDongen  spoke of proposed road corridors  and upgrades                                                                   
needed on page 20.                                                                                                              
                                                                                                                                
In  response  to  a question  by,  Representative  Gara,  Mr.                                                                   
VanDongen  highlighted the  Burma and  Knik/Goose Bay  roads.                                                                   
The Burma Road has not been paved.                                                                                              
                                                                                                                                
2:50:56 PM                                                                                                                    
                                                                                                                                
Mr. VanDongen  described the next  steps to develop  the rail                                                                   
line - page 21.   He reviewed Page 22, "Projected  Volumes of                                                                   
Natural Resources,"  which was compiled from  Dr. Paul Metz's                                                                   
November 2007 report:  Economic Analysis of Rail  Link - Port                                                                   
MacKenzie to  Willow, Alaska.   He listed the  annual tonnage                                                                   
of  the various  natural  resources to  be  transported.   He                                                                   
concluded his opinion that there  is tremendous potential for                                                                   
new jobs due to the railway.                                                                                                    
                                                                                                                                
2:56:06 PM                                                                                                                    
                                                                                                                                
Mr.  VanDongen  showed an  artist's  rendering  of the  Goose                                                                   
Creek Correctional  Center on  page 23.  Representative  Gara                                                                   
asked how  it was  named.  Mr.  VanDongen related  the naming                                                                   
process.                                                                                                                        
                                                                                                                                
Mr. VanDongen turned to page 24,  current, new, and projected                                                                   
businesses related  to the project.   Pages 25 -  27 outlined                                                                   
the  businesses  of Alutiiq  Manufacturing  Contractors,  and                                                                   
NPI.  Page 28 showed the gravel  excavation project.  Page 29                                                                   
illustrated the upgrade  and paving project.   Page 30 listed                                                                   
the benefits of Port MacKenzie.                                                                                                 
                                                                                                                                
3:00:37 PM                                                                                                                    
                                                                                                                                
Mr. VanDongen showed pictures  on pages 31 and 32 of ships in                                                                   
Cook Inlet  and at the  dock.  The  last page, 33,  contained                                                                   
the Port MacKenzie logo.                                                                                                        
                                                                                                                                
Vice-Chair  Thomas  shared a  personal  story  of a  previous                                                                   
logging job.  He wondered if there  would be similar concerns                                                                   
with this  project.   Mr. VanDongen said  there would  not be                                                                   
because of stabilizing  technology.  Vice-Chair  Thomas asked                                                                   
if ice would be  a problem.  Mr. VanDongen said  it would not                                                                   
and listed prevention measures.  Lines are doubled when there                                                                   
is ice. Two tugboats are also  available to break up the ice.                                                                   
He stressed  that Port  MacKenzie has not  had a  single line                                                                   
snapped. He said extra precautions would be taken.                                                                              
                                                                                                                                
3:04:15 PM                                                                                                                    
                                                                                                                                
Representative   Gara  asked  if   the  Mat-Su  Borough   has                                                                   
contributed  to the funding  of the  project.  Mr.  VanDongen                                                                   
explained  that the  Borough  of Anchorage  contributed  $1.7                                                                   
million toward the  deep draft dock; and the  mill rate funds                                                                   
the Port's annual operating budget.  He stressed that it only                                                                   
took  five  years  for  the  Port  to  come  into  the  black                                                                   
(compared to  six years for the  Port of Anchorage).  He felt                                                                   
the Port  would be  self sufficient once  the route  comes on                                                                   
line.  Representative  Gara  thought it  important  that  the                                                                   
local  government  contribute   to  the  project.    Co-Chair                                                                   
Stoltze invited legislators to hear more about the project.                                                                     
                                                                                                                                
3:06:28 PM                                                                                                                    
                                                                                                                                
Co-Chair Stoltze termed the project a "success tale".                                                                           
                                                                                                                                
Representative Foster thanked  Mr. VanDongen for his military                                                                   
service and  hard work.  Mr.  VanDongen saw the project  as a                                                                   
regional benefit.                                                                                                               
                                                                                                                                
Representative Kelly asked when  the rail connection would be                                                                   
complete.  Mr.  VanDongen explained that it could  be done by                                                                   
the end  of 2012, subject  to funding.  Representative  Kelly                                                                   
asked if it was a railroad project.    Mr. VanDongen reported                                                                   
that it  was a borough project  that would be turned  over to                                                                   
the railroad to  operate.  Representative Kelly  inquired how                                                                   
much  has  been spent  on  the  total  physical plant.    Mr.                                                                   
VanDongen said that about $25 million has been spent.                                                                           
                                                                                                                                
Representative Kelly  asked if any problems  were anticipated                                                                   
with the ferry.  Mr. VanDongen  thought that eventually there                                                                   
would be a second ferry for backup  purposes.  Representative                                                                   
Kelly asked if the ferry would  be for passenger vehicles and                                                                   
how much time would  be saved.  Mr. VanDongen  said that once                                                                   
the Burma  Road is upgraded and  paved, it would be  used for                                                                   
vehicles,  and would save  about an  hour on the  North/South                                                                   
route.                                                                                                                          
                                                                                                                                
Representative  Kelly wondered if  the city of  Anchorage was                                                                   
putting  pressure on  the Port regarding  getting traffic  to                                                                   
the takeoff  point on the south.   Mr. VanDongen had  not had                                                                   
discussions  regarding the  issue,  but didn't  see  it as  a                                                                   
problem.   He observed  they would  schedule the ferry  truck                                                                   
use during  off hours.   Representative Kelly asked  how long                                                                   
the Burma Road was and when it  would be done.  Mr. VanDongen                                                                   
said it  was about 7.5 miles,  plus a bypass, and  would cost                                                                   
roughly $45 million,  but he could not project  when it would                                                                   
be done.  Representative  Kelly asked if more  money would be                                                                   
needed.  Mr. VanDongen said he is not requesting any funds.                                                                     
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The meeting was adjourned at 3:14 PM.                                                                                           
                                                                                                                                
                                                                                                                                

Document Name Date/Time Subjects
Port Presentation Juneau.pdf HFIN 2/11/2009 1:30:00 PM
Port of Anchorage Persentaiton.pdf HFIN 2/11/2009 1:30:00 PM