Legislature(2013 - 2014)HOUSE FINANCE 519

04/25/2014 08:00 AM FREE CONFERENCE COMMITTEE ON HB 23


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08:03:08 AM Start
08:03:25 AM HB23
08:47:23 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 23 KNIK ARM CROSSING
Moved FCCS HB 23 Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
               FREE CONFERENCE COMMITTEE ON HB 23                                                                             
                         April 25, 2014                                                                                         
                           8:03 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
Representative Alan Austerman, Co-Chair                                                                                         
Representative Bill Stoltze                                                                                                     
Representative Harriet Drummond                                                                                                 
                                                                                                                                
Senator Lesil McGuire, Co-Chair                                                                                                 
Senator Peter Micciche                                                                                                          
Senator Berta Gardner                                                                                                           
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
All members present                                                                                                             
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. HB 23(RLS)                                                                                                       
"An Act creating  the Knik Crossing Development  Corporation as a                                                               
subsidiary corporation of the  Alaska Housing Finance Corporation                                                               
and  relating   to  bonds  of   the  Knik   Crossing  Development                                                               
Corporation."                                                                                                                   
                                                                                                                                
     - MOVED FCCS HB 23 OUT OF COMMITTEE                                                                                        
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 23                                                                                                                   
SHORT TITLE: KNIK ARM CROSSING; AHFC                                                                                            
SPONSOR(s): REPRESENTATIVE(s) NEUMAN, HUGHES                                                                                    
                                                                                                                                
01/16/13       (H)       PREFILE RELEASED 1/7/13                                                                                
01/16/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/13       (H)       TRA, FIN                                                                                               
02/28/13       (H)       TRA AT 2:00 PM BARNES 124                                                                              
02/28/13       (H)       Heard & Held                                                                                           
02/28/13       (H)       MINUTE(TRA)                                                                                            
03/12/13       (H)       TRA AT 1:00 PM BARNES 124                                                                              
03/12/13       (H)       Heard & Held                                                                                           
03/12/13       (H)       MINUTE(TRA)                                                                                            
03/21/13       (H)       TRA AT 1:00 PM BARNES 124                                                                              
03/21/13       (H)       Moved Out of Committee                                                                                 
03/21/13       (H)       MINUTE(TRA)                                                                                            
03/22/13       (H)       TRA RPT 5DP 2AM                                                                                        
03/22/13       (H)       DP: LYNN, JOHNSON, GATTIS, ISAACSON,                                                                   
                         P.WILSON                                                                                               
03/22/13       (H)       AM: FEIGE, KREISS-TOMKINS                                                                              
03/28/13       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
03/28/13       (H)       Heard & Held                                                                                           
03/28/13       (H)       MINUTE(FIN)                                                                                            
04/02/13       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
04/02/13       (H)       Moved CSHB  23(FIN) Out of Committee                                                                   
04/02/13       (H)       MINUTE(FIN)                                                                                            
04/03/13       (H)       FIN RPT CS(FIN) 3DP 1NR 6AM                                                                            
04/03/13       (H)       DP: NEUMAN, T.WILSON, STOLTZE                                                                          
04/03/13       (H)       NR: THOMPSON                                                                                           
04/03/13       (H)       AM: KAWASAKI, HOLMES, MUNOZ, EDGMON,                                                                   
                         GARA, COSTELLO                                                                                         
04/08/13       (H)       RETURNED TO RLS COMMITTEE                                                                              
04/09/13       (H)       RLS TO CALENDAR PENDING REPORT                                                                         
04/09/13       (H)       IN RULES                                                                                               
04/09/13       (H)       RLS AT 9:30 AM CAPITOL 120                                                                             
04/09/13       (H)       Heard & Held                                                                                           
04/09/13       (H)       MINUTE(RLS)                                                                                            
04/10/13       (H)       RLS TO CALENDAR PENDING REPORT                                                                         
04/10/13       (H)       IN RULES                                                                                               
04/10/13       (H)       RLS AT 9:00 AM CAPITOL 120                                                                             
04/10/13       (H)       -- Continued at 3:05 p.m. Today from                                                                   
                         4/9 Mtg. --                                                                                            
04/11/13       (H)       RLS RPT 2D CS(RLS) NT 2DP 5NR                                                                          
04/11/13       (H)       DP: KELLER, JOHNSON                                                                                    
04/11/13       (H)       NR: CHENAULT, HERRON, HAWKER, OLSON,                                                                   
                         GRUENBERG                                                                                              
04/11/13       (H)       MOTION TO ADOPT CS(FIN) WITHDRAWN UC                                                                   
04/11/13       (H)       TRANSMITTED TO (S)                                                                                     
04/11/13       (H)       VERSION: 2D CSHB 23(RLS)                                                                               
04/11/13       (H)       RLS AT 9:00 AM BARNES 124                                                                              
04/11/13       (H)       Moved 2d CSHB  23(RLS) Out of Committee                                                                
04/11/13       (H)       MINUTE(RLS)                                                                                            
04/12/13       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/12/13       (S)       FIN                                                                                                    
04/12/13       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
04/12/13       (S)       <Pending Referral>                                                                                     
04/12/13       (S)       FIN AT 1:30 PM SENATE FINANCE 532                                                                      
04/12/13       (S)       Heard & Held                                                                                           
04/12/13       (S)       MINUTE(FIN)                                                                                            
02/25/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
02/25/14       (S)       <Bill Hearing Postponed>                                                                               
03/18/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/18/14       (S)       Heard & Held                                                                                           
03/18/14       (S)       MINUTE(FIN)                                                                                            
03/19/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/19/14       (S)       Heard & Held                                                                                           
03/19/14       (S)       MINUTE(FIN)                                                                                            
03/25/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
03/25/14       (S)       Heard & Held                                                                                           
03/25/14       (S)       MINUTE(FIN)                                                                                            
04/02/14       (S)       FIN AT 9:00 AM SENATE FINANCE 532                                                                      
04/02/14       (S)       -- MEETING CANCELED --                                                                                 
04/02/14       (S)       FIN AT 1:30 PM SENATE FINANCE 532                                                                      
04/02/14       (S)       Moved SCS 2d CSHB  23(FIN) Out of                                                                      
                         Committee                                                                                              
04/02/14       (S)       MINUTE(FIN)                                                                                            
04/04/14       (S)       FIN RPT SCS   4DP 1DNP 1NR   NEW TITLE                                                                 
04/04/14       (S)       DP: KELLY, MEYER, DUNLEAVY, FAIRCLOUGH                                                                 
04/04/14       (S)       DNP: OLSON                                                                                             
04/04/14       (S)       NR: HOFFMAN                                                                                            
04/14/14       (S)       VERSION: SCS 2D CSHB 23(FIN) AM S                                                                      
04/23/14       (H)       CONSIDER CONCUR MESSAGE                                                                                
04/23/14       (H)       FREE CONFERENCE COMMITTEE APPOINTED                                                                    
04/23/14       (H)       AUSTERMAN (CHAIR), STOLTZE, DRUMMOND                                                                   
04/24/14       (S)       RECEDE MESSAGE READ                                                                                    
04/24/14       (S)       UNIFORM RULE 42(A) & (B) WAIVED                                                                        
04/24/14       (S)       FREE CONFERENCE COMMITTEE APPOINTED                                                                    
04/24/14       (S)       MCGUIRE (CHAIR), MICCICHE, GARDNER                                                                     
04/25/14       (H)       HB23 AT 8:00 AM HOUSE FINANCE 519                                                                      
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
PETE ECKLUND, Staff                                                                                                             
Representative Alan Austerman                                                                                                   
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  On behalf of Representative Austerman, Co-                                                               
Chair, Free Conference Committee (FCC) on HB 23, explained the                                                                  
proposed Free Conference Committee Substitute (FCCS) for HB 23.                                                                 
                                                                                                                                
