02/28/2012 08:00 AM House STATE AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| HB316 | |
| HB2 | |
| Adjourn |
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 316 | TELECONFERENCED | |
| *+ | HB 2 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
February 28, 2012
8:07 a.m.
MEMBERS PRESENT
Representative Bob Lynn, Chair
Representative Wes Keller, Vice Chair
Representative Paul Seaton
Representative Peggy Wilson
Representative Max Gruenberg
Representative Pete Petersen
Representative Kyle Johansen
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
HOUSE BILL NO. 316
"An Act relating to military facility zones in the state;
relating to the development of housing in military facility
zones; relating to the financing of projects in military
facility zones; and providing for an effective date."
- MOVED HB 316 OUT OF COMMITTEE
HOUSE BILL NO. 2
"An Act relating to certain investments of the Alaska permanent
fund, the state's retirement systems, the State of Alaska
Supplemental Annuity Plan, and the deferred compensation program
for state employees in certain companies that do business in
Iran, and restricting those investments; and providing for an
effective date."
- MOVED CSHB 2(STA) OUT OF COMMITTEE
PREVIOUS COMMITTEE ACTION
BILL: HB 316
SHORT TITLE: MILITARY FACILITY ZONES
SPONSOR(s): REPRESENTATIVE(s) THOMPSON
02/08/12 (H) READ THE FIRST TIME - REFERRALS
02/08/12 (H) MLV, STA
02/16/12 (H) MLV AT 1:00 PM CAPITOL 120
02/16/12 (H) Moved Out of Committee
02/16/12 (H) MINUTE(MLV)
02/17/12 (H) MLV RPT 2DP 1NR 1AM
02/17/12 (H) DP: LYNN, THOMPSON
02/17/12 (H) NR: MILLER
02/17/12 (H) AM: CISSNA
02/28/12 (H) STA AT 8:00 AM CAPITOL 106
BILL: HB 2
SHORT TITLE: DIVEST INVESTMENTS IN IRAN
SPONSOR(s): REPRESENTATIVE(s) GATTO, LYNN
01/18/11 (H) PREFILE RELEASED 1/7/11
01/18/11 (H) READ THE FIRST TIME - REFERRALS
01/18/11 (H) STA, FIN
02/28/12 (H) STA AT 8:00 AM CAPITOL 106
WITNESS REGISTER
REPRESENTATIVE STEVE THOMPSON
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented HB 316 as sponsor.
THOMAS STUDLER, Staff
Representative Steve Thompson
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Offered information during the hearing on
HB 316, on behalf of Representative Thompson, sponsor.
McHUGH PIERRE, Deputy Commissioner
Department of Military & Veterans Affairs
Ft. Richardson, Alaska
POSITION STATEMENT: Answered questions during the hearing on HB
316.
DALE NASH, Chief Executive Officer (CEO)
Alaska Aerospace Corporation (AAC)
Anchorage, Alaska
POSITION STATEMENT: Testified during the hearing on HB 316.
KAREN SAWYER, Staff
Representative Carl Gatto
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Co-Presented HB 2 on behalf of
Representative Gatto, joint prime sponsor.
SAM GOTTSTEIN, Staff
Senator Bill Wielechowski
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Co-Presented HB 2 on behalf of Senator
Wielechowski, sponsor of SB 131, the companion bill to HB 2.
ACTION NARRATIVE
8:07:30 AM
CHAIR BOB LYNN called the House State Affairs Standing Committee
meeting to order at 8:07 a.m. Representatives Keller, Seaton,
Johansen, Petersen, and Lynn were present at the call to order.
Representatives P. Wilson and Gruenberg arrived as the meeting
was in progress.
HB 316-MILITARY FACILITY ZONES
8:07:48 AM
CHAIR LYNN announced that the first order of business was HOUSE
BILL NO. 316, "An Act relating to military facility zones in the
state; relating to the development of housing in military
facility zones; relating to the financing of projects in
military facility zones; and providing for an effective date."
