04/14/2014 03:15 PM House LABOR & COMMERCE
| Audio | Topic |
|---|---|
| Start | |
| SB99 | |
| SB140 | |
| SB194 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 99 | TELECONFERENCED | |
| + | SB 140 | TELECONFERENCED | |
| + | SB 194 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE LABOR AND COMMERCE STANDING COMMITTEE
April 14, 2014
3:23 p.m.
MEMBERS PRESENT
Representative Kurt Olson, Chair
Representative Lora Reinbold, Vice Chair
Representative Mike Chenault
Representative Bob Herron
Representative Dan Saddler
Representative Andy Josephson
MEMBERS ABSENT
Representative Charisse Millett
Representative Craig Johnson
COMMITTEE CALENDAR
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 99(L&C)
"An Act relating to the Alaska Industrial Development and Export
Authority revolving fund; limiting the use of the Alaska
Industrial Development and Export Authority sustainable energy
transmission and supply development fund for certain loans and
loan guarantees and allowing the development fund to be used as
security for a bond guarantee; amending the definition of
'qualified energy development'; and authorizing the Alaska
Industrial Development and Export Authority to issue bonds to
finance the infrastructure and construction costs of the Bokan-
Dotson Ridge rare earth element project and the Niblack
project."
- MOVED CSSB 99(L&C) OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 140(FIN)
"An Act creating the Arctic infrastructure development program
and fund in the Alaska Industrial Development and Export
Authority; and relating to dividends from the Alaska Industrial
Development and Export Authority."
- MOVED CSSB 140(FIN) OUT OF COMMITTEE
COMMITTEE SUBSTITUTE FOR SENATE BILL NO. 194(FIN)
"An Act creating the Alaska Tourism Marketing Board; and
relating to tourism marketing."
- MOVED HCS CSSB 194(L&C) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: SB 99
SHORT TITLE: AIDEA: DEVELOPMENT LOANS
SPONSOR(s): SENATOR(s) MCGUIRE
04/05/13 (S) READ THE FIRST TIME - REFERRALS
04/05/13 (S) L&C
02/18/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/18/14 (S) Heard & Held
02/18/14 (S) MINUTE(L&C)
02/27/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/27/14 (S) -- MEETING CANCELED --
03/13/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/13/14 (S) Scheduled But Not Heard
03/18/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/18/14 (S) -- MEETING CANCELED --
03/20/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/20/14 (S) Moved CSSB 99(L&C) Out of Committee
03/20/14 (S) MINUTE(L&C)
03/21/14 (S) L&C RPT CS 2DP 1NR NEW TITLE
03/21/14 (S) DP: MICCICHE, STEDMAN
03/21/14 (S) NR: OLSON
03/28/14 (S) TRANSMITTED TO (H)
03/28/14 (S) VERSION: CSSB 99(L&C)
03/31/14 (H) READ THE FIRST TIME - REFERRALS
03/31/14 (H) L&C
04/14/14 (H) L&C AT 3:15 PM BARNES 124
BILL: SB 140
SHORT TITLE: AIDEA: ARCTIC DEVELOPMENT PROGRAM/FUND
SPONSOR(s): SENATOR(s) MCGUIRE
01/27/14 (S) READ THE FIRST TIME - REFERRALS
01/27/14 (S) L&C, FIN
02/18/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/18/14 (S) Heard & Held
02/18/14 (S) MINUTE(L&C)
02/25/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/25/14 (S) -- MEETING CANCELED --
02/27/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
02/27/14 (S) -- MEETING CANCELED --
03/11/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/11/14 (S) -- MEETING CANCELED --
03/13/14 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/13/14 (S) Moved CSSB 140(L&C) Out of Committee
03/13/14 (S) MINUTE(L&C)
03/14/14 (S) L&C RPT CS 4DP 1NR NEW TITLE
03/14/14 (S) DP: DUNLEAVY, STEDMAN, MICCICHE, OLSON
03/14/14 (S) NR: ELLIS
03/27/14 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/27/14 (S) Heard & Held
03/27/14 (S) MINUTE(FIN)
03/31/14 (S) FIN RPT CS 4DP 1NR NEW TITLE
03/31/14 (S) DP: KELLY, MEYER, HOFFMAN, BISHOP
03/31/14 (S) NR: OLSON
03/31/14 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/31/14 (S) Moved CSSB 140(FIN) Out of Committee
03/31/14 (S) MINUTE(FIN)
04/02/14 (S) TRANSMITTED TO (H)
04/02/14 (S) VERSION: CSSB 140(FIN)
04/03/14 (H) READ THE FIRST TIME - REFERRALS
04/03/14 (H) L&C, FIN
04/13/14 (H) FIN AT 1:00 PM HOUSE FINANCE 519
04/13/14 (H) <Pending Referral>
04/14/14 (H) L&C AT 3:15 PM BARNES 124
BILL: SB 194
SHORT TITLE: TOURISM MARKETING BOARD
SPONSOR(s): SENATOR(s) MCGUIRE
02/21/14 (S) READ THE FIRST TIME - REFERRALS
02/21/14 (S) FIN
03/13/14 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/13/14 (S) Heard & Held
03/13/14 (S) MINUTE(FIN)
03/24/14 (S) FIN RPT CS 4DP 1NR TECHNICAL TITLE
CHANGE
03/24/14 (S) DP: MEYER, DUNLEAVY, BISHOP, FAIRCLOUGH
03/24/14 (S) NR: OLSON
03/24/14 (S) FIN AT 9:00 AM SENATE FINANCE 532
03/24/14 (S) Moved CSSB 194(FIN) Out of Committee
03/24/14 (S) MINUTE(FIN)
03/26/14 (S) TRANSMITTED TO (H)
03/26/14 (S) VERSION: CSSB 194(FIN)
03/27/14 (H) READ THE FIRST TIME - REFERRALS
03/27/14 (H) L&C, FIN
04/12/14 (H) FIN AT 8:00 AM HOUSE FINANCE 519
04/12/14 (H) <Bill Hearing Postponed to 2:00 p.m.>
04/12/14 (H) FIN AT 2:00 PM HOUSE FINANCE 519
04/12/14 (H) Scheduled But Not Heard
04/14/14 (H) L&C AT 3:15 PM BARNES 124
WITNESS REGISTER
JESSE LOGAN, Staff
Representative Lesil McGuire
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the sponsor of SB
99, Senate Labor & Commerce Committee, chaired by Senator Lesil
McGuire.
JAMES SULLIVAN, Director
Southeast Alaska Conservation Council (SEACC)
Juneau, Alaska
POSITION STATEMENT: Testified in opposition to SB 99.
KEN COLLISON, Chief Executive Officer
Ucore Rare Metals, Inc.
Halifax, Nova Scotia, Canada
POSITION STATEMENT: Testified during the discussion of SB 99.
PATRICK SMITH, President and Chief Executive Officer
Heatherdale Resources, Ltd.
Vancouver, Canada
POSITION STATEMENT: Testified during the discussion of SB 99.
TED LEONARD, Executive Director
Alaska Industrial Development & Export Authority (AIDEA)
Department of Commerce, Community, & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of SB 99.