HILARY MARTIN, Attorney                                                                                                         
Legislative Legal Counsel                                                                                                       
Legislative Legal Services                                                                                                      
Legislative Affairs Agency                                                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions during the discussion of                                                              
the Free Conference Committee Substitute (FCCS) for HB 23.                                                                      
                                                                                                                                
PAT KEMP, Commissioner                                                                                                          
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Answered questions  during the discussion of                                                             
the Free Conference Committee Substitute (FCCS) for HB 23.                                                                      
                                                                                                                                
ANGELA RODELL, Commissioner                                                                                                     
Department of Revenue (DOR)                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Answered questions  during the discussion of                                                             
the Free Conference Committee Substitute (FCCS) for HB 23.                                                                      
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
8:03:08 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  ALAN AUSTERMAN  called  the  Free Conference  Committee                                                             
meeting  on  HB  23  to  order  at  8:03  a.m.    Representatives                                                               
Austerman  and Stoltze  and Senators  McGuire  and Micciche  were                                                               
present  at  the call  to  order.   Representative  Drummond  and                                                               
Senator Gardner arrived as the meeting was in progress.                                                                         
                                                                                                                                
                 HB 23-KNIK ARM CROSSING; AHFC                                                                              
                                                                                                                                
8:03:25 AM                                                                                                                    
                                                                                                                                
CO-CHAIR AUSTERMAN announced the only  item on the calendar would                                                               
be the  Free Conference  Committee on  HB 23.   He  explained the                                                               
goal of  the Free Conference  Committee on is to  reach consensus                                                               
agreement on the Free Conference  Committee substitute (FCCS) for                                                               
HB 23 and recommend it to  both bodies for approval.  Pursuant to                                                               
Uniform Rule 42,  the Free Conference Committee  was appointed by                                                               
the House on April 23, 2014 and  the Senate on April 24, 2014.  A                                                               
Free  Conference Committee  may suggest  any amendments  that are                                                               
clearly  germane  to   the  original  bill.     Adoption  of  the                                                               
conference  committee report  requires an  affirmative vote  by a                                                               
majority of members from each house.                                                                                            
                                                                                                                                
8:04:11 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MCGUIRE moved  that the Free Conference  Committee on HB                                                               
23  adopt  the  proposed  Free  Conference  Committee  Substitute                                                               
(FCCS) for HB 23, labeled 28-LS0141\H, Martin, 4/24/14.                                                                         
                                                                                                                                
CO-CHAIR AUSTERMAN objected for discussion purposes.                                                                            
                                                                                                                                
8:04:57 AM                                                                                                                    
                                                                                                                                
PETE ECKLUND, Staff, Representative  Alan Austerman, Alaska State                                                               
Legislature,   provided  an   overview  of   the  proposed   Free                                                               
Conference   Substitute   (FCCS)  for   HB   23   on  behalf   of                                                               
Representative Austerman, Co-Chair,  Free Conference Committee on                                                               
HB  23.   He  explained  that members  have  the Free  Conference                                                               
Committee  Substitute  (FCCS)  for  HB  23  and  an  accompanying                                                               
sectional analysis  [included in members' packets].   He provided                                                               
a broad overview of the FCCS  HB 23, stating that the bill strips                                                               
many of the  powers and duties from the Knik  Arm Bridge and Toll                                                               
Authority  (KABATA).   It removes  KABATA's ability  to bond  and                                                               
exercise the power  of eminent domain, but allows KABATA  to be a                                                               
toll  authority and  collector once  the project  is constructed.                                                               
He  said that  this leaves  KABATA  some ability  to operate  and                                                               
maintain   the  bridge   structure  after   completion;  however,                                                               
KABATA's  powers  and  duties  have  very  much  been  curtailed.                                                               
Additionally, the  FCCS HB  23 also  instructs the  Department of                                                               
Transportation   &  Public   Facilities   (DOT&PF)   to  seek   a                                                               
Transportation Infrastructure Finance  and Innovation Act (TIFIA)                                                               
loan.                                                                                                                           
                                                                                                                                