8:07:55 AM
REPRESENTATIVE STEVE THOMPSON, Alaska State Legislature,
presented HB 316 as sponsor. He read the sponsor statement,
which read as follows [original punctuation provided]:
House Bill 316 gives statutory authority to the
Department of Military and Veterans' Affairs to
establish "military facility zones" within the State
of Alaska. Military facility zones are designated
areas in close proximity to a military base (facility)
where industrial or economic development will directly
enhance the base's ability to fulfill its mission.
Military facility zones are successfully employed in
other states as vehicles to obtain and administer
funds for business development specifically relating
to military activities. Funding for such zones in
Alaska may be available from the Alaska Industrial
Development and Export Authority (AIDEA) and/or the
Alaska Housing Finance Corporation (AHFC), or from
federal New Market Tax Credits. Federal, state, or
local public or private funding sources, credit, or
guarantee programs can be made available directly to
municipalities and boroughs that are working on
specifically approved projects within a military
facility zone.
Military facility zones create opportunities for
significant benefits to Alaska and the nation. They
will enhance economic activity near military
installations and thereby facilitate economic growth
and development in the state, especially where local
governments are working in close partnership with
their military counterparts. The zones promote
expansion of infrastructure to benefit both military
and civilian objectives, such as civil defense,
homeland security and emergency response. They will
enhance the nation's military capabilities by helping
bases operate more effectively and efficiently.
Finally, military facility zones in Alaska will
clearly demonstrate the state's continuing and
substantive support for the armed services, and help
defend against the negative impacts on Alaska's
regional economies and military communities that might
occur should Congress choose to implement the federal
Base Realignment and Closure Act (BRAC).
8:11:01 AM
REPRESENTATIVE THOMPSON, in response to Chair Lynn, confirmed
that the proposed legislation has not been modified since its
hearing in the House Special Committee on Military and Veterans'
Affairs.
8:11:11 AM
REPRESENTATIVE SEATON offered his understanding that under HB
316, a municipality could apply for an area within its
boundaries. He asked if, for example, all of Anchorage would be
a military zone if that municipality were to apply.
REPRESENTATIVE THOMPSON answered yes. He said, "I've read where
this could be effectively used up to 500 miles from the military
base ..., as long as it's affecting the base operations." He
offered his understanding that under HB 316 an unincorporated
city, such as Delta Junction, could apply for a facility zone.
8:13:10 AM
REPRESENTATIVE SEATON noted that under HB 316, there could not
be more than two military zones within a municipality at one
time unless "it" exceeds 500 square miles.
REPRESENTATIVE THOMPSON, in response to a question from
Representative Seaton, said the distances are not specified
within the proposed legislation.
8:13:54 AM
REPRESENTATIVE THOMPSON, in response to Representative Seaton,
again described the benefits of the zone.
REPRESENTATIVE SEATON said he is trying to figure out if HB 316
would benefit some communities over others, and whether it would
institute state tax credits, tax reductions, or loans only for
certain areas.
REPRESENTATIVE THOMPSON deferred to Dale Nash, the CEO of Alaska
Aerospace Corporation. He reminded Representative Seaton that
the proposed legislation is not just for the U.S. Army and Air
Force, but would also apply to the U.S. Coast Guard bases. He
expressed concern with BRAC impending. He said, "If we can do
something to help the military ... to enhance the effectiveness
of their base[s] and cut their cost, this is a way that we can
move forward with this to where it can help prevent a lot of
that type of thing [from] happen[ing]."
CHAIR LYNN asked if, under HB 316, there could be a military
zone around a National Guard facility.
REPRESENTATIVE THOMPSON ventured that would be possible, but
deferred to McHugh Pierre for confirmation.