DAN BOCKHORST, Manager
Ketchikan Gateway Borough (KGB)
Ketchikan, Alaska
POSITION STATEMENT: Testified in support of SB 99.
JESSE LOGAN, Staff
Senator Lesil McGuire
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the prime sponsor of
SB 140.
TED LEONARD, Executive Director
Alaska Industrial Development & Export Authority (AIDEA)
Department of Commerce, Community, & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of SB 140.
MARK DAVIS, Deputy Director
Alaska Industrial Development and Export Authority (AIDEA)
Department of Commerce, Community, & Economic Development
Anchorage, Alaska
POSITION STATEMENT: Answered questions regarding SB 140.
RON LONG, Deputy City Manager
City of Seward
Seward, Alaska
POSITION STATEMENT: Testified during the discussion of SB 140.
SARA LUKIN, Chief Operating Officer
Pt Public Policy, LLC
Anchorage, Alaska
POSITION STATEMENT: Testified in support of SB 140.
GENEIVIEVE WOJTUSIK, Staff
Senator Lesil McGuire
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the prime sponsor of
SB 194, Senator Lesil McGuire.
BILL PEDLAR, Government Relations
Alaska Travel Industry Association (ATIA)
Seattle, Washington
POSITION STATEMENT: Testified during the discussion of SB 194.
JOSEPH JACOBSON, Director
Division of Economic Development
Department of Commerce, Community & Economic Development
Juneau, Alaska
POSITION STATEMENT: Testified in support of SB 194.
ACTION NARRATIVE
3:23:32 PM
CHAIR KURT OLSON called the House Labor and Commerce Standing
Committee meeting to order at 3:23 p.m. Representatives
Reinbold, Herron, Josephson, Saddler, and Olson and were present
at the call to order. Representative Chenault arrived as the
meeting was in progress.
SB 99-AIDEA: DEVELOPMENT LOANS
3:23:59 PM
CHAIR OLSON announced that the first order of business would be
CS FOR SENATE BILL NO. 99(L&C), "An Act relating to the Alaska
Industrial Development and Export Authority revolving fund;
limiting the use of the Alaska Industrial Development and Export
Authority sustainable energy transmission and supply development
fund for certain loans and loan guarantees and allowing the
development fund to be used as security for a bond guarantee;
amending the definition of 'qualified energy development'; and
authorizing the Alaska Industrial Development and Export
Authority to issue bonds to finance the infrastructure and
construction costs of the Bokan-Dotson Ridge rare earth element
project and the Niblack project."
3:24:07 PM
JESSE LOGAN, Staff, Representative Lesil McGuire, Alaska State
Legislature, stated that SB 99 corrects a few ambiguities in the
existing statutes for the sustainable energy transmission and
supply development program (SETS) within the Alaska Industrial
Development & Export Authority (AIDEA). Primarily, the bill
would clarify a few technical aspects of the SETS program which
was created by the 27th Legislature. He explained that some
ambiguity arises with the one-third capital cost limitation as
it relates to loans, loan guarantees, and bond guarantees. He
referred to page 2, lines 18-36 [Section 2], which relates to
whether the loan guarantee limitation works in conjunction as a
one-third limitation on the loans or was independent of that
limitation. Additionally, the statutes were vague pertaining to
AIDEA's authority to use the fund as security for a bond
guarantee. He said AIDEA has received requests from project
components and banks to utilize the fund in which AIDEA needed
the authority to issue a bond guarantee for more than one-third
of the capital project cost. This bill would clarify those
ambiguities, he explained. Additionally, referring to the
bottom of the bill, AIDEA is granted bonding authority on two
projects, the rare earth elements at the Bokan Dotson Ridge site
for $145 million and the Niblack mine site for $125 million.
CHAIR OLSON commented that the fiscal note is zero.
3:25:47 PM
REPRESENTATIVE JOSEPHSON referred to [page 3], Section 5-6, of
SB 99. He asked for a description of the location of the rare
earth mines. He said that the sites are both located on the
southeastern corner of Prince of Wales Island, including a
description of tailings moved to Gravina Island.
MR. LOGAN deferred to representatives of the projects.
3:26:41 PM
JAMES SULLIVAN, Director, Southeast Alaska Conservation Council
(SEACC), expressed concern about the two projects being added,
although SEACC does not have any issue with the original bill.
Overall, SB 99 is a good bill; however, the way the proposed
committee substitute [(CS) for SB 99 (L&C)] is worded to include
the two mining projects and to allow AIDEA to either own or
finance these creates a huge conflict of interest for the state.
He explained that the state will be regulating the projects -
the watchdog of the group - but will also be the owner. This
conflict of interest has not been addressed by any of the
committees thus far, he said. These projects also put the state
"on the hook" for a combined $300 million, yet the bill does not
have a referral to the House or Senate Finance Committees. He
said SEACC finds this troubling. He cautioned that this does
not suggest that AIDEA doesn't perform its "due diligence" since
AIDEA has created a wonderful track record over the years. He
reported the financing range could be anywhere from zero to $270
million. He said this as an unfortunate step since it places
the state in ownership of an operation that should be regulated.
3:29:19 PM
REPRESENTATIVE JOSEPHSON related his understanding that AIDEA
loans money.
MR. SULLIVAN agreed.
REPRESENTATIVE JOSEPHSON asked for further clarification on the
concern. He asked whether his concern stemmed from the state
loaning money to itself.
MR. SULLIVAN said that the conflict arises because the state
could potentially own a project it must regulate. He noted that
many mining operations in the state have done well and have been
profitable; however, other examples in mining have not gone so
well and the state has been "left with the bag" for the cleanup.
He pointed out the Tulsequah Chief Mine near the Taku River [in
British Columbia]. He reported that this mine is draining acid
right now, has been for years, and will continue to do so for
years to come. In response to a question, he acknowledged that
the Tulsequah Chief mine was not an AIDEA project; however, he
noted it is a mining project. He offered his belief that it
puts the state in a difficult position. He would like the state
to avoid possible problems in the years to come, which is why he
is speaking out against it.
3:30:59 PM
REPRESENTATIVE JOSEPHSON asked to set aside the issue of the
conflict. He said that his cursory review of Bokan Dotson Ridge
rare earth element project and the Niblack mine project is that
these mines are underground mines, and one has a small footprint
and, in the other, tailings would be moved to Gravina Island for
processing. He asked whether SEACC has any concerns about the
health of Prince of Wales Island from this or if the project is
relatively benign.
MR. SULLIVAN responded that he does not have a "crystal ball"
and he does not know what situations will arise. He said that
SEACC believes any type of mining in Alaska should undergo a
rigorous permitting process, which should be constantly reviewed
to ensure that it is operating in the way it is supposed to
operate. In the event that problems do arise and the state has
invested millions in the project, but another agency within the
state has the regulatory responsibility to fine them or stop
them, it creates troubling conflicts. He acknowledged he's
raising hypothetical circumstances, but he asked how the
Department of Natural Resources or the Department of
Environmental Conservation [would regulate the activity]. He
further acknowledged that he was unsure the mines will be
financed so, again, this is hypothetical and could be years away
from any decision. Still, it would be very troubling if
problems did arise, noting that the Bokan-Dotson mine has
uranium, and many issues potentially exist and should be
constantly monitored. This isn't about being pro-mining or
anti-mining but about taking care of the land appropriately that
the state is entrusted to care for, he said.