8:06:40 AM                                                                                                                    
                                                                                                                                
MR. ECKLUND  provided a section-by-section  analysis of  the HCCS                                                               
HB  23.    He  said   Section  1  authorizes  the  Department  of                                                               
Transportation   &   Public    Facilities   (DOT&PF)   to   incur                                                               
indebtedness   to  the   Federal  Highway   Administration,  U.S.                                                               
Department of Transportation for a TIFIA loan.                                                                                  
                                                                                                                                
8:06:56 AM                                                                                                                    
                                                                                                                                
MR.  ECKLUND related  that Section  2 amends  the purpose  of the                                                               
Knik Arm Bridge and Toll  Authority (KABATA).  Section 3 provides                                                               
that  KABATA  may  not  be   terminated  if  it  has  obligations                                                               
outstanding,  including  an  obligation  to the  state  under  AS                                                               
37.15.225.   Section 4  would apply the  Executive Budget  Act to                                                               
the  operating budget  of  KABATA.   Section  5  would amend  the                                                               
powers   of   KABATA  and   removes   the   authority  to   incur                                                               
indebtedness,   issue   bonds,   apply   for   permits,   perform                                                               
engineering  and  design  studies,  and  exercise  the  power  of                                                               
eminent  domain.   Section 6  would  remove language  authorizing                                                               
KABATA  to plan,  design,  construct, and  operate  the Knik  Arm                                                               
Bridge  and  appurtenant  facilities.     It  also  would  remove                                                               
language giving  KABATA the exclusive authority  to determine and                                                               
fix  fees, rents,  tolls, rates,  and other  charges.   Section 7                                                               
would  remove  language  related  to  bonds  from  AS  19.75.261.                                                               
Section 8  would remove "acquisition, design,  construction" from                                                               
AS 18.75.291.                                                                                                                   
                                                                                                                                
8:08:11 AM                                                                                                                    
                                                                                                                                
MR. ECKLUND  related that  Section 9  requires the  department to                                                               
transfer  control   of  the  Knik  Arm   Bridge  and  appurtenant                                                               
facilities to KABATA  after construction of the bridge.   It also                                                               
would  authorize KABATA  to operate  the  bridge and  appurtenant                                                               
facilities  but  retains  ownership of  the  bridge,  appurtenant                                                               
facilities,  and real  property;  and the  power to  reconstruct,                                                               
equip, extend,  maintain, or improve  the bridge  and appurtenant                                                               
facilities  with the  DOT&PF.   He stated  that Section  10 makes                                                               
conforming changes  to AS 19.75.915  and Section 11  would permit                                                               
the department  to set fees,  rents, tolls, or other  charges for                                                               
the  use of  the Knik  Arm Bridge  and appurtenant  facilities in                                                               
excess of operating costs.                                                                                                      
                                                                                                                                
8:08:56 AM                                                                                                                    
                                                                                                                                
MR. ECKLUND stated that Section  12 authorizes the state to issue                                                               
revenue  bonds  to build  the  Knik  Arm Bridge  and  appurtenant                                                               
facilities.     More   specifically,   Section  37.15.255   would                                                               
authorize the state  to issue toll revenue bonds.   It also would                                                               
require the proceeds of the sale  of the bonds to be deposited in                                                               
the  Knik  Arm  construction  fund and  requires  notice  to  the                                                               
legislature  before  issuance  of   bonds.    He  indicated  this                                                               
provision  prevents  the  state  from  issuing  bonds  until  the                                                               
Federal  Highway   Administration  (FHWA),  U.S.   Department  of                                                               
Transportation (US-DOT)  has approved a  loan to the state  of at                                                               
least 30 percent of the total  project cost under TIFIA.  Section                                                               
37.15.230 would  establish the Knik  Arm construction fund  to be                                                               
used for the construction of  the Knik Arm Bridge and appurtenant                                                               
facilities.   He stated  that Section  37.15.235 limits  the toll                                                               
bridge revenue  bonds to $300  million.  Section  37.15.240 would                                                               
create the toll  bridge revenue fund.  The reserve  fund may only                                                               
be used to pay the bonds,  redeem the bonds, and pay indebtedness                                                               
under  TIFIA.   Section 37.15.245  would create  the toll  bridge                                                               
revenue bond  redemption fund to  pay the principal  and interest                                                               
and redemption premium on the bonds.                                                                                            
                                                                                                                                
8:10:23 AM                                                                                                                    
                                                                                                                                
MR. ECKLUND stated  that Section 37.15.250 allows  the state bond                                                               
committee   to  set   the  amounts   or  series,   price,  terms,                                                               
conditions, and  maturity date on  the bonds.   Section 37.15.255                                                               
would require the state bond  committee to authorize the issuance                                                               
of  bonds by  adopting  a resolution.    Section 37.15.260  would                                                               
create the bond reserve fund to  pay interest on and principal of                                                               
the toll  bridge revenue bonds.   The money may not  be withdrawn                                                               
if it  would reduce the amount  in the reserve fund  to an amount                                                               
less than the  required debt service.  It would  also require the                                                               
commissioner of  the department  of revenue  (DOR) to  certify to                                                               
the governor and the legislature  the amount necessary to restore                                                               
the  fund  to  an  amount  equal to  the  required  debt  service                                                               
reserve.                                                                                                                        
                                                                                                                                