8:17:17 AM
REPRESENTATIVE PETERSEN ventured that energy costs may be a
reason that the idea to build a base in certain areas may be
less attractive than in others. He asked if under HB 316, loans
could be used to improve energy efficiency.
REPRESENTATIVE THOMPSON answered yes, and offered an example.
8:18:51 AM
REPRESENTATIVE JOHANSEN directed attention to the sponsor
statement, which indicates that military facility zones are
successfully employed in other states, and he asked for examples
relating U.S. Coast Guard stations.
REPRESENTATIVE THOMPSON deferred to Mr. Nash.
REPRESENTATIVE JOHANSEN noted that the last paragraph of the
sponsor statement refers to defending against the negative
impacts of Alaska regional economy and military communities that
might occur should U.S. Congress choose to implement BRAC. He
asked if HB 316 is a proactive approach to ensuring against a
base closure by spurring infrastructure, investment, and cost
savings that will help Alaska in argument to keep its bases open
in the event that BRAC is adopted.
REPRESENTATIVE THOMPSON answered that he actually started
working on HB 316 early last summer, before anyone thought about
BRAC or about moving the F-16s from Eielson Air Force Base to
Elmendorf Air Force Base. He continued:
We were doing this in anticipation that Lockheed
Martin would win the missile defense contract down in
Delta Junction. They were wanting to build some
subdivisions of housing and move the rocket scientists
to Delta, where they would be permanently, instead of
having them - two weeks in, two weeks out - flying
back and forth to the states.
REPRESENTATIVE THOMPSON said that as he was working on HB 316,
it was brought to his attention that other states, communities,
and areas close to military bases have utilized their military
bases to fight BRAC. In response to Representative Johansen, he
stated, "Anything we can do that would ... expand the mission of
the military base and give them additional duties and a bigger
mission would lessen the effect ... of ... BRAC happening,
because they've got more strategic importance."
8:22:33 AM
REPRESENTATIVE JOHANSEN referred to the analysis section on page
2 of the fiscal note from AIDEA, prepared by Mr. Leonard, which
states that HB 316 will allow the Department of Military &
Veterans' Affairs (DMVA) to designate up to five military
effectiveness zones. He said he could not find that language in
the bill, and he asked if the base in Ketchikan would be among
the five.
REPRESENTATIVE THOMPSON said he is not aware of "any particular
ones that have been set out."
8:23:34 AM
THOMAS STUDLER, Staff, Representative Steve Thompson, Alaska
State Legislature, on behalf of Representative Thompson,
sponsor, said the decision would be left to the adjutant
general, and that is addressed in Section 1 of the bill. He
said, "I think the idea is there would probably be five, but ...
the bill is much more broad than that."
8:24:28 AM
REPRESENTATIVE JOHANSEN ventured there must be a "list of five"
somewhere for Mr. Leonard to have referenced it. He said he
supports HB 316, but does not want the fiscal note to say there
are going to be five, because that could result in another zone
being left out.
8:25:26 AM
REPRESENTATIVE GRUENBERG pointed to a reference to "rural areas"
in the same fiscal note, and said he does not see any mention of
"rural areas" in the bill, except for language regarding
infrastructure. He said his district is adjacent to Elmendorf,
is not a rural area, and he would like it to be covered.
REPRESENTATIVE THOMPSON said he does not know why the term
"rural areas" is referenced.
REPRESENTATIVE GRUENBERG echoed Representative Johansen's
concern that the information must have come from somewhere, and
he said he would like to know where.
8:27:09 AM
REPRESENTATIVE GRUENBERG mentioned a new law from Kansas, under
which a liaison committee can and shall be set up for areas
adjacent to military bases.
REPRESENTATIVE THOMPSON said that sounds like it is related to
HB 316.
REPRESENTATIVE GRUENBERG noted that the issue was one that was a
high priority for the U.S. Department of Defense (DoD).
8:28:53 AM
REPRESENTATIVE JOHANSEN requested a letter regarding the fiscal
analysis.
