Legislature(2003 - 2004)

03/16/2004 08:04 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
             HOUSE STATE AFFAIRS STANDING COMMITTEE                                                                           
                         March 16, 2004                                                                                         
                           8:04 a.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Bruce Weyhrauch                                                                                                  
Representative Jim Holm, Vice Chair                                                                                             
Representative Coghill                                                                                                          
Representative Seaton                                                                                                           
Representative Gruenberg                                                                                                        
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Lynn                                                                                                             
Representative Berkowitz                                                                                                        
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                                
Representative Beth Kerttula                                                                                                    
Senator Kim Elton                                                                                                               
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
^OVERVIEW - DEPARTMENT OF TRANSPORTATION/PUBLIC FACILITIES                                                                      
                                                                                                                                
TAPES                                                                                                                         
                                                                                                                                
04-35, SIDE(S) A & B                                                                                                            
04-36, SIDE(S) A                                                                                                                
                                                                                                                                
CHAIR BRUCE  WEYHRAUCH convened  the meeting  of the  House State                                                             
Affairs Standing Committee at 8:04 a.m.                                                                                         
                                                                                                                                
SUMMARY OF INFORMATION                                                                                                        
                                                                                                                                
CHAIR  WEYHRAUCH  introduced  Commissioner  Mike  Barton,  Alaska                                                             
Department  of  Transportation/Public  Facilities  (DOT/PF);  and                                                               
Deputy Commissioner  Tom Briggs, Director, Alaska  Marine Highway                                                               
System   (AMHS),  Alaska   Department  of   Transportation/Public                                                               
Facilities.  He  explained that the House  State Affairs Standing                                                               
Committee  has  plenary  jurisdiction  over  DOT/PF  relating  to                                                               
public facilities.   Currently, AMHS maintains  a headquarters in                                                               
Juneau at an  area designated as three-mile.   The proposed lease                                                               
property  [Wards  Cove  Plant]  will house  the  headquarters  in                                                               
Ketchikan.     There  is  tremendous  public   interest  in  this                                                               
proposal, therefore,  the House State Affairs  Standing Committee                                                               
is holding this public hearing.                                                                                                 
                                                                                                                                
There  were  no  questions  from   the  committee  prior  to  the                                                               
beginning of testimony.                                                                                                         
                                                                                                                                
CHAIR  WEYHRAUCH  outlined  the  points  he  wanted  Commissioner                                                               
Barton and Deputy  Commissioner Briggs to address as  follows:  A                                                               
background of  what the lease is;  why the state thinks  it is in                                                               
the public  interest to have  this move  take place; some  of the                                                               
background on what  led to the decision to have  the lease and to                                                               
make the move; why  it is in the best interest of  AMHS to have a                                                               
lease on  that particular  building and  move the  personnel from                                                               
Juneau to Ketchikan;  what the beneficial impact is  to AMHS; and                                                               
what the cost is to the public.                                                                                                 
                                                                                                                              
COMMISSIONER  BARTON addressed  the governor's  concern regarding                                                               
the  fiscal situation  and having  the  state operate  in a  more                                                               
efficient and  business-like manner.   Shoreside  management near                                                               
the  fleet  provides  better   opportunities  for  management  to                                                               
interact  with the  actual operations.   The  department and  the                                                               
governor believe that  this move will be beneficial  and will, in                                                               
the long  run, be  a more  cost effective,  efficient way  to run                                                               
AMHS; give  better service  to Alaskans and  help enable  AMHS to                                                               
reduce the amount of general fund  subsidy that it requires.  The                                                               
estimated costs  of the  move are  between $340,000  to $520,000.                                                               
Savings of  about $240,000-plus are  anticipated.   The Ketchikan                                                               
Gateway  Borough  will reimburse  the  move  cost through  lease-                                                               
payment incentives  in the form  of reduced lease  payments until                                                               
after  the  cost of  the  move  is  amortized.   He  related  his                                                               
understanding  that  the reduced  lease  rate  will be  effective                                                               
until 100 percent of the cost of the move is amortized.                                                                         
                                                                                                                              