3:33:28 PM
REPRESENTATIVE SADDLER asked whether Tulsequah Chief Mine near
the Taku River is in the U.S.
MR. SULLIVAN answered no.
REPRESENTATIVE SADDLER noted his comment that Alaska mining
should go through a rigorous permitting process. He asked
whether the Pebble Project should go through a rigorous state
permitting process.
MR. SULLIVAN answered yes, if it ever gets that far.
3:34:16 PM
REPRESENTATIVE JOSEPHSON asked for a sense of what the project
would look like. He said he has been to Ketchikan and has been
all over Revillagigedo Island, but he does not have a sense of
what this project will look like when it's done.
KEN COLLISON, Chief Executive Officer, Ucore Rare Metals, Inc.,
explained that the Bokan-Dotson Ridge mine will be an
underground mine with a small footprint and all the tailings
will be put back underground. He reiterated that the tailings
will not be on the surface at closure. He explained that the
rare earth mine ore is acid consuming and the waste is acid
consuming so acid-rock drainage issues don't exist. He said
that basically what a person would see at the site would be a
decline that goes into the ground with a 15-foot square opening,
and several openings will also rise vertically for ventilation.
Additionally, some buildings will be built, including a
relatively small mill, an office building, and a camp. He
pointed out a waste rock storage area for the mine would exist
for the approximately 2.5 inch rock, which may make good
aggregate; however, this is not yet known. In further response
to a question, he agreed the mine would be in Alaska on the
south end of Prince of Wales Island.
3:35:47 PM
REPRESENTATIVE SADDLER asked for the impact of the financial
prospects of the development of the Bokan-Dotson Ridge mine if
the lending authority is authorized under the bill.
MR. COLLISON answered that the mine would create approximately
200 fulltime jobs, most of which would come from Prince of Wales
Island or Ketchikan. The typical mining job in the state pays
approximately $80,000-$100,000 per year. These are good jobs
that can support families. Additionally, the mine will create
some indirect jobs in the area.
3:36:23 PM
REPRESENTATIVE SADDLER asked whether he could identify where the
product would be used.
MR. COLLISON said that this project will put in a separation
plant, which is new technology used to recover platinum and
pluatium from catalysts. The mine is proposed to produce 16
rare-earth elements, including dysprosium, terbium, and
europium. He said key uses of these elements are through a
contract with the U.S. Department of Defense since high-
technology weaponry requires rare earth minerals. Further, rare
earth minerals are used for electric cars, hybrid cars, wind
turbines, and solar panels. Currently, over 95 percent of the
heavy rare earth minerals consumed on the earth are produced in
China. He quantified that the Bokan-Dotson Ridge mine is
anticipated to produce over 50 percent of the U.S. needs for
dysproseum and about 10 times what the DOD will need. He
characterized these minerals as unique and the advantage of the
small size needed is why these minerals are used in motors,
generators, and electric or hybrid cars.
3:37:44 PM
REPRESENTATIVE CHENAULT asked for the life expectancy of the
mine.
MR. COLLISON answered that the mine expectancy is currently 11
years, but he thinks that once the mining operation reaches 10
years, it will stop drilling since adding five more years
wouldn't justify the mine. He said, "Miners like to mine. The
trick is to get it going." He pointed out that Red Dog and
Greens Creek mines have lasted two or three times what they were
originally planned, yet they each have ore bodies that have not
yet been mined.
3:38:19 PM
REPRESENTATIVE JOSEPHSON asked whether he had any sense whether
processing minerals on Gravina Island is good for the
environment.
MR. COLLISON suggested that the Gravina Island is what the
Niblack mine is proposing. The Bokan-Dotson Ridge mine project
will process the tailings onsite.
REPRESENTATIVE JOSEPHSON asked whether he could describe any
local hire efforts for the 200 anticipated jobs.
MR. COLLISON answered that the mine has begun efforts in Juneau
at the University of Alaska Southeast and with the vocational
training in Ketchikan and Craig. He said, "Local hire is one of
my pets. It's the right thing to do for the area, but it's also
the right thing to do for the mine." He related that he has
built three mines thus far so this mine will be his fourth. He
said that one mine, a small open pit mine in Nova Scotia, ran
with two people in the pit who were not local, the blaster and
the shovel operator, since the pit shovel was worth $5 million.
He said two people were "from away" since they hadn't lived
there for three generations. He said the rest were local people
and the mine had very low turnover with a really good safety
record. Additionally, he said, it is cheaper and better to run
the mine for the community [to use local hire].
3:40:28 PM
PATRICK SMITH, President & Chief Executive Officer, Heatherdale
Resources, Ltd. stated that his company has ownership of the
Niblack [copper-gold-zinc-silver] project in Southeast Alaska.
3:41:16 PM
REPRESENTATIVE JOSEPHSON asked for clarification on the
processing at Gravina Island and why the decision was made to
move the minerals across the water.
MR. SMITH explained the Niblack Mine is a similar underground
mine for the Niblack as for the Ucore project. The Niblack Mine
would produce similar production rates as with 1,500 to 2,000
tons per day, similar to Greens Creek. He explained that when
the mine investigated ways to improve the overall operation, the
Niblack considered barging the material to an offsite location
for the milling. He related that they looked at quite a few
options in Alaska. The mine needs power capacity since the
Niblack site mine would need to generate its own power through
diesel or other means. The hydroelectric power capacity in
Ketchikan was a very big "plus" with the infrastructure located
at the Gravina Island industrial complex with an existing cable
across the Tongass Narrows. Additionally, the workforce can
live there, commute, and their children can go to school in
Ketchikan. A third advantage would be the hydroelectric power
usage so it would also provide cleaner energy for the mill site,
which consumes a lot more energy than the mine itself. The
Gravina Island processing location is a "win-win-win" situation
since it provides local jobs and the tradeoff for barging
materials looks good, he said.
3:43:30 PM
REPRESENTATIVE JOSEPHSON asked whether the mine would be using
chemicals on Prince of Wales Island.
MR. SMITH said he couldn't say chemicals wouldn't be used on
Prince of Wales Island, which is where the mining would take
place; however, a stockpile would go on a pad, be loaded on a
barge, and then offloaded at Gravina Island where the processing
would take place. In the case with the Niblack mine, a large
percentage of the material would be back-loaded to Niblack and
put back underground.
3:44:25 PM
REPRESENTATIVE SADDLER asked how the AIDEA funding fit into the
mining project financing.
MR. SMITH reported that the Bokan-Dotson Ridge mine is in the
advanced stage of exploration. The company has conducted
substantial engineering scoping work, and based on the
production schedule, anticipates capital expenditures of
approximately $200 million for mine, mill, and infrastructure.
The project has been considering different scenarios so he
characterized the figures as "ball park" figures.
3:45:15 PM
CHAIR OLSON asked whether the original business model is similar
to what is happening in Skagway in which the ore is being
brought down from Whitehorse.