REPRESENTATIVE THOMPSON said he can understand Representative
Johansen's concern, and said he would get something in writing
to accompany the bill.
8:30:23 AM
REPRESENTATIVE SEATON directed attention to page 5, line 17,
regarding benefits to a municipality. He said subsection (a)
would allow financing for projects and subsection (b), on line
26, would allow a business entity located in a zone to receive
priority consideration for financial assistance for projects.
He asked if that would mean that AIDEA and AHFC has to give
priority to those projects within the zone over competing
projects from other communities within the state that are not in
a designated zone.
8:31:51 AM
REPRESENTATIVE THOMPSON said that is a good question. He
ventured that if the striker brigades are going to be able to
deploy off of the docks in Seward, they would have to be
transported there, and the docks would have to be rebuilt to
accommodate heavy equipment and military tanks. He said Seward
would have to go to AHFC or AIDEA to get money for those
renovations. He said that could be considered part of the
military mission and necessary for the military to do their job.
CHAIR LYNN stated his assumption that the 500 miles could be in
one direction.
REPRESENTATIVE THOMPSON said that is how he looks at it.
8:33:02 AM
REPRESENTATIVE SEATON reiterated that he would like to figure
out whether AHFC or AIDEA would have designated priorities. He
then directed attention to page 4, line 29, which states that
the adjutant general would be given 60 days after an application
is submitted to make a determination. He said, "I don't see a
process where the adjutant general does anything other than say
yes." He said he is trying to figure out if that is enough time
for the adjutant general.
8:34:09 AM
REPRESENTATIVE P. WILSON offered her understanding that under HB
316, most of the areas are going to be excluded. She directed
attention to subsection (a) on page 2, beginning on line 31,
through page 3, line 1, which states that "The adjutant general
may designate an area as a military facility zone" only under
certain conditions, including paragraph (4), on page 3, lines 6-
7, which read: "(4) is in area with inadequate infrastructure
to support the continued or expanded operations of the
facility."
REPRESENTATIVE P. WILSON directed attention to subsection (c),
[on page 3, lines 11-12], which states that "The adjutant
general shall consider the following factors before designating
an area as a military zone", and she pointed to one factor,
which is shown in paragraph (4), on lines 20-22, as follows:
"the relationship between the area and a military facility
subject to realignment or closure under 10 U.S. C. 2687, as
amended, or a successor statute or the effect of the realignment
or closure on the area". She highlighted another factor, shown
in paragraph (6), on lines 25-27, which read:
(6) the difference between the median annual income of
residents of the area and the median annual income of
the residents of the state and region, and the 27
number of residents who receive public assistance".
REPRESENTATIVE P. WILSON offered her understanding that of the
areas that could be closed, there would be an attempt to boost
the ones that are worse off economically. She ventured that
changes could be made to boost other areas across the state.
8:36:36 AM
REPRESENTATIVE THOMPSON responded, "I think that that's
either/or." He directed attention to the language beginning on
page 2, line 31 [text provided previously], and then directed
attention to the language in subsections (b) and (c), on page 3,
lines 8-12, which read as follows:
(b) The adjutant general may give priority
consideration to an area for designation as a military
facility zone if the area is of strategic importance
to the economic development interests of the
municipality.
(c) The adjutant general shall consider the following
factors before designating an area as a military
facility zone:
REPRESENTATIVE THOMPSON concluded, "So, I believe it covers both
sides of that coin is the way that it's set up."
8:37:22 AM
REPRESENTATIVE JOHANSEN noted that under subsection (c), there
are 15 factors for the adjutant general to consider, and one of
them is BRAC. Regarding the previous comments of Representative
Seaton, he directed attention to language on page 5, lines 25-
29, which read as follows:
(b) A municipality in which a military facility zone
is located, a military facility zone authority for a
military facility zone, or a business entity located
in a zone may receive priority consideration for
financial assistance for projects or operations in the
zone from the Department of Military and Veterans'
Affairs and from any other appropriate state program,
if available under the law establishing the program.