COMMISSIONER BARTON,  in response  to Chair  Weyhrauch's question                                                             
as to  whether that was  his "understanding"  or if that  is what                                                               
the lease  actually says, responded  that he thinks that  is what                                                               
the lease says.   However, he said  that he does not  have a copy                                                               
of the lease with him.   He informed the committee that the lease                                                               
has not  been signed, and is  still being reviewed.   In response                                                               
to a  comment from Representative Gruenberg,  Commissioner Barton                                                             
said that although  the decision to enter into the  lease has not                                                               
been made,  the decision  to move the  headquarters [of  AMHS] to                                                               
Ketchikan have been  made, the lease is still in  the works.  The                                                               
decision to move was made after December 8, 2003.                                                                               
                                                                                                                                
COMMISSIONER BARTON,  in response  to Chair  Weyhrauch, specified                                                               
that he  had been  involved with  the decision-making  process of                                                               
this  move since  last fall  when the  Ketchikan Gateway  Borough                                                               
approached  the  State   of  Alaska.    He   deferred  to  Deputy                                                               
Commissioner Briggs  for the  answer to  the questions  about the                                                               
personnel  being included  in the  process.   Commissioner Barton                                                               
recalled  that   George  Cappaci,  General  Manager,   AMHS,  was                                                               
involved in advising the personnel of the plans.                                                                                
                                                                                                                                
DEPUTY   COMMISSIONER  BRIGGS   stated  there   were  no   formal                                                               
discussions   with  the   employees.     In  response   to  Chair                                                               
Weyhrauch's question  of "Why?", Deputy Commissioner  Briggs said                                                               
"we hadn't  gotten to that point  yet."  He explained  fully what                                                               
his  tasks were  at  that time.   In  further  response to  Chair                                                               
Weyhrauch, Deputy  Commissioner Briggs said  his job was  to work                                                             
with the borough to negotiate a  position in which a formal offer                                                               
could be made.                                                                                                                  
                                                                                                                                
CHAIR  WEYHRAUCH restated  his  original question  to Mr.  Briggs                                                             
regarding who was supposed to  be talking to AMHS staff regarding                                                               
the proposed move.                                                                                                              
                                                                                                                                
DEPUTY  COMMISSIONER BRIGGS  responded that  he and  Commissioner                                                               
Barton, and  down through the  general manager were  discussed as                                                               
the people who were  to do that.  Mr. Briggs  related that he had                                                               
also requested that the Department  of Personnel, Diane Corso and                                                               
her staff,  put together a team  to sit down with  AMHS employees                                                               
to discuss a potential move.                                                                                                    
                                                                                                                                
DEPUTY  COMMISSIONER   BRIGGS,  in  response   to  Representative                                                               
Gruenberg's questions,  responded that the governor  had made the                                                             
decision to  move AMHS headquarters  to Ketchikan. He went  on to                                                               
say  that  Ketchikan  has  been  trying for  years  to  get  AMHS                                                               
headquarters to  move there.   Mr.  Briggs reviewed  the positive                                                               
aspects of moving AMHS headquarters to Ketchikan.                                                                               
                                                                                                                                
CHAIR  WEYHRAUCH  referred to  a  February  2003, Welsh,  Whitney                                                             
architect's  study of  the  Ward  Cove building  [  which is  the                                                               
building  the Ketchikan  Gateway Borough  proposes to  house AMHS                                                               
headquarters].  The  report  discussed existing  asbestos,  mold,                                                               
windows that couldn't  be opened, and suggested  that a hazardous                                                               
materials  survey   should  be   performed.    He   asked  Deputy                                                               
Commissioner Briggs if he could perform that survey.                                                                          
                                                                                                                                
DEPUTY COMMISSIONER BRIGGS responded  that Vern Jones, Department                                                               
of Administration,  Division of  General Services, would  be able                                                               
to  answer that  question since  Department of  Administration is                                                               
administering  the lease.  Deputy  Commissioner  Briggs said  the                                                             
Steve Flodin  report discusses  the windows.   The  Department of                                                               
Administration  requires a  complete hazardous  materials survey;                                                               
as a  condition of  the lease.   He  mentioned that  the problems                                                               
with the building will be remediated before AMHS occupies it.                                                                   
                                                                                                                              