MR. SMITH answered yes; the Skagway terminal project is another
AIDEA project.
3:45:35 PM
REPRESENTATIVE SADDLER asked for further clarification on the
rest of the financing.
MR. SMITH answered that the [Bokan-Dotson Ridge] project must
still undergo pre-feasibility and a feasibility studies, and it
must meet all the objectives internally. At that point, the
financing becomes part of a larger group of potential financing,
including AIDEA, or equity and debt financing elsewhere. He
commented that AIDEA would be part of this process. One of the
advantages of SB 99 is that the mining project wouldn't get
caught up in a timeframe in which the mine is ready for
production but must wait for legislative approval for AIDEA
financing. This bill would remove that delay, he said.
3:46:35 PM
REPRESENTATIVE SADDLER asked how critical the AIDEA financing is
to the project.
MR. SMITH answered that the AIDEA financing shows tremendous
state support. He related that the project has a Memorandum of
Understanding (MOU) with AIDEA, a MOU with the Ketchikan Gateway
Borough, and will work over the next 14-18 months on how to
collaborate with AIDEA and the Gravina Island Industrial site to
make it a workable situation.
3:47:15 PM
REPRESENTATIVE JOSEPHSON asked whether Heatherdale Resources
Ltd. would take a similar position as Mr. Collison with Ucore's
Bokan-Dotson project that it is beneficial to hire Alaskans and
if it is something Ucore would plan to do.
MR. SMITH said absolutely. Ucore has been very successful thus
far over the exploration part of this project. He reported that
since 2009, Ucore has spent $37 million on the project and have
engaged with over 60 vendors in Southeast Alaska in the
Ketchikan area and Prince of Wales Island. It has a partnership
with the Prince of Wales Tribal Enterprise Consortium, LLC
(POWTEC) that provides hiring and substantial logistical
support, which he characterized as being "extremely good."
3:48:18 PM
CHAIR OLSON asked if the lifetime of the Ucore mine project is
projected at 10 years.
MR. SMITH answered that it will depend on the production rate.
Currently, Ucore has been projecting a 10 to 14-year mine life.
He said he has every confidence that this mine will continue
once it is up and running.
3:48:42 PM
TED LEONARD, Executive Director, Alaska Industrial Development &
Export Authority (AIDEA), Department of Commerce, Community, &
Economic Development, in response to Chair Olson, agreed that
AIDEA has approximately 29 years of a relationship with the
mining industry through funding infrastructure for ports and
facilities. For example, AIDEA funded the tailings facility for
Fort Knox through a conduit revenue bond in the late 1990s.
3:49:47 PM
REPRESENTATIVE JOSEPHSON asked whether he could respond to the
concern about the conflict of the state being an owner and a
regulator.
MR. LEONARD answered that AIDEA is a political subdivision of
the state as an independent corporation so it is not a
department. Thus, he considered that a major firewall exists
between AIDEA and its investments and any of the regulatory
agencies. He reported that AIDEA's balance sheet rolls up into
the state, but it is AIDEA's balance sheet. He recalled
instances in which AIDEA has entered into agreements with the
Department of Environmental Conservation for regulation of the
Skagway Ore Terminal. Additionally, regulatory decisions have
been made on the Red Dog Mine that affected AIDEA, but AIDEA
would never attempt to influence a regulatory agency, which is
not acceptable or probably legal.
3:51:16 PM
CHAIR OLSON asked whether AIDEA also has financed roads to
mines.
MR. LEONARD answered that yes; AIDEA owns the port and road to
the Red Dog mine.
3:51:29 PM
REPRESENTATIVE CHENAULT asked for the balance in the
[Sustainable Energy Transmission and Supply Development Fund
(SETS)].
MR. LEONARD answered that the SETS fund balance is approximately
$67.5 million, and AIDEA just requested transfer of the $125
million appropriated from passage of SB 23, but AIDEA has not
yet received those funds.
REPRESENTATIVE CHENAULT recalled the legislature is also
considering a bill that would remove all the funding from the
SETS fund.
MR. LEONARD answered yes; he acknowledged that it would wipe out
original SETS funding.
3:52:15 PM
REPRESENTATIVE CHENAULT noted that AIDEA has loaned two amounts
to natural gas entities in Fairbanks: $15 million to Fairbanks
Natural Gas (FNG) for the initial build-out for pipes for the
Fairbanks distribution system and $18.1 million to Interior
Natural Gas utility to fund initial development work on the
distribution system that surrounds the FNG. He said he realized
20-year negotiated loans. He asked for clarification on the
effect of the potential $67 million transfer from the SETS fund
to fulfill either of these projects.
MR. LEONARD answered that the bill would not affect the loan
obligations for these two loans since they would be derived from
the second $125 million. He acknowledged two loans, one to the
FNG for $15 million for the initial build out in 2014 for pipes
for its system. The other loan would start the development of
the second service area that somewhat surrounds the FNG area.
MR. LEONARD related his understanding that the potential capital
project [that would deplete the SETS fund] would stop AIDEA's
ability to fund other projects for renewable energy, such as
wind farm and other projects. He summarized that the SETS fund
would become a holding fund for funding the [Interior Energy
Project] IEP and any future projects that the legislature will
fund, but it would not be an ongoing fund, per se.
3:54:36 PM
REPRESENTATIVE CHENAULT referred to current SETS projects,
including the FNG's proposed liquefaction plant in Port
McKenzie. He asked for an update on the project with respect to
other natural gas projects.
MR. LEONARD explained that AIDEA is in preliminary pre-
feasibility to see if the project will be feasible and whether
the project would be using Cook Inlet gas. He said that thus
far there hasn't been any true work on that, although AIDEA is
in the process of considering a reimbursement agreement. He
pointed out that would be in conjunction with working with the
Alaska Gas Development Corporation (AGDC) and any other
activities. In response to a question, he clarified that IEP
refers to the Interior Energy Project funded from SB 23 for
trucking natural gas to Fairbanks and to build out the
distribution center.
3:56:25 PM
DAN BOCKHORST, Manager, Ketchikan Gateway Borough (KGB),
explained that the Ketchikan Gateway Borough assembly has
endorsed SB 99. He thinks Mr. Leonard, Mr. Collison, and Mr.
Smith have effectively addressed the issues raised by Mr.
Sullivan. He reiterated that the KGB endorses SB 99. He urged
committee members to support the bill.
3:57:19 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on SB 99.
REPRESENTATIVE CHENAULT offered his belief that this would
provide legislative intent to approve two of the projects. He
asked whether the Niblack project is on Gravina Island.
MR. SMITH said that the Niblack project is located on southern
Prince of Wales Island. The Gravina Island industrial complex
would be the site for the milling.
REPRESENTATIVE CHENAULT related his understanding that there
would be two sites for the project.
REPRESENTATIVE REINBOLD moved to report CSSB 99(L&C) out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, CSSB 99(L&C) was
reported from the House Labor and Commerce Standing Committee.
The committee took an at-ease from 3:59 p.m. to 4:01 p.m.