REPRESENTATIVE JOHANSEN said "from any other appropriate state
program" causes him concern. He said, "It does make me wonder
if we're going to be choosing whether we're going to help save
Eielson or put up a jack-up rig in the Cook Inlet."
8:39:32 AM
REPRESENTATIVE THOMPSON replied that he did not intend to set up
a competitive fight.
8:39:58 AM
REPRESENTATIVE PETERSEN said he thinks the term, "inadequate
infrastructure", on page 3, line 6, is broad enough. He noted
that all the military agencies that would be included under HB
316 are listed, starting on page 6, line 10, and the list
includes the U.S. Coast Guard.
8:41:08 AM
McHUGH PIERRE, Deputy Commissioner, Department of Military &
Veterans Affairs, noted that he was currently at a conference in
Florida, at which the top focus was cost sharing to support
efficiency at military installations, which involves the
establishment of either a public/public or public/private
partnership in working on installations to make it feasible for
the military to keep what it has in the midst of numerous budget
cuts. He said, "This bill is certainly right along that path."
MR. PIERRE said the fiscal note by AIDEA was based on a previous
version of bill; there is no maximum number of zones. He
relayed that [under HB 316], if there is a military installation
in a community, a zone could be created by the community to help
establish business directly related to that installation. He
explained that a payday lender would not qualify for benefits of
the zone; only an entity with a direct business link to the
military organization, such Lockheed Martin, would qualify. Mr.
Pierre said he does not consider the bill as a financing issue
for the state, but rather as a way to leverage funding to
encourage development around military bases, in areas that the
communities deem appropriate. Many communities in need, which
are near military zones, could benefit under the proposed
legislation. He said there are 42 military installations across
the state, which means it would be possible for 42 communities
to establish a zone. He stated that he does not see why the
commissioner of DMVA would say no to a community asking to
establish a zone, and he opined that 60 days is adequate time in
which to consider a proposal.
8:44:43 AM
REPRESENTATIVE SEATON directed attention to the language on page
3, line 20, [text provided previously], and said he thinks that
has been alluded to as positive. He said his understanding of
the language is that if a zone was to be established next to a
base that probably will close, then the community would be
leveraging financing for housing and other things that would
become useless after the closure of the base. He asked Mr.
Pierre if he sees the establishment of zones as a means to
prevent closures or if "you would consider the effects of a
closure on the projects that you are trying to advantage through
this priority financing."
8:46:07 AM
MR.PIERRE replied that every military facility in Alaska is
under threat of closure and to think otherwise would be naïve.
He indicated that [the purpose of HB 316] is to ensure that
everything is done to lower the risk of each facility in order
to keep it functioning.
8:47:00 AM
REPRESENTATIVE JOHANSEN noted that Ketchikan has a U.S. Coast
Guard base, a U.S. National Guard Armory, and a U.S. Navy
acoustic testing base, all within the Borough of Ketchikan.
Further, he related that there are two cities within the
borough: Ketchikan and Saxman. He asked if the whole area
could be a military zone to qualify for the preference.
MR. PIERRE offered his understanding that that is correct. He
offered further details.
8:48:41 AM
REPRESENTATIVE JOHANSEN noted that Ketchikan's former pulp mill
is the northern-most, ice-free, deep-water port, as well as a
shipyard owned by the state and operated by Alaska Ship and Dry
Dock and Vigor Industrial. He said there is dovetailing
happening regarding "assets that may come on line later." He
offered his understanding that "all of that should be able to
fit under this umbrella," and asked Mr. Pierre if that is
correct.
MR. PIERRE answered, "Only if they are direct contractors with
the military." He said if the pulp mill owners or the ship yard
were to secure a contract with DoD to specifically work on some
type of long-term ship development or repair, then they would be
eligible to "receive consideration under the zone."