COMMISSIONER  BARTON recalled  that  the building  must meet  all                                                               
state and federal laws and regulations.                                                                                         
                                                                                                                                
CHAIR WEYHRAUCH again  asked if a hazardous  materials survey was                                                               
going to be performed before the state signs the lease.                                                                         
                                                                                                                                
COMMISSIONER    BARTON   deferred    to    the   Department    of                                                               
Administration; but  related his understanding that  the building                                                               
will be certified  for occupancy before any staff  are moved into                                                               
the space.                                                                                                                      
                                                                                                                                
CHAIR  WEYHRAUCH asked  if  DOT/PF would  recommend  that such  a                                                               
survey be completed prior to the signing of the lease.                                                                          
                                                                                                                                
COMMISSIONER  BARTON  said he  would  be  happy  to make  such  a                                                               
request in writing.                                                                                                             
                                                                                                                                
CHAIR WEYHRAUCH  asked if  DOT/PF will  recommend that  the state                                                               
require  a structural  engineering survey  be done  prior to  the                                                               
signing of the lease.                                                                                                           
                                                                                                                                
COMMISSIONER BARTON responded in the affirmative.                                                                               
                                                                                                                              
CHAIR   WEYHRAUCH  spoke   of  a   May  2003   report  from   SRI                                                               
International written  when the National Oceanic  and Atmospheric                                                               
Administration  (NOAA)  had considered  docking  a  ship on  that                                                               
area.  He  asked if shoreside power is available  to AMHS vessels                                                               
at the docking area.                                                                                                            
                                                                                                                                
DEPUTY  COMMISSIONER  BRIGGS  answered in  the  affirmative.  The                                                             
survey  notes  some concern  in  the  area of  the  Comprehensive                                                               
Environmental  Response Liability  Act  (CERCLA)  with regard  to                                                               
susceptibility  to  shared  liability for  on-site  contamination                                                               
unless environmental due diligence assessments were performed.                                                                  
                                                                                                                                
CHAIR WEYHRAUCH asked if the  Department of Law has reviewed this                                                               
proposal for  potential liability to  the State of Alaska  in the                                                               
case of a substance being found  either on-site or off-shore.  He                                                               
also inquired as  to the potential up-welling  of those hazardous                                                               
substances.   Chair Weyhrauch expressed concern  over the process                                                               
being too abrupt and hasty.   He stated he doesn't feel there has                                                               
been adequate  time or sufficient  information for the  public to                                                               
understand what is happening.                                                                                                   
                                                                                                                                
DEPUTY COMMISSIONER BRIGGS  said he was only  recently made aware                                                               
of that report and  has not had a chance to  review it.  However,                                                               
he assured the  committee that he would take  this information to                                                               
the  Department  of  Administration.    He  further  assured  the                                                               
committee that  the state would  never put any of  it's employees                                                               
or the state in  harm's way.  He said he  will recommend that the                                                               
Department  of Law  and the  Department of  Administration review                                                               
the report before the lease is signed.                                                                                          
                                                                                                                                
REPRESENTATIVE  GRUENBERG  queried   Deputy  Commissioner  Briggs                                                               
about  a  March   15,  1997,  report  on   Impact  Analysis  from                                                               
Information Insights, which is fairly negative.                                                                               
                                                                                                                                
DEPUTY  COMMISSIONER  BRIGGS stated  he  was  familiar with  that                                                               
report and  agreed that  it is  a very  negative report.  He also                                                               
spoke to the  advantages of having the shipyard  near the docking                                                               
facility.   In response to  Chair Weyhrauch,  Deputy Commissioner                                                               
Briggs agreed  that any information  covering this  subject would                                                               
be made available to the legislature.   In response to a question                                                               
from Representative Seaton,  Deputy Commissioner Briggs explained                                                               
that  currently work  is  being  done to  AMHS  ships in  various                                                               
locations around the country.                                                                                                   
                                                                                                                                
General  discussion   was  held   on  various  aspects   of  ship                                                               
maintenance and  requirements by  AMHS for overhauls  and general                                                               
maintenance.                                                                                                                    
                                                                                                                                