SB 140-AIDEA: ARCTIC DEVELOPMENT PROGRAM/FUND
4:01:15 PM
CHAIR OLSON announced that the next order of business would be
CS FOR SENATE BILL NO. 140(FIN), "An Act creating the Arctic
infrastructure development program and fund in the Alaska
Industrial Development and Export Authority; and relating to
dividends from the Alaska Industrial Development and Export
Authority."
4:01:20 PM
JESSE LOGAN, Staff, Senator Lesil McGuire, Alaska State
Legislature, stated that SB 140 represents one of the principal
elements of the Alaska Arctic Policy Commission's legislative
packet. The AAPC was created by the legislature to prepare an
Arctic policy and implementation plan for Alaska and to return
the plan to the full body for consideration. The purpose of
this bill would be to attract investment in Arctic
infrastructure to pair with private investment from Alaska's
AIDEA. Although AIDEA has the authority to invest in many
areas, it does not have a specific program to attract private
investment for infrastructure.
CHAIR OLSON reported that the House Labor and Commerce Standing
Committee heard the companion bill, HB 288, but SB 140 will be
the vehicle.
4:02:28 PM
MR. LOGAN provided a section-by-section analysis of the bill.
Section 1 would establish AIDEA's ability to adopt a policy for
payment of a dividend. He characterized Sections 1-3 as
"boilerplate" provisions that would establish definitions for
"net income" and "unrestricted net income" as well as
establishing a means for this fund to return dividends back to
the general fund. Sections 4-8 would make conforming changes to
include loans from the Arctic Infrastructure Development Fund
(AIDF) regarding interest rates and other requirements for loans
from funds managed by AIDEA, such as the SETS fund. Section 9
would add the AIDF to the types of programs to pay borrowers of
loan participation that the authority can establish. Section 10
would establish the Arctic Infrastructure Development Program
fund to promote and provide financing for Arctic infrastructure
development.
4:03:27 PM
MR. LOGAN referred to page 6 lines 2-16, which lists what the
fund consists of, including direct appropriation made by the
legislature, money or assets transferred to the fund by AIDEA,
unrestricted loan repayments, interest, and other income earned.
It would also make certain that this account is separate from
other accounts and accounts can be established within this fund.
He referred to page 6, lines 17-19, which clarify that the fund
will be used for Arctic infrastructure development. He referred
to page 6, lines 20 through page 7, line 21, which would
establish the powers and duties of the authority regarding the
AIDF. This section would mirror the powers and duties of the
SETS fund. It would allow AIDEA to use this fund for Arctic
infrastructure development, insure project obligations,
guarantee loans or bonds, establish reserves, and acquire real
or personal property by purchase, transfer, or foreclosure. It
would also defer principal payments on capitalized interest on
Arctic infrastructure development, as well as to enter into
lease agreements, sales-lease-back agreements, build-operate-
transfer and operate-transfer agreements or similar financing
agreements. It would also allow AIDEA to enter into agreements
with government entities for the transfer and control of
infrastructure facilities, rights-of-way, and studies. It would
allow for services to be contracted and bonds to be issued.
This section would also allow for loan guarantees to be provided
for purchase and repair of vessels in federally managed
fisheries or purchase of quota shares or individual fishing
quota used in federally managed fisheries in the Arctic. He
said the loan guarantees would be $7 million and the cap would
be no more than one-third of the capital cost of the projects.
4:04:56 PM
MR. LOGAN referred to page 7, line 22 to page 8, line 2, which
would establish limitations on the financing for infrastructure
development. It would consist of loans for not more than one-
third of the capital cost of the development, limiting the loan
guarantee to not exceed $20 million. It would also allow
financing for up to 40 years and establish that the fund can be
used as security for a bond guarantee. He referred to page 8,
lines 2-19, Section 11, which defines the "Arctic" in a
geographical boundary and page 8, lines 7-19, defines "Arctic
infrastructure development."
4:05:39 PM
REPRESENTATIVE JOSEPHSON asked what exactly is being envisioned.
He has seen the map that extends to Kamchatka and the Mackenzie
River. He asked for an example of projects would be developed
with these loans.
MR. LOGAN answered that he couldn't give any examples but the
purpose is to attract projects from private investment in the
state or outside the state. For example, one project could be a
deep water draft port the United States Army Corps of Engineers
(USACE) has currently been working on. Several sites have been
identified, with Port Clarence often discussed. This fund would
allow the U.S. Department of Defense or the U.S. Department of
the Interior to partner with the state on financing options. He
recalled that this has previously happened to establish the U.S.
Coast Guard's permanent presence in Anchorage. Using AIDEA
saved the U.S. Coast Guard considerable money and was part of
their decision-making, he said.
4:07:11 PM
REPRESENTATIVE JOSEPHSON recalled SB 99 would give specific
authority to issue new bonds in substantial amounts, but he
asked whether projects would compete with other projects for the
$67 million corpus of the fund under this bill.
MR. LOGAN answered that this fund would not be capitalized. He
explained that under SB 99, the issuance of bonds would be
outside the SETS fund, and would fall under the general AIDEA
authority. This bill would allow the fund to be created and
allow other assets that AIDEA controls to be transferred to this
fund if the board of directors deemed it. Additionally it could
be used in the future as a repository for earmarked projects.
4:08:01 PM
REPRESENTATIVE JOSEPHSON recalled an earlier question asked how
all of these things can be done if the other body plans to use
some of the SETS funds to pay for the power plant for the
University of Alaska Fairbanks (UAF). He asked for the
viability of this or if it would rely on a separate
appropriation at a later date.
MR. LOGAN answered that this would rely on a separate
appropriation or a transfer from other funds within AIDEA.
CHAIR OLSON suggested that this one is lagging about a year or
two behind the other bill.
4:08:48 PM
REPRESENTATIVE SADDLER referred to page 8 lines 16-18, and asked
what is envisioned in terms of the construction, improvement,
rehabilitation, or expansion of a shore-based plant, facility or
equipment used in support of a fishery in the Arctic. He
suggested the language is fairly broad. He asked how closely
affiliated the project would need to be to Arctic fisheries for
it to qualify.
MR. LOGAN answered it may be that a dock needed to be built to
house vessels that fish primarily in the federally-managed
fisheries. He said it might not be located in the Arctic. He
offered his belief that these provisions are designed to allow
projects in the state to be eligible for these funds if they
support development in the Arctic.
4:09:53 PM
REPRESENTATIVE SADDLER said, "There was discussion about the
community development quota corporation that home ports outside,
and they could use a port in Seward if we're available." He
asked whether this bill is aimed at that.
MR. LOGAN answered that the fisheries provisions in the bill are
designed to repatriate some of the vessels and quotas that
currently reside outside Alaska. He emphasized that there isn't
any specific mention of eligibility of any specific group, but
AIDEA has authority to operate only in Alaska, so if a vessel
wanted to participate, it would need to relocate to Alaska.
4:10:32 PM
REPRESENTATIVE SADDLER pointed out he did not see any specific
restriction limiting it to Alaska-based businesses.
CHAIR OLSON clarified that projects were eligible if engaged in
business in Alaska.
4:10:58 PM
REPRESENTATIVE REINBOLD asked who the responsible agency within
the federal area would be if a conflict arose between mining and
fishing.