REPRESENTATIVE JOHANSEN asked, "So, if ... some entity of the
[U.S.] Department of Defense ..., for example, decided to home
port a vessel in Ward Cove, then basically that would ...
qualify for folks supporting that home porting effort?"
MR. PIERRE answered, "Absolutely, especially if they're home
ported and they're working directly out of the facilities there
at Ward Cove that used to be the pulp mill."
8:50:34 AM
REPRESENTATIVE SEATON asked where language in the bill is that
"limits to directly contracting with the military."
MR. PIERRE responded that he does not have a copy of the bill
with him, but remembers going over this issue with the bill
sponsor. He said [the department's] number one issue was
regarding eligibility "to receive selection through the zone."
He said he knows the zone would have to "put up recommendations
as to who would get financing in support of that activity in the
zone." He said, "The way the discussion took place was that
only businesses working directly with military in the zone would
receive consideration."
REPRESENTATIVE SEATON stated:
I don't see anything in the bill that would limit AHFC
or AIDEA from participating with people in the
military facility zone, only to those who are directly
contracting with the military, and if that's the
intent of the bill, I think we need to see that in the
bill; if it's not the intent of the bill, I think we
need to know it.
REPRESENTATIVE SEATON, in response to Representative Gruenberg,
said he was referring to language on page 5, lines 25-29.
8:53:23 AM
MR. PIERRE stated:
This doesn't preclude any state agency from working
with anybody else inside the zone. So, if ... the
zone overlaps in area and other ... business
activity's taking place there, the zone doesn't
preclude that from taking place. So, if ... AHFC
wanted to conduct another business project in the zone
that had nothing to do with the military, it wouldn't
be impacted; it would be processed like each ...
agency normally conducts business. This would just
specifically solicit companies working with the
military to develop in that area, to encourage
development with low interest loans and possible
access to federal tax credits if the area meets the
requirements for federal tax credit.
8:54:16 AM
DALE NASH, CEO, Alaska Aerospace Corporation (AAC), stated that
the intent of the proposed legislation is to benefit the
military. Each zone as it's created will have a liaison office
that will meet regularly with the base commanders and major
contractors to offer help. He said in reality few corporations
have a direct contract with DoD, most have a sub-tier contract
in the event of building housing so the base does not have to do
so. He said the intent of HB 316 is not only to help get more
missions in place and help against BRAC, but also to help
underutilized areas. He said AAC continues to look at what
missions it might be able to bring into Kulis Air National Guard
Base through Alaska Aerospace and other aerospace companies. He
said, "It is very broad in nature." Regarding the previously
mentioned limit of five, he ventured that limit was brought over
from another bill. He said, "We do not want to have it limited
to five; we want to have it open to any area in the state where
it makes sense."
MR. NASH talked about a new community center near Ft. Greely,
which is nice, and he talked about the cost to the military in
having to build all facilities instead of having the use of
those in the adjacent communities. He said, "I have only been
five years here in Alaska, but I was surprised at how strong the
military is and how little we had outside the base in the form
of aerospace companies, because most everywhere else you go, you
will have ... supply chain customers right outside the base."
He stated:
We asked for the legislation, clearly looking at if we
were able to win the Ft. Greely bid in Delta Junction,
how to take the cost of infrastructure and support off
the contract and utilize federal tax credits, and
there are a lot of federal tax credits out there, and
any other capability we can to compete basically as
Alaska incorporated to build things up.
8:59:16 AM
MR. NASH said everyone is looking at costs and considering ways
to identify missions not done that could be done to protect
military bases and bring additional work. He said [HB 316] is
legislation that would set up authority for each community to
work with military bases. He talked about setting up a
"maintenance depot" inside the base or Outside. He said the
bill is similar to legislation in Texas and Virginia. He
related that Virginia's legislation set the limit to 50 miles,
but Alaska is so much bigger and spread out that the limit is
set at 500 miles. He told Representative Johansen that the U.S.