8:11:18 AM                                                                                                                    
                                                                                                                                
MR. ECKLUND  said Section  37.15.265 allows  the trustee  for the                                                               
holders  of the  bonds to  bring appropriate  proceedings in  the                                                               
superior court.   Section 37.15.270 would require  the state bond                                                               
committee  to  certify  to  the   commissioners  of  revenue  and                                                               
administration  the  amounts required  in  the  current and  next                                                               
fiscal year  to be paid out  of toll revenue into  a reserve fund                                                               
or  other fund.   He  related that  Section 37.15.275  allows the                                                               
state  bond committee  to refund  the bonds  or any  part of  the                                                               
bonds before their  maturity or redemption date  and AS 37.15.280                                                               
declares  the bonds  to be  legal investments.   He  related that                                                               
Section  37.15.285 states  that AS  37.15.225-37.15.290 shall  be                                                               
construed liberally in order to  carry out the purposes for which                                                               
they were enacted.   Proposed AS 37.15.290 defines  the terms for                                                               
AS  37.15.225-37.15.290.   He indicated  that Section  13 repeals                                                               
various KABATA statutes mostly related  to bonding and Section 14                                                               
requires KABATA to transfer all  rights, titles, and interests to                                                               
the  DOT&PF and  Section 15  adds an  effective date  of July  1,                                                               
2014.                                                                                                                           
                                                                                                                                
MR. ECKLUND highlighted  one issue that was not  addressed in the                                                               
section-by-section  analysis.     He  explained  that   the  "Buy                                                               
America" section was removed.   After conferring with the DOT&PF,                                                               
it was  determined that  most of the  "Buy America"  sections are                                                               
covered under federal highway laws,  which were intended to cover                                                               
the broad  aspects of  purchasing steel.   The  language inserted                                                               
into HB  23 by  the other  body went further  than that  and some                                                               
problems  arose  that could  result  in  increased costs  to  the                                                               
project so that section was removed.                                                                                            
                                                                                                                                
8:13:40 AM                                                                                                                    
                                                                                                                                
SENATOR   MCGUIRE  confirmed   that  the   fundamental  financing                                                               
structure remains  the same even  though it has  been transferred                                                               
to  DOT&PF.   She  referred  to the  funding  as a  "three-legged                                                               
stool" such  that the  requirement to apply  for the  TIFIA loans                                                               
and  the project  is contingent  upon the  issuance of  the TIFIA                                                               
loan, and  the project  won't move forward  to issue  state bonds                                                               
without the aforementioned approval.                                                                                            
                                                                                                                                
MR. ECKLUND  answered yes; that  is correct. The TIFIA  loan must                                                               
be secured before  the revenue bonds can be issued  and the TIFIA                                                               
loan  must be  a minimum  of  30 percent  of the  total Knik  Arm                                                               
Bridge project cost.                                                                                                            
                                                                                                                                
8:14:32 AM                                                                                                                    
                                                                                                                                
SENATOR MICCICHE asked whether  the National Environmental Policy                                                               
Act  of   1969,  Department  of   Natural  Resources   (DNR)  and                                                               
Department  of Environmental  Conservation (DEC)  permitting that                                                               
has already been  accomplished will be fully  transferable to the                                                               
DOT&PF.                                                                                                                         
                                                                                                                                
MR.  ECKLUND  answered that  he  spoke  to the  commissioners  of                                                               
DOT&PF, DEC and it was their  belief that those permits - whether                                                               
midstream or complete - were transferable.                                                                                      
                                                                                                                                
SENATOR   MICCICHE  asked   whether   any  right-of-way   already                                                               
purchased  will   also  transfer  with  the   authority  if  this                                                               
conference bill passes.                                                                                                         
                                                                                                                                
MR. ECKLUND referred to page 16  to the transition section of the                                                               
FCCS HB 23,  which instructs KABATA to transfer all  of the items                                                               
listed in proposed Section 14 to the DOT&PF.                                                                                    
                                                                                                                                
8:15:49 AM                                                                                                                    
                                                                                                                                
SENATOR  GARDNER  referred  to  page   4,  line  10  of  proposed                                                               
[paragraph] (10) and asked whether  this means KABATA retains the                                                               
power to issue bonds.                                                                                                           
                                                                                                                                
MR. ECKLUND  answered he did not  believe so.  He  explained that                                                               
there  are many  repealers in  the proposed  FCCS, such  that the                                                               
proposed Free  Conference Committee  Substitute repealed  all the                                                               
sections related  to KABATA's  ability to bond.   He  deferred to                                                               
the DOR and the legislative legal counsel to answer.                                                                            
                                                                                                                                
8:16:50 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  AUSTERMAN  expressed  his  appreciation  for  the                                                               
legislative legal counsel's efforts on the FCCS.                                                                                
                                                                                                                                
8:17:18 AM                                                                                                                    
                                                                                                                                
HILARY MARTIN,  Attorney, Legislative Legal  Counsel, Legislative                                                               
Legal  Services,  Legislative   Affairs  Agency,  explained  that                                                               
[Section 5]  provides KABATA the  ability to pledge tolls  to pay                                                               
off  bonds of  the state.   Thus,  it doesn't  refer to  KABATA's                                                               
bonds,  but  to any  revenue  bonds  the  state  may issue.    In                                                               
response  to Senator  Gardner, she  indicated that  the power  of                                                               
eminent domain is language that is repealed.                                                                                    
                                                                                                                                