MR. LOGAN asked for further clarification on the question.
REPRESENTATIVE REINBOLD asked who would be the governing body to
resolve any disputes if multiple resources were in the area.
MR. LOGAN answered it would be the same agencies that currently
resolve those disputes. In further response to a question, he
said he didn't know, possibly the National Marine Fisheries
Service, Alaska Department of Fish & Game, or any agency that
resolves disputes in federal and state managed fishery areas.
REPRESENTATIVE HERRON said that Mr. Logan has done a good job.
4:12:30 PM
REPRESENTATIVE CHENAULT recalled comments about the City of
Seward. He explained that Seward is also a major marine repair
terminal so it is possible some ships could be in port that have
been involved in oil exploration in the Arctic. He suggested
this could be why this bill could affect Seward.
TED LEONARD, Executive Director, Alaska Industrial Development &
Export Authority (AIDEA), Department of Commerce, Community, &
Economic Development, deferred to Mark Davis.
4:14:04 PM
MARK DAVIS, Deputy Director, Alaska Industrial Development and
Export Authority, Department of Commerce, Community, & Economic
Development, stated that funding would work within Alaska as per
AIDEA's statutes. He anticipated that would be further refined
by regulation. Secondly, with respect to the funding, he
pointed out that the AIDF is an unfunded fund, unlike the
current SETS fund that is funded.
4:14:58 PM
CHAIR OLSON asked whether he anticipated that it would be funded
in the future.
MR. DAVIS said that the funding would be in a manner similar to
the Interior Energy Project and anticipated that the legislature
would focus on a specific port project and it would use this
AIDF as a vehicle to provide AIDEA with some of the funding if
it was using a public-private partnership funding mechanism.
4:15:22 PM
RON LONG, Deputy City Manager, City of Seward, stated a variety
of industries would be in support of development within the
Arctic, including the oil and gas industry port development, in
which the city would provide a staging area for goods and
services that need to do business in the Arctic but must stage
outside the strictest geographic definition as developed by the
Alaska Arctic Policy Council. He emphasized that this should
take place in Alaska, and the City of Seward would want to be
competitive with other ports in Alaska. He said that the state
will want to tilt the development towards Alaska from
development currently being staged outside Alaska. He noted
that the Alaska Arctic Policy Council has identified a number of
needs and opportunities as well as significant private capital
ready to support the development effort, which the state and
municipalities want to attract to Alaska. He compared it to how
other states attract Nike and Boeing corporate industries to
their states. He identified the fisheries as ones conducted in
the Bering Sea, which are large offshore federally managed
fisheries that are not against the coast or in conflict with
state-managed fisheries. He acknowledged that not any one port
could do everything to support development in the Arctic. He
stressed that response agencies must be close to the area, but
moving goods and services might be located at Dutch Harbor or in
Kodiak. He offered his belief that Seward is the right place
for operations that need rail and road access.
4:18:09 PM
REPRESENTATIVE SADDLER asked how he envisioned this financing
tool being used in his community.
MR. LONG suggested that the public-private partnerships have
worked successfully at Red Dog and the North Slope. In terms of
fisheries, such as the Bering Sea fleet, the CDQ groups have
allocated 10 percent of the resource to Alaskans and the
remaining 90 percent is largely being capitalized outside the
state. He suggested that the state could create a new, or
augment an existing, fisheries processing plant. He commented
that if the shoulder seasons could be expanded to bring in new
product by leveraging state guarantees on private capital loans
using this program, it makes that process more viable for the
offshore fisheries and for the state fisheries it also supports.
He suggested that in port development, piles, dock materials,
staging and logistics, and assembly for construction in the
Arctic could be done. He offered his belief that the City of
Seward can be competitive for these projects through this
program and private capital. He envisioned that the pieces
could be assembled in Seward and barged when needed.
4:20:07 PM
REPRESENTATIVE SADDLER asked whether he would have some
advantage over other food processing plants due to the proximity
to the ocean. He asked whether there is anything a port
facility would offer that other Cook Inlet or Gulf of Alaska
fisheries could not access. He further asked if there would be
any limitations on it.
MR. LONG answered no. He related that as Mr. Davis suggested,
it would be done through AIDEA's due diligence process. He said
that each proposal would need to be a good business case and he
anticipated that AIDEA would be doing its due diligence and
measuring the financial aspects to ensure that it is a good and
viable project before "they sign on the bottom line."
4:20:53 PM
SARA LUKIN, Chief Operating Officer, Pt Public Policy, LLC,
stated briefly Pt Public Policy's support of this bill as a
whole, and, more specifically, for the fisheries provision.
Speaking as the only private equity firm in Alaska,
headquartered in Anchorage, and focused exclusively on building
private equity and investment in Arctic Alaska, she said that Pt
is supportive of the bill and the company is "hugely" supportive
of the fisheries provision. In response to a comment, she said
that Pt Public Policy has worked in partnership with the City of
Seward, the Association of Village Council Presidents, and
[Aleutian Pribilof Island Community Development Association)
(APICDA) with the fisheries portion of this bill. In response
to a question, she clarified that APICDA is the Aleutian
Pribilof Island Community Development Association, which is a
community development quota (CDQ) group.
4:22:53 PM
REPRESENTATIVE SADDLER asked whether APICDA would be the CDQ
organization that would envision taking advantage of these
opportunities to "plus up" the facilities in Seward.
MS. LUKIN answered that the organization doesn't have a project
in mind, but if she would envision a project for this committee
she would suggest it might be a partnership between AVPC as a
majority owner and APICDA as a minority owner, using a loan
guarantee from AIDEA to purchase vessels and quota that are
currently housed in Washington State. The partnership would
bring the quota and vessels back to Alaska, specifically to fish
the Bering Sea fishery. They would be required to house the
boats in a port in Alaska, perhaps in Seward.
4:24:01 PM
REPRESENTATIVE HERRON commented that Pt Public Policy is an
important partner for a lot of western and northern Alaska, but
the issue is that when the Arctic opens up, a lot of resources
will need to be developed. He envisioned that these would be
world class projects, not just "mom and pop" organizations. He
emphasized the importance of sustainable communities and offered
his belief that Seward can help the Arctic by having fleets
stationed there, as well as in Unalaska and some smaller ports
in the Bering Sea. He said it is not just about development of
fisheries, but to have the ability to respond to accidents and
to provide a safe refuge for vessels operating in Alaska's
waters. The communities of Unalaska and Seward are examples of
established ports that will expand due to Arctic development.
CHAIR OLSON remarked that Seward has also been a railhead and an
export facility for coal. He suggested that it could be
activated again pretty easily.
4:25:36 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on SB 140.
REPRESENTATIVE SADDLER asked whether the sponsor considered
placing limitations on where funds could be used. He understood
this bill relates to things that will service the Arctic but not
be located in the Arctic. He asked whether the sponsor has
considered any geographical limitation on where facilities would
need to be built.
MR. LOGAN referred to page 8, lines 4-7, that describe the
geographical boundary of the Arctic. He pointed out that other
provisions that will allow Seward to provide support for Arctic
development.