CHAIR  WEYHRAUCH initiated  discussion  with Deputy  Commissioner                                                               
Briggs as  to why the Wards  Cove location was chosen  over other                                                               
places in the state.                                                                                                            
                                                                                                                                
DEPUTY  COMMISSIONER BRIGGS  offered that  the Ketchikan  Gateway                                                               
Borough came forward with the lease  offer.  He noted that he was                                                               
never directed  not to look at  any other offers that  might come                                                               
up.                                                                                                                             
                                                                                                                                
REPRESENTATIVE KERTTULA  asked how  the shipyard in  Ketchikan is                                                               
currently  managed and  who  here in  Juneau  is responsible  for                                                               
interacting with the shipyard.                                                                                                  
                                                                                                                                
DEPUTY  COMMISSIONER  BRIGGS  responded   that  Alaska  Ship  and                                                               
Drydock, under  a contract from  AIDEA, operate the  shipyard. He                                                               
explained that  the contact  is on  a project-by-project  basis -                                                               
port  engineers  are primarily  the  ones  to interact  with  the                                                               
shipyard.                                                                                                                       
                                                                                                                                
CHAIR   WEYHRAUCH   stressed   the  importance   of   encouraging                                                               
industrial development in all areas of the State of Alaska.                                                                     
                                                                                                                                
REPRESENTATIVE  KERTTULA   asked  the  commissioner   and  deputy                                                               
commissioner to  comment on the  impact to the community  as well                                                               
as to  the employees who are  going to be affected  by this move.                                                               
In previous studies the impact is shown to be great.                                                                            
                                                                                                                              
DEPUTY COMMISSIONER  BRIGGS explained how the  efficiency of AMHS                                                             
will be maintained and possibly improved by the relocation.                                                                     
                                                                                                                                
CHAIR  WEYHRAUCH  asked  if the  Marine  Transportation  Advisory                                                               
Board (MTAB) had reviewed and approved the move.                                                                                
                                                                                                                                
DEPUTY COMMISSIONER BRIGGS answered that it had not.                                                                            
                                                                                                                                
A  short discussion  of the  MTAB involvement  or non-involvement                                                               
followed with Chair  Weyhrauch being very firm  in believing MTAB                                                               
should have been more involved in this entire issue.                                                                            
                                                                                                                                
REPRESENTATIVE GRUENBERG commented on  being involved with people                                                               
in  the Naval  fleet  in  comparison with  AMHS  ships and  their                                                               
ability  to  interface with  the  people  on  the ships  to  more                                                               
effectively manage and communicate.                                                                                             
                                                                                                                                
DEPUTY  COMMISSIONER BRIGGS  agreed with  that idea.  He said  he                                                               
doesn't see  the disadvantage of  having shoreside  management in                                                               
Ketchikan.    In  response  to   a  comment  from  Representative                                                               
Gruenberg  relative to  the amount  of  time Deputy  Commissioner                                                               
Briggs  spent talking  to his  predecessors, Deputy  Commissioner                                                             
Briggs  responded  that  the  only   talked  with  Greg  Dronker,                                                               
Assistant Director  and head of  Marine Engineering for  AMHS and                                                               
George Cappaci, General Manager, AMHS.                                                                                          
                                                                                                                                
CHAIR WEYHRAUCH announced he was  opening up public testimony and                                                               
asked  that the  commissioner and  deputy commissioner  remain in                                                               
the room while the general public testified.                                                                                    
                                                                                                                                
DEPUTY  COMMISSIONER  BRIGGS  explained  that  there  are  marine                                                             
safety officers  in Ketchikan.  The  Captain of the port  is here                                                               
in Juneau.   He said  he has no idea  whether there are  plans to                                                               
move the Captain  of the port to Ketchikan. In  response to Chair                                                               
Weyhrauch's comment regarding how the  system will save any money                                                               
if no one moves and all of  the staff have to be replaced, Deputy                                                               
Commissioner Briggs  clarified that  it was  never the  intent of                                                               
AMHS to save money by losing people.                                                                                            
                                                                                                                                