Coast Guard was in mind "as we put it together."
9:02:09 AM
MR. NASH said states and communities have been successful under
similar plans. He offered the example of Huntsville, Alabama,
which now has more flag officers than any other place, except
the Pentagon. He said Redstone Arsenal was slated for closure,
but now has every major aerospace company in the world building
there. He said the mayor of Huntsville looks forward to BRAC,
because he believes he can argue that he takes missions away
from other places, brings them to Huntsville, thereby improving
efficiency and saving money. He concluded, "We're trying to get
this legislation to allow us to go do battle - BRAC or otherwise
- to improve our partnership with DoD and those aerospace
companies or other companies that will do business to support
DoD."
9:03:22 AM
REPRESENTATIVE PETERSEN directed attention to the term,
"educational facilities", in subsection (c), paragraph (5), on
page 3, lines 23-24, and asked if that would be facilities of
children of military members or facilities where military
personnel take classes.
MR. NASH answered that that definition was left open, because
[AAC] envisioned "all of the above." He offered examples.
9:05:08 AM
REPRESENTATIVE GRUENBERG noted that Mr. Nash had mentioned that
each zone would have a liaison committee. He asked him where
that appears in HB 316.
MR. NASH answered:
We have left it open that the zone itself will meet
with the military and the contractors. So, I cannot
point you to a specific place in here, but I can tell
you specifically in practice you have someone who is
designated as the head of that zone, and they have a
financial analyst, and many times are also employed
through the borough ..., but they will go meet with
the base commanders.
9:07:49 AM
MR. NASH, in response to Representative Gruenberg, named the
following states that have similar legislation: Virginia,
Texas, Maryland, and Arizona. He said both Virginia and Texas
proposed their legislation prior to "the BRAC process."
Maryland and Arizona enacted legislation after the BRAC process.
He said there are other areas in the country that have put this
into practice, but not on a statewide level - Huntsville, for
example.
9:09:33 AM
REPRESENTATIVE GRUENBERG said he had been given the name of the
Kansas law, which is: "An Act Concerning Land Use Relating to
Military Installations and Adjacent Areas".
9:10:00 AM
REPRESENTATIVE SEATON directed attention to language on page 6,
beginning on line 21, which read as follows:
(5) "military facility zone authority"
means a public corporation established by one or more
municipalities to administer a military facility zone
located in the municipalities in the state;
REPRESENTATIVE SEATON asked if, under HB 316, it would be a
requirement that a military facility zone authority administer a
military facility zone.
9:10:49 AM
MR. STUDLER directed attention to page 5, line 11, which states
that military facility zone authorities may create the zones.
He directed attention to further permissive language on page 5,
[line 14-16], which read as follows:
(b) If a military facility zone includes areas within
the boundaries of more than one municipality, the
municipalities may, by agreement, create a military
facility zone authority for the zone.
9:11:35 AM
REPRESENTATIVE THOMPSON, in response to Representative
Gruenberg, offered his understanding that HB 316 had not been
vetted through the Alaska Municipal League (AML).
9:12:05 AM
REPRESENTATIVE JOHANSEN asked if a business would need a
contract or if the business would have to be in support of some
sort of defense project. He asked, for example, if someone who
fixes refrigeration in a fish processing plant could also fix
refrigeration in a military installation.
9:13:04 AM
MR. STUDLER emphasized the broad nature of the language in
Section 3, paragraph (9), subparagraphs (A) through (H),
beginning on page 7, line 23, through page 8, line 19, and he
offered his understanding that it would cover the type of
projects that would create a military facility zone and be
supported. He added that there is no language in HB 316 that
specifies "it's solely for contractors."
REPRESENTATIVE JOHANSEN said he wants to ensure that a company
that tries to get a loan to build up the faction of its business
that supports the military is not excluded because another
faction has nothing to do with the military.