4:26:53 PM
REPRESENTATIVE SADDLER read the definition, in part, which read:
(19) "Arctic infrastructure development" means
(A) the construction, improvement, rehabilitation, or
expansion of a facility
(i) in the Arctic to aid in development or meet
emergency response needs; or
(ii) in the state if the construction,
improvement,
rehabilitation, or expansion supports or furthers the
development of a facility in the Arctic; or
(B) the purchase, construction, improvement,
rehabilitation, or expansion of a shore-based plant,
facility, equipment, or assets used in support of a
fishery in the Arctic.
4:27:04 PM
REPRESENTATIVE SADDLER asked where financing for quota share or
vessel purchasing envisioned in this bill fit in the financial
opportunities of fishing loans, boat loans, and quotas. He
asked whether this was the only financing or if other financing
was available.
MR. LOGAN prefaced his response noting he is not expert on
fisheries financing, but the floor of $7 million and the cap of
one-third was specifically designed to not conflict with other
state or federal programs that provide financing for fisheries.
He referred to page 7, lines 8-15, which provides for loan
guarantee only, but does not provide any direct loans.
4:28:08 PM
REPRESENTATIVE REINBOLD moved to report CSSB 140(FIN) out of
committee with individual recommendations and the accompanying
fiscal notes. There being no objection, the CSSB 140(FIN) was
reported from the House Labor and Commerce Standing Committee.
The committee took an at-ease from 4:28 p.m. to 4:31 p.m.
SB 194-TOURISM MARKETING BOARD
4:31:41 PM
CHAIR OLSON announced that the final order of business would be
CS FOR SENATE BILL NO. 194(FIN), "An Act creating the Alaska
Tourism Marketing Board; and relating to tourism marketing."
4:31:51 PM
REPRESENTATIVE REINBOLD moved to adopt the proposed committee
substitute (CS) for HB 194 labeled 28-LS1497\R, Martin, 4/9/14
as the working document.
CHAIR OLSON objected for discussion purposes.
4:32:07 PM
GENEIVIEVE WOJTUSIK, Staff, Senator Lesil McGuire, Alaska State
Legislature, explained this bill would create the Alaska Tourism
Marketing Board within the Department of Commerce, Community &
Economic Development consisting of 21 members, including one
member appointed by the House and Senate and one DCCED member.
She stated that 18 members will represent Southeast,
Southcentral, Southwest, Interior Alaska, and the far north.
The categories would include accommodations, activities,
attractions, transportation, cruise travel, tour operators, and
destination management organizations (DMOs). She explained that
SB 194 would require the department and the board to work
together to plan and execute a destination tourism marketing
plan for Alaska. The public members on the board serve at no
cost to the state and the board will sunset in 2018. The quorum
to conduct business would require nine members but must include
one representative from each part of the state.
4:33:16 PM
MS. WOJTUSIK explained the changes in the proposed committee
substitute, Version R. She referred to page 3, line 16,
changing "governor shall" to "governor may." It also changes
the number of appointees from a "list of three" to a "list of
nominees." It also clarifies on page 3, line 31 and page 4,
line 1, that the state does not pay for the per diem or travel
expenses for the 18 remaining board members to attend meetings.
4:33:53 PM
REPRESENTATIVE JOSEPHSON referred to the sponsor statement
noting that the bill is an important step in continuing the
growth of one of Alaska's most important industries. He asked
how this bill would do that beyond what is currently happening.
MS. WOJTUSIK answered that it formalizes the Alaska Tourism
Marketing Board as a process, and she hoped the 18 members plus
the legislative and department members can create [the
additional industry growth.]
4:34:34 PM
REPRESENTATIVE JOSEPHSON referred to page 2, line 30, which
reads, "(1) the 18 members appointed by the governor who are
members of the leading statewide nonprofit tourism association
...." He offered his belief the Alaska Travel Industry
Association is the leading tourism association
MS. WOJTUSIK agreed.
REPRESENTATIVE JOSEPHSON referred to page 3, line 16, "(C),
which allows the governor to appoint the members from a list of
nominees for each seat submitted by the leading statewide
nonprofit tourism marketing association and asked for
clarification on "shall" and "may." He said it is mandated on
page 2, but the governor "might" pick from there on page 3.
MS. WOJTUSIK referred to page 3, which clarifies the number of
nominees since it had previously read "three" nominees, but is
now a list of nominees.
4:35:44 PM
REPRESENTATIVE CHENAULT expressed concern that regions of the
state are represented, but he did not see the Kenai Peninsula
represented. He suggested that the Kenai Peninsula is as much a
destination of the Far North. He wondered if anyone has raised
this issue when the bill was considered by other committees.
MS. WOJTUSIK said it has not been brought up. She deferred to
the Alaska Travel Industry Association.
4:37:32 PM
REPRESENTATIVE JOSEPHSON referred to page 3 of the bill and said
it seemed as though if the governor selected someone not on the
statewide nonprofit tourism marketing association, the person
would need to join the association.
MS. WOJTUSIK agreed with that assessment.
4:37:57 PM
REPRESENTATIVE JOSEPHSON asked whether the bill has another
committee of referral.
MS. WOJTUSIK said it would go to the House Finance Committee
next.
REPRESENTATIVE JOSEPHSON suggested the requirement to join an
association may come up.
4:38:18 PM
REPRESENTATIVE REINBOLD asked if this bill is for the tourism
industry or if the sponsor would like to create the vision of
what Alaska looks like in the future.
MS. WOJTUSIK offered her belief that this is limited to the
current tourism industry. She recalled some preliminary
discussions about doing something with other divisions, but at
this point, SB 194 is limited to tourism.
4:39:13 PM
REPRESENTATIVE REINBOLD remarked that if the state knows what it
wants to look like in the future, it would make it easier to
manage where tourism, roads, and infrastructure is placed.
REPRESENTATIVE CHENAULT noted the proposed board was a 21-member
board, but only 9 members would be needed to establish a quorum.
He was not aware of any instance in which a minority of
membership could establish a quorum since the quorum typically
requires half or more of the board membership to be present.
MS. WOJTUSIK answered that initially the quorum was 11 members,
but Senator Fairclough pointed out that it can be hard to get a
quorum. Thus the figure was changed, but it requires one member
from each region.
4:40:50 PM
REPRESENTATIVE CHENAULT commented it can be hard to hold
meetings that work with everyone's schedule so sometimes it is
easier to get a smaller group together. He acknowledged that
meeting during the tourism timeframe could be difficult.
REPRESENTATIVE HERRON acknowledged that a lot of tourists don't
want infrastructure and seek a lack of infrastructure. He
suggested it could be an important quality.
REPRESENTATIVE JOSEPHSON commented that the Kenai Peninsula is a
unique, stand-alone place and arguably is the most remarkable
place in the state. He also agreed some people want to be "off
the grid." He hoped that if the board is created it will
consider some opportunities for non-consumptive use. He said,
"That's what tourists want as well. They want to see wildlife,
and we've got to make sure that happens."
REPRESENTATIVE REINBOLD agreed. She wondered what locations
should be identified as natural locations and where
accommodations should be located. She further asked what the
state would like to see in 10, 20, 50, or 100 years.