DEPUTY  COMMISSIONER   BRIGGS,  in  response   to  Representative                                                               
Seaton's  question, said  the lease  at three  mile is  privately                                                               
owned  and  is   in  effect  until  2014.     The  Department  of                                                               
Administration is  responsible for  managing that contract.   The                                                               
estimation is that  the space will be filled fairly  quickly.  In                                                               
response  to  Representative  Holm,  Deputy  Commissioner  Briggs                                                               
confirmed  that this  move is  an administrative  proposal for  a                                                             
better administration  rather than a  proposal to save  money. He                                                               
related his opinion that this  proposal is so close to break-even                                                               
that the contention is justified.                                                                                               
                                                                                                                                
PAT DAVIDSON, Director, Legislative  Audit Division, spoke to her                                                               
review  of  the  discussion  paper  prepared  by  Pacific  Marine                                                               
Technical  Services  in  terms  of the  cost  savings  that  were                                                               
addressed in the  paper. She pointed out that "the  true value of                                                               
the two alternative leases isn't  necessarily going to the be the                                                               
value of the  three mile lease."  In response  to a question from                                                               
Representative Gruenberg regarding that  she was only being asked                                                             
to look  at the lease issue,  she responded that she  was given a                                                               
stack of documents  and asked if, in a short  amount of time, she                                                               
could  read  through  them  and make  comments.  She  stated  she                                                               
focused  on those  areas she  knew the  most about.  Ms. Davidson                                                             
explained  that originally  her  involvement  came about  because                                                               
there  were requests  made of  the Legislative  Budget and  Audit                                                               
Committee to do an audit. These  types of issues, in her opinion,                                                               
would take a  full audit to evaluate, therefore, she  said she is                                                               
unable to comment on these other matters.                                                                                       
                                                                                                                                
DAVID LANDIS,  Vice Mayor, City  and Borough of  Ketchikan ,spoke                                                               
positively to the proposal and  the lease and the appropriateness                                                               
of the  Wards Cove Plant to  house AMHS headquarters. He  went on                                                               
to say  that the  building in  question is  a very  fine building                                                               
structurally  and environmentally  sound.  The Ketchikan  Gateway                                                               
Borough is  prepared to address [the  state's] concerns, whatever                                                               
they may be, he said.                                                                                                           
                                                                                                                                
REPRESENTATIVE  SEATON  asked  Vice   Mayor  Landis  if,  in  his                                                             
opinion,  the reason  for  the move  was a  cost  savings to  the                                                               
state.                                                                                                                          
                                                                                                                                
VICE MAYOR  LANDIS responded that  [the reason for the  move] was                                                               
two-fold,  referring to  the  management  advantages that  Deputy                                                               
Commissioner Briggs  spoke of  as well as  the cost  savings that                                                               
mentioned by Ms. Davidson.                                                                                                      
                                                                                                                                
JACK SHAY,  Member, Assembly  of City  and Borough  of Ketchikan,                                                             
pointed out that  there are 43-45 positions, less than  3/10 of 1                                                               
percent of the Juneau workforce  affected.  Mr. Shay also pointed                                                               
out  that Juneau  is  the  only community  in  Southeast that  is                                                               
growing. He  went on to comment  that when the M/V  Taku is taken                                                               
out of  service and the other  new ferries are put  into service,                                                               
Juneau will regain at least 40 positions.                                                                                       
                                                                                                                                
BRUCE BOTELHO,  Mayor, City and  Borough of Juneau, spoke  to the                                                             
standards  set by  Chair Weyhrauch  in relation  to the  proposed                                                               
move and the myths that  he considers surround the proposed move.                                                               
He  suggested certain  actions that  he believes  the legislature                                                               
should  take.    In  response  to  a  comment  by  Representative                                                               
Gruenberg regarding the potential  of other state agencies moving                                                               
to different  communities, Mayor Botelho  said it is  his feeling                                                           
that it  is important  to know  what impacts  of such  moves are,                                                               
particularly when they are as monumental as these.                                                                              
                                                                                                                                