CO-CHAIR MCGUIRE  further clarified that the  language pertaining                                                               
to eminent domain was repealed.                                                                                                 
                                                                                                                                
8:18:25 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DRUMMOND  asked what remains  for KABATA to  do if                                                               
all the operating features are removed.                                                                                         
                                                                                                                                
MR. ECKLUND  related his understanding that  KABATA would collect                                                               
tolls, which  could be transmitted  to the  state.  He  said that                                                               
KABATA  can  also operate  and  manage  Knik  Bridge once  it  is                                                               
constructed, and KABATA  could own or lease  property for offices                                                               
or toll  facilities.  He  summarized that KABATA's  authority has                                                               
been pared back significantly.                                                                                                  
                                                                                                                                
MS. MARTIN related that Mr. Ecklund appropriately covered it.                                                                   
                                                                                                                                
8:19:30 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND, assuming  it would  take time  to build                                                               
the  Knik Arm  Bridge,  asked  what KABATA  would  do during  the                                                               
interim period since  it is limited to operate  and collect tolls                                                               
once the bridge is completed.                                                                                                   
                                                                                                                                
MR. ECKLUND  answered that [under the  FCCS for HB 23]  KABATA is                                                               
subject  to  the Executive  Budget  Act  so the  legislature  can                                                               
decide on KABATA's budget and its mission.                                                                                      
                                                                                                                                
8:20:00 AM                                                                                                                    
                                                                                                                                
CO-CHAIR  AUSTERMAN   indicated  that  obviously   this  proposal                                                               
represents quite  a transition and  change and  the deliberations                                                               
included  considering activities  during  the transition  period.                                                               
He said it's  important to not "cut KABATA off"  today since lots                                                               
of interactions will be needed during  the next year to make this                                                               
project  happen.   He  acknowledged  that  at  any point  in  the                                                               
future,  the legislature  can make  a  determination on  KABATA's                                                               
role; however,  having KABATA involved  during the  transition is                                                               
important.                                                                                                                      
                                                                                                                                
CO-CHAIR MCGUIRE reinforced that  the transition is important due                                                               
to  the  rights-of-way  activities,   pending  permits,  and  the                                                               
overall  knowledge  base.   She  acknowledged  some  disagreement                                                               
exists between the bodies on  KABATA's team; however, she offered                                                               
her appreciation for KABATA's good  work to date, noting many are                                                               
volunteers.    She  also  noted  collecting  tolls  should  be  a                                                               
function of  KABATA, but not  the state or  the DOT&PF, so  it is                                                               
important for KABATA  to gain the knowledge  necessary to conduct                                                               
its  toll function  even though  KABATA's  role is  significantly                                                               
pared down.                                                                                                                     
                                                                                                                                
8:21:45 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  DRUMMOND  related  her understanding  that  there                                                               
will  also  be  significant  costs   "post-bridge"  for  all  the                                                               
connecting  roads  and  the  transition  to  reroute  traffic  to                                                               
Gambell and Ingra Streets instead  of the traffic being routed to                                                               
"A"  and  "C" streets  in  downtown  Anchorage.   She  asked  for                                                               
clarification on how that will be handled and funded.                                                                           
                                                                                                                                
MR. ECKLUND answered  that those issues are not  addressed in the                                                               
bill.                                                                                                                           
                                                                                                                                
REPRESENTATIVE  DRUMMOND remarked  that [the  funding for  "post-                                                               
bridge" infrastructure] seems to be a significant omission.                                                                     
                                                                                                                                
8:22:26 AM                                                                                                                    
                                                                                                                                
SENATOR  MICCICHE  noted Alaskans  have  a  tendency to  reinvent                                                               
systems.   He  asked  whether any  comparison  model exists  from                                                               
other  states that  operate toll  infrastructure for  business or                                                               
construction.                                                                                                                   
                                                                                                                                
MR. ECKLUND answered that he  did not have any examples; however,                                                               
the DOT&PF commissioner may have examples.                                                                                      
                                                                                                                                
REPRESENTATIVE   STOLTZE  commented   that  the   best  qualified                                                               
individuals to answer this were cut out of today's process.                                                                     
                                                                                                                                
8:23:52 AM                                                                                                                    
                                                                                                                                
SENATOR MICCICHE  recalled using  passes while traveling  on toll                                                               
roads via  car rentals    He asked whether this  business will be                                                               
similar to  how it is done  by places that have  had toll bridges                                                               
for 80 years.                                                                                                                   
                                                                                                                                
PAT  KEMP, Commissioner,  Department of  Transportation &  Public                                                               
Facilities (DOT&PF),  answered yes; that  a number of  ways exist                                                               
to  fund  megaprojects and  tolls  are  an  active part  of  that                                                               
process.    He  acknowledged  that   similar  projects  are  done                                                               
nationwide   using  design-build   concept;  however,   there  is                                                               
generally  a  lot  more  traffic  to  generate  the  tolls.    He                                                               
emphasized that this  process is not new.  He  offered his belief                                                               
that the design-build process should be fine.                                                                                   
                                                                                                                                
8:25:02 AM                                                                                                                    
                                                                                                                                
SENATOR  MICCICHE  related one  advantage  to  being new  to  the                                                               
KABATA project is  that he doesn't have any emotions  tied to the                                                               
[evolving]  KABATA   project.    He  wondered   if  the  previous                                                               
arrangement for  the project  was less  typical than  projects in                                                               
the Lower 48 or elsewhere.                                                                                                      
                                                                                                                                