4:43:26 PM
REPRESENTATIVE SADDLER referred to page 3, line 16-19,
[subsection (d)], which allows the governor to reject a list.
He asked whether it is the sponsor's intent that there isn't any
duplication.
MS. WOJTUSIK answered that she was unsure. She suggested that
this language was used for other boards.
REPRESENTATIVE SADDLER could understand the request to consider
non-consumptive use, but he thought it was equally important to
have "consumptive" use represented so all aspects of tourism are
on the proposed ATMB.
4:44:56 PM
BILL PEDLAR, Government Relations, Alaska Travel Industry
Association (ATIA), related he is also president of Knightly
Tours, which is a small tour company that specializes in in-
bound vacation travel to Alaska. He said Knightly Tours has
been in business for over 45 years. He said, most notably, the
ATIA recognizes the Kenai as a hugely important area in tourism;
the definitions of the areas represent the areas the state uses
to market Alaska in the state's Alaska Travel Planner. Thus,
this is where the five regions were derived from and it was
thought it would be easier to use the regional definitions the
travel industry currently uses.
4:46:07 PM
CHAIR OLSON answered that the visitor guide will link up.
MR. PEDLAR agreed.
4:46:18 PM
MR. PEDLAR explained that the ATIA has often discussed the
"rings of tourism" including high, mid, and low density. In
fact, over the years, the travel industry has come forward with
several plans that mirror the way agencies manage state and
federal lands. From that point the ATIA believes there is
pretty good synergy. He said that this board's function is to
renormalize a relationship between the industry and the DCCED
that went awry several years ago. However, the statute has been
in effect since 1988. Further, the industry would like a broad
representation to have small to large businesses. He
characterized it as bringing the best marketing talent to the
table to help the state efficiently market the money. He
suggested that thus far it has worked out well.
4:47:46 PM
REPRESENTATIVE HERRON remarked that he recalled the conversation
on tourism and the board. He offered his belief that this
"reset" is a good way to move forward. He suggested that this
group of people decide together on sustainable and practical
approaches to tourism because the state wants people to visit.
MR. PEDLAR commented on the quorum. He recalled that Senator
Fairclough pointed out she didn't want a quorum not to occur if
the three government employees serving on the board could not
attend. Thus the quorum was reduced to nine, he said.
4:49:23 PM
JOSEPH JACOBSON, Director, Division of Economic Development,
Department of Commerce, Community & Economic Development, stated
that this this essentially formalizes the relationship that the
department currently has with the Alaska Travel Industry. He
said the department supports SB 194.
4:50:31 PM
REPRESENTATIVE CHENAULT asked for clarification on how the
members would be picked to serve on the board. He further asked
whether the seats would be dedicated.
MR. PEDLAR answered the ATIA has found that the broadest
representation, such as three members from each region and three
"at large" appointments, always tends to work the best. The
industry has found that if it does not have broad based
representation that the industry can miss part of the market.
He emphasized the importance of the ATIA to make sure the
membership represents very balanced representation throughout
the state. He said the ATIA doesn't want people complaining
they have not been listened to. He acknowledged that it was
left "a little loose" intentionally so it wasn't too highly
defined to get best marketing talent available to the state.
4:52:32 PM
REPRESENTATIVE SADDLER said sometimes there are informal
allocations of seats and asked him to identify three
representatives, and whether it would be for categories of big
boats and aviation. He asked for the "understood" division.
MR. PEDLAR responded that currently there are about six
different classes of tourism operators defined at the state
level. The ATIA's goal would be to have a balance, that it
would not be a board of big cruise, big airlines, helicopter
operators, or fishing operators. He said people volunteer to
serve from the big Westmark chain of hotels to bed and
breakfasts and emphasized the importance of achieving diversity.
4:53:52 PM
REPRESENTATIVE SADDLER asked for the six general areas.
MR. PEDLAR listed the six areas as being accommodations,
activities, attractions, transportation, cruise travel, tour
operators and destination marketing organizations, predominately
the convention and visitor bureaus.
4:54:42 PM
REPRESENTATIVE SADDLER referred to page 2, line 30, which read,
"(1) 18 members appointed by the governor who are members of the
leading statewide nonprofit tourism association ...." He asked
him to identify the organization that is the leading statewide
nonprofit tourism association.
MR. PEDLAR answered the ATIA is the only organization that
currently fills that role. He clarified that the language is
general so if the association changes its name, or the ATIA is
no longer the leading association, that it would still apply.
4:55:10 PM
REPRESENTATIVE SADDLER asked whether anyone would feel that they
are "aced out" of serving on the board.
MR. PEDLAR acknowledged there is always someone who wants to
serve. He stated that the goal is to have people bring ideas to
the table. In the past, ATIA has had a significant subcommittee
structure that allows interested parties to serve. He said that
for the key 18 members, the industry tried to narrow it down
from a larger board to one that is still representative of all
the facets of the industry as well as the geographical
distribution of the industry.
4:56:16 PM
REPRESENTATIVE HERRON asked for further clarification, that the
definition of Southcentral and Interior is understood. He
wondered about the Southwest and the Far North. He asked
whether a loose geographical description would be the area west
of the Alaska Range to the end of the chain, up to the Yukon and
that the Far North would be north of the Yukon, wrapping around
the coast to Barrow and Kaktovik.
MR. PEDLAR answered yes.
4:56:57 PM
REPRESENTATIVE JOSEPHSON asked whether segments of the tourism
economy feel unappreciated by the ATIA, such as eco-tourism or
subsistence tours on the North Slope.
MR. PEDLAR acknowledged that many years ago it was probably
true. He said that there was some general animosity, but the
industry has "grown up" and that "all inclusive" tends for
better ideas and decisions. He noted that members and segments
may not always agree, but everyone's ideas are allowed to come
to the table and be heard. He did not believe that there is any
group left out of the current way the state is marketed.
4:58:24 PM
REPRESENTATIVE CHENAULT acknowledged the intent is to ensure
that all industry and all user groups are "under the tent." He
said he does not have any amendment at this point, but he just
wants to be sure the Kenai Peninsula is represented. He
expressed confidence that the ATMB will ensure all Alaskans are
represented.
4:59:05 PM
CHAIR OLSON, after first determining no one else wished to
testify, closed public testimony on SB 194.
REPRESENTATIVE HERRON moved a conceptual amendment that can be
dealt with at a later time to add Kenai as an area of the state
that could be added to the five areas represented by the ATMB.
In response to a question, he agreed that some committee members
could further discuss this with the sponsor.
REPRESENTATIVE REINBOLD noted that Eagle River wants to be
remembered, too.
5:00:17 PM
REPRESENTATIVE REINBOLD moved to the proposed committee
substitute (CS) for SB 194 labeled 28-LS1497\R, Martin, 4/9/14,
with individual recommendations and the accompanying fiscal
notes. There being no objection, the HSC CSSB 194(L&C) was
reported from the House Labor and Commerce Standing Committee.
5:00:44 PM
ADJOURNMENT
There being no further business before the committee, the House
Labor and Commerce Standing Committee meeting was adjourned at
5:00 p.m.