BOB  DOLL,   Executive  Director,  Better  Ferries   for  Alaska,                                                               
explained  that  Better Ferries  for  Alaska  is a  coalition  of                                                               
organizations  with  a  common interest  in  the  enhancement  of                                                               
Alaska's ferry system and the  improvement of the service that it                                                               
provides to the  coastal communities of Alaska.   He stressed the                                                               
unease  of  the   coalition  with  the  proposed   move  of  AMHS                                                               
headquarters from Juneau  to Ketchikan.  Mr.  Doll listed several                                                             
points  for   the  committee  and  general   public  to  consider                                                               
regarding  the  move.    He  also  offered  the  opinion  of  the                                                               
coalition that  the information that  has been made  available is                                                               
somewhat fictitious,  and he  made corrections  that were  of his                                                               
own opinion.                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SEATON  asked  Mr.  Doll  whether  the  Emergency                                                               
Incident Command System  that has been established,  not just for                                                               
Homeland Security but for all  kinds of emergencies, involves the                                                               
AMHS.  He also asked whether  the movement of people who might be                                                               
involved  in this  Command System  negatively impact  the system,                                                               
should AMHS be removed from the system.                                                                                         
                                                                                                                                
MR. DOLL  indicated that he is  not totally familiar with  all of                                                               
the details of the Command System.                                                                                              
                                                                                                                                
CHAIR  WEYHRAUCH requested  that an  answer be  submitted to  the                                                               
committee in writing by whoever can answer it.                                                                                  
                                                                                                                                
CHAIR WEYHRAUCH announced  that there would only be  time for the                                                               
testimony of two  other people and asked that  all others wishing                                                               
to testify submit their comments to the committee in writing.                                                                   
                                                                                                                                
JIM  SEPEL,  Marine Surveyor,  expressed  his  surprise with  the                                                               
recent announcement by the governor  of the proposed move of AMHS                                                               
headquarters to Ketchikan. He said  he doesn't agree that this is                                                               
a wise move.  Mr. Sepel went  on to urge the committee to request                                                               
a proper cost benefit analysis on this proposed move.                                                                           
                                                                                                                                
FAYE  BAIN, retired  Leasing and  Fiscal  Manager, Department  of                                                               
Administration, directed  her comments  to the lease  and related                                                               
her opinion  that it's  not complete  and contains  sections that                                                               
are contradictory.    As someone who is  completely familiar with                                                               
the  way  a lease  should  read,  she highlighted  the  following                                                               
questions: 1. What  is the accurate number of square  feet? 2. Is                                                               
the  space at  three  mile going  to be  backfilled  in a  timely                                                               
manner?  She also  highlighted that  the building  is old,  damp,                                                               
moldy,  and has  inadequate wiring.   However,  the cost  benefit                                                               
analysis  that is  included  in  the lease  does  not talk  about                                                               
tenant  improvements over  and above  what the  Ketchikan Gateway                                                               
Borough  said  it  will  do.   She  commented  further  that  the                                                               
committee  should look  at all  of  the costs  involved, as  this                                                               
paperwork does not cover them well.                                                                                             
                                                                                                                                
CHAIR  WEYHRAUCH   encouraged  those   interested  to   give  the                                                               
committee  their  comments in  writing.    He asked  that  Deputy                                                               
Commissioner  Briggs also  address  any further  comments to  the                                                               
committee in writing.                                                                                                           
                                                                                                                                
ANNOUNCEMENTS                                                                                                                 
                                                                                                                                
There were no announcements.                                                                                                    
                                                                                                                                
COMMITTEE ACTION                                                                                                              
                                                                                                                                
The committee took no action.                                                                                                   
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
The overview was adjourned at 9:50 a.m.                                                                                         
                                                                                                                                
NOTE:   The meeting was  recorded and handwritten log  notes were                                                               
taken.  A  copy of the tape(s)  and log notes may  be obtained by                                                               
contacting the  House Records  Office at  State Capitol,  Room 3,                                                               
Juneau,  Alaska  99801  (mailing address),  (907)  465-2214,  and                                                               
after  adjournment  of the  second  session  of the  Twenty-Third                                                               
Alaska  State Legislature  this  information may  be obtained  by                                                               
contacting the Legislative Reference Library at (907) 465-3808.                                                                 

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