COMMISSIONER KEMP said,  "I believe it's a  mixed bag nationwide.                                                               
Projects are funded and constructed  in many different ways."  He                                                               
said  that   the  [public,   private,  partnership]   "P3"  model                                                               
introduced  earlier this  session is  frequently used  across the                                                               
nation; however,  in Alaska, Commissioner  Rodell found  a better                                                               
way to fund the project to  save funds.  He suggested that either                                                               
KABATA or  the department could  follow through with  the current                                                               
model.                                                                                                                          
                                                                                                                                
8:26:20 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MCGUIRE  asked whether  the commissioner  is comfortable                                                               
executing the  requirements included  in FCCS HB  23 and  all the                                                               
provisions that are being transferred to the DOT&PF.                                                                            
                                                                                                                                
COMMISSIONER KEMP answered yes.                                                                                                 
                                                                                                                                
8:26:52 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MCGUIRE  asked for insights  on how well  the department                                                               
works with  KABATA and how  comfortable the  relationship between                                                               
KABATA and  the DOT&PF is  in terms of the  transition, including                                                               
rights-of-way, permitting, and other tasks.                                                                                     
                                                                                                                                
COMMISSIONER KEMP characterized  the department's relationship as                                                               
good, noting  it continues  to improve.   He acknowledged  he has                                                               
not had an  opportunity to talk to the chair  or anyone at KABATA                                                               
in  the past  couple  of  days, but  he  offered  his belief  the                                                               
transition will be smooth.                                                                                                      
                                                                                                                                
CO-CHAIR MCGUIRE  recalled an innovative funding  structure.  She                                                               
asked for clarification on the "P3" model.                                                                                      
                                                                                                                                
8:27:55 AM                                                                                                                    
                                                                                                                                
ANGELA  RODELL,   Commissioner,  Department  of   Revenue  (DOR),                                                               
expressed  concern  about the  "P3"  model  since the  state  was                                                               
taking 100 percent  of the financing risk; however,  she said the                                                               
department  determined  a  less  expensive  way  to  finance  the                                                               
project.  The  department worked over the interim  with DOT&PF to                                                               
develop an alternative plan that  is contained in the bill before                                                               
members today.   She said the "P3" model became  expensive due to                                                               
a  number of  changes in  the market.   Additionally,  since this                                                               
project  is  considered  a   "Greenfield  project,"  without  any                                                               
history, so the financing became more expensive.                                                                                
                                                                                                                                
8:29:17 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE STOLTZE,  with respect  to the transition  for the                                                               
commissioners,  asked for  confirmation  that both  commissioners                                                               
are voting  members of  the KABATA  board and  how that  may help                                                               
during the transition process.                                                                                                  
                                                                                                                                
COMMISSIONER KEMP  answered yes; that he  and Commissioner Rodell                                                               
have served on the five-member KABATA board.                                                                                    
                                                                                                                                
REPRESENTATIVE  STOLTZE  pointed  out  that this  is  not  a  new                                                               
project for the DOT&PF or the DOR.                                                                                              
                                                                                                                                
COMMISSIONER  KEMP agreed.    He said  that he  has  been on  the                                                               
periphery of  the project, but  he believes the DOT&PF  will work                                                               
well with the board.                                                                                                            
                                                                                                                                
REPRESENTATIVE  STOLTZE clarified  that  Commissioner  Kemp is  a                                                               
member of the KABATA board of directors.                                                                                        
                                                                                                                                
COMMISSIONER KEMP answered yes.                                                                                                 
                                                                                                                                
8:30:35 AM                                                                                                                    
                                                                                                                                
SENATOR GARDNER  asked whether KABATA  can receive funds  but not                                                               
be indebted directly under the current arrangement.                                                                             
                                                                                                                                
COMMISSIONER RODELL  related her understanding the  state will be                                                               
able to  transfer funds  to KABATA  for very  specific activities                                                               
that have  been authorized.   For  example, KABATA  could receive                                                               
funds  to purchase  the software  to run  the tolling  operation.                                                               
She pointed out  that will come through the DOT&PF  or the DOR to                                                               
conduct specific tasks.                                                                                                         
                                                                                                                                
8:31:57 AM                                                                                                                    
                                                                                                                                
SENATOR GARDNER  referred to the capital  budget, which currently                                                               
contains $55 million for KABATA.   She asked whether that funding                                                               
will be line-item vetoed.                                                                                                       
                                                                                                                                
CO-CHAIR  AUSTERMAN  anticipated  an   amendment  to  change  the                                                               
language from KABATA to the Knik Arm Bridge.                                                                                    
                                                                                                                                
8:32:28 AM                                                                                                                    
                                                                                                                                
SENATOR GARDNER, in  reference to the socio-economic  data in the                                                               
Legislative Budget &  Audit on KABATA, recalled the  raw data has                                                               
been  provided but  it  has not  yet been  put  into the  traffic                                                               
model.   She asked who will  be responsible to put  the data into                                                               
usable form and when will it be available to the legislature.                                                                   
                                                                                                                                
COMMISSIONER  KEMP  answered that  he  has  not seen  the  socio-                                                               
economic information.  He noted that  there will be a new process                                                               
with the receipt  of federal aid, since one-third  of the project                                                               
is anticipated to be funded via  federal funds.  He recalled that                                                               
will go through the large  project office in Washington, who will                                                               
conduct   a  thorough   review   of  the   financing  plan,   the                                                               
construction estimate and  other estimates will be  vetted by the                                                               
FHWA.   In  fact, any  project over  $500 million  undergoes this                                                               
type of scrutiny, he said.                                                                                                      
                                                                                                                                
8:33:54 AM                                                                                                                    
                                                                                                                                
SENATOR GARDNER expressed an interest  in the [legislative budget                                                               
and  audit]  LB&A report  that  indicated  KABATA's toll  traffic                                                               
numbers were overestimated  and need to be redone.   She recalled                                                               
that  is   why  the  upwards   of  $100  million   investment  is                                                               
anticipated in  Phase 1 of the  project.  She offered  her belief                                                               
that it is important to have  a realistic estimate of the traffic                                                               
patterns now  and into the  future, the estimated tolls,  and any                                                               
debt the tolls can support.                                                                                                     
                                                                                                                                
CO-CHAIR  AUSTERMAN explained  that  today's discussion  revolves                                                               
around the  changes in FCCS HB  23.  He said  he also understands                                                               
the issues  and desire for  justification; however,  these issues                                                               
are not in this proposed  Free Conference Committee Substitute or                                                               
the discussion  being held  today.   He asked  members to  try to                                                               
stick to the proposed Free Conference Committee Substitute.                                                                     
                                                                                                                                
8:35:30 AM                                                                                                                    
                                                                                                                                
SENATOR GARDNER asked  to put on the record  that the information                                                               
is forthcoming.   She understood the time  constraints, but would                                                               
like  to know  who  will  be providing  this  information in  the                                                               
future.                                                                                                                         
                                                                                                                                
CO-CHAIR MCGUIRE  referred to  page 16,  to proposed  Section 14,                                                               
noting  the  transition  language  includes  a  transfer  of  all                                                               
studies and  intellectual property.   She agreed that this  was a                                                               
subject of  earlier conversation, but  the report is due  back in                                                               
July and the language is specifically in the FCCS HB 23.                                                                        
                                                                                                                                
8:36:20 AM                                                                                                                    
                                                                                                                                
SENATOR  MICCICHE  asked how  this  megaproject  will affect  the                                                               
current  statewide  transportation   improvement  program  (STIP)                                                               
schedule.     He   remarked  he   has  received   questions  from                                                               
constituents  concerned about  how  the Knik  Arm Bridge  project                                                               
will affect the current project schedule.                                                                                       
                                                                                                                                
COMMISSIONER KEMP  referred to  the STIP and  impacts to  the 10-                                                               
year  snapshot  of   projects.    He  reminded   members  he  has                                                               
previously testified that  the new FHWA funding  program, MAP 21,                                                               
has  shifted funding  from local  roads  to urban  roads and  the                                                               
National Highway System (NHS), such  as the Seward Highway, Parks                                                               
Highway, and  Egan Drive.   He  said that  this change  has dove-                                                               
tailed well  and the DOT&PF  can accommodate this project  in the                                                               
NHS side of  the STIP.  He acknowledged that  a problem exists in                                                               
backfilling  the surface  transportation system  (STP) side.   He                                                               
characterized the  progress thus  far as  being "pretty  good" so                                                               
"all in all" he did not believe there would be any impacts.                                                                     
                                                                                                                                
8:38:13 AM                                                                                                                    
                                                                                                                                
SENATOR MICCICHE asked for clarification  whether the $18 million                                                               
in authority KABATA has would be transferred to DOT&PF.                                                                         
                                                                                                                                
MR.  ECKLUND did  not think  this is  in the  bill.   Further, he                                                               
suggested there  could be an  amendment to the capital  budget if                                                               
an  appropriation  is necessary;  otherwise  he  deferred to  the                                                               
commissioner.                                                                                                                   
                                                                                                                                
8:39:01 AM                                                                                                                    
                                                                                                                                
COMMISSIONER  RODELL answered  that she  was not  sure she  has a                                                               
good answer.   She understood that the KABATA  board has approved                                                               
its  operating   budget  for   next  year.     She   related  her                                                               
understanding  that  this  funding  has  been  encumbered.    She                                                               
offered to look into the issue.                                                                                                 
                                                                                                                                
REPRESENTATIVE  STOLTZE  reported  that KABATA  falls  under  the                                                               
Executive Budget  Act so  the executive  branch has  authority to                                                               
work  with  the  DOT&PF  on the  transfers.    Additionally,  the                                                               
administration  has  the  flexibility   and  authority  over  the                                                               
spending  process.   He emphasized  that it  is very  significant                                                               
that KABATA was put under the Executive Budget Act.                                                                             
                                                                                                                                
8:40:14 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DRUMMOND  expressed concern the  Commissioner Kemp                                                               
said,  "We'll have  to backfill  the STIP."   She  said there  is                                                               
significant  additional  cost  to  the  Knik  Arm  Bridge.    She                                                               
expressed  concern that  statewide transportation  needs will  be                                                               
set aside in the interests of  building the Knik Arm Bridge.  She                                                               
said, "We don't build a bridge  in isolation.  We have connecting                                                               
roads.   We have roads  to Big Lake.   We have  the Ingra-Gambell                                                               
connection  that   has  to  be   made  at  the  request   of  the                                                               
Municipality of  Anchorage.  I'm  curious if the  commissioner is                                                               
aware of  just how  much is  not addressed  by this  project that                                                               
looks like it will be bumping projects from the STIP."                                                                          
                                                                                                                                
COMMISSIONER KEMP  answered that the  department is aware  of the                                                               
additional costs  on both  sides of  the bridge.   This  has been                                                               
discussed  internally  through  the  liaison  with  KABATA.    He                                                               
indicated the  DOT&PF will  need to  accommodate the  projects in                                                               
the regular  STIP process, with  general fund  appropriations, or                                                               
by other means.  He  acknowledged that transitions will occur and                                                               
anticipated the department will need to deal with them.                                                                         
                                                                                                                                
8:41:40 AM                                                                                                                    
                                                                                                                                
REPRESENTATIVE DRUMMOND  understood tolls would take  care of all                                                               
the additional roads required.                                                                                                  
                                                                                                                                
COMMISSIONER KEMP said he was unsure.   He understood that at one                                                               
point capacity  will require  four lanes, but  he was  unsure how                                                               
that dovetails with the additional needs  shore side.  He said he                                                               
has heard the explanation, but cannot recall the details today.                                                                 
                                                                                                                                
8:42:13 AM                                                                                                                    
                                                                                                                                
SENATOR GARDNER  recalled that eminent  domain could not  be used                                                               
any  further in  the  Senate version  of the  bill,  but she  was                                                               
unsure if the provision is included in the FCCS HB 23.                                                                          
                                                                                                                                
MS. MARTIN explained  that the language was  removed since KABATA                                                               
will  transfer all  its property  to  DOT&PF so  there isn't  any                                                               
reason to stop them from transferring  the property.  She said it                                                               
would be a conflict in the bill  to tell them not to transfer the                                                               
property and then tell them to transfer the property.                                                                           
                                                                                                                                
8:43:05 AM                                                                                                                    
                                                                                                                                
SENATOR GARDNER  asked whether any  "stop/go" issues exist  or if                                                               
this is a "green" light all the way.                                                                                            
                                                                                                                                
COMMISSIONER  KEMP responded  that authorities  to proceed  (ATP)                                                               
are  part of  the  FHWA  process.   The  state  can't proceed  to                                                               
construction  until all  the right-of-way  is  completed and  the                                                               
environmental permits  and U.S. Corps of  Engineering permits are                                                               
obtained.  He reported that  checklists for the FHWA exist, which                                                               
the project  has been under  from the beginning with  the funding                                                               
of the environmental document.                                                                                                  
                                                                                                                                
REPRESENTATIVE AUSTERMAN removed his objection.                                                                                 
                                                                                                                                
8:44:24 AM                                                                                                                    
                                                                                                                                
CO-CHAIR MCGUIRE moved to report the  FCCS for HB 23, labeled 28-                                                               
LS0141\H, Martin,  4/24/14 out of the  Free Conference Committee,                                                               
with  two  fiscal  notes: one  forthcoming  conference  committee                                                               
fiscal  note  and the  [SCS  2nd  CSHB  23(FIN)] fiscal  note  #7                                                               
[prepared by the DOT&PF dated 4/14/14].                                                                                         
                                                                                                                                
8:45:04 AM                                                                                                                    
                                                                                                                                
SENATOR GARDNER objected.   She offered her belief  that the FCCS                                                               
is  a tremendous  improvement.    She congratulated  Commissioner                                                               
Rodell  since  [this bill]  will  serve  the state  much  better.                                                               
However,  like Representative  Drummond,  she  maintained she  is                                                               
very concerned  about the costs, the  impacts on the rest  of the                                                               
state, and the costs not included  in the proposal.  She said she                                                               
planned to oppose the bill on the  floor but did not wish to hold                                                               
it up in committee.                                                                                                             
                                                                                                                                
CO-CHAIR MCGUIRE  thanked the co-chair,  and members of  the free                                                               
conference committee.   She acknowledged that it  is difficult to                                                               
have something  significant arise at  the end of  the legislative                                                               
session.    She  offered  her  belief  that  significant  project                                                               
improvements  are included  and the  chances of  success for  the                                                               
project have greatly improved.                                                                                                  
                                                                                                                                
REPRESENTATIVE STOLTZE  thanked the bill  sponsor, Representative                                                               
Neuman, the  sponsor of HB 23.   He also thanked  Senator Huggins                                                               
and  Co-Chair McGuire.    He  said that  without  their work  the                                                               
committee  would   not  likely   be  moving  forward   with  this                                                               
compromise.   He  said, "We  like  to build  bridges and  there's                                                               
often more than one way to do it.  Thank you."                                                                                  
                                                                                                                                
CO-CHAIR AUSTERMAN offered his belief  that this project wouldn't                                                               
be moving forward without everyone's  efforts.  He recognized the                                                               
long  hours by  Ms. Martin,  legislative legal  counsel, and  his                                                               
staff, Pete Ecklund, have put in on this bill.                                                                                  
                                                                                                                                
8:47:23 AM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being  no further business  before the committee,  the Free                                                               
Conference Committee meeting on HB 23 was adjourned at 8:47 a.m.                                                                

Document Name Date/Time Subjects
HB 23 CC Letter - 4 23 2014-signed.pdf JHB23 4/25/2014 8:00:00 AM
HB 23
HB 23 CC Presentation Knik Arm Crossing.pdf JHB23 4/25/2014 8:00:00 AM
HB 23
SCS 2D CSHB 23(FIN) AM S vers 28-LS0141-I A Summary of changes 04 18 2014.pdf JHB23 4/25/2014 8:00:00 AM
HB 23
HB 23 SCS 2D CSHB 23(FIN) AM S vers 28-LS0141-I A Summary of changes 04 18 2014.pdf JHB23 4/25/2014 8:00:00 AM
HB 23
HB 23 Free CS 28-LS 0141-H.pdf HFIN 4/25/2014 8:00:00 AM
JHB23 4/25/2014 8:00:00 AM
HB 23
HB 23 CC CS Sectional.pdf HFIN 4/25/2014 8:00:00 AM
JHB23 4/25/2014 8:00:00 AM
HB 23
HB 23 Revised #2 CC HB023CC-DOR-KABATA-04-25-14.pdf JHB23 4/25/2014 8:00:00 AM
HB 23