9:14:32 AM
MR. PIERRE offered his understanding that the company would just
need to work with the military; having another part of business
unrelated to the military would not be a deterrent.
9:15:02 AM
REPRESENTATIVE SEATON said he thinks the committee has heard
testimony on two conflicting points: one was from Mr. Pierre
regarding the requirement that [businesses] have a direct
relationship with the military; and the other was regarding the
example of Ft. Greely, where the community center provided
services, which meant that the military would not have to build
those services. He said he does not see any language in the
bill that says a business within a zone would be restricted and
could not get funding without having direct contract with the
military. He said he thinks this is crucial to what
Representative Johansen is saying, and he emphasized that he
would like this point clarified before the next bill hearing.
9:16:02 AM
REPRESENTATIVE THOMPSON estimated that last July, the bill used
the term, "military enhancement zone", but that was changed to
"military facility zone". He said the attractiveness of the
military base is important, because the friendliness of the
community toward the base has an influence on the military's
choice of whether to keep a base open. He stated, "So,
everything that can be done to enhance that military base would
probably be able to be considered [emphasis added]." He said
there is a process through which approval is attained, which
includes the base commander and the state's Department of
Military & Veterans Affairs.
9:18:00 AM
REPRESENTATIVE GRUENBERG expressed appreciation of the direction
of the conversation. He said he would like to see "these kinds
of concepts incorporated into the bill" - to look at the entire
situation. He said in East Anchorage there have been problems
with noise from the artillery range and the affect that has on
civilians. Conversely, he said in his district there are Little
League fields that are technically on a military base but are
used by children "from all over." He expressed his hope that
the proposed legislation would forge a better relationship
between and a better life for people on both sides of the fence.
9:19:50 AM
REPRESENTATIVE THOMPSON concurred with Representative Gruenberg.
He said sometimes the spouses of military personnel do not
adjust to life in Alaska, and anything that can be done to make
the community more attractive would help a military family be a
cohesive unit.
REPRESENTATIVE GRUENBERG commented that there is a huge list of
considerations. He said, "I'm afraid if we're not really
careful the list will be used to exclude people as they compete
with these funds."
REPRESENTATIVE THOMPSON responded that that is why the bill is
so broad. He said, "The adjutant general is ... wanting the
military to enhance themselves here, and I think they would even
read it even more broad[ly] than what we wrote. So, I ...
really am encouraged by this."
9:21:32 AM
REPRESENTATIVE KELLER requested that committee consider moving
the bill out of committee. He said the broad nature of the bill
is what makes it attractive.
9:22:10 AM
REPRESENTATIVE THOMPSON, in response to the chair, said he would
like to see the proposed bill moved out of committee today.
9:22:19 AM
CHAIR LYNN closed public testimony.
9:22:28 AM
REPRESENTATIVE PETERSEN said he believes the proposed
legislation is well-intended. He ventured that HB 316 may make
necessary improvements on bases and economic improvements in
areas surrounding the bases less costly. He stated his support
of the bill.
9:23:18 AM
REPRESENTATIVE SEATON said he thinks the bill is a good idea;
however, he said he thinks as the last committee of referral,
the House State Affairs Standing Committee needs more answers
before sending the proposed legislation to the House floor. He
said the committee heard testimony that the projects must be
approved by the adjutant general, but he offered his
understanding that under HB 316, the adjutant general would
approve a zone, but the city or authority would approve the
project.
9:24:46 AM
REPRESENTATIVE GRUENBERG reiterated that he supports HB 316;
however, he echoed Representative Seaton's concern that there
are a number of questions that have not been answered.
9:25:26 AM
REPRESENTATIVE JOHANSEN said he can think of varied
possibilities for his community under HB 316, because the entire
Borough of Ketchikan could be a zone. He said he agrees there
are pending questions, but said he does not have any problem
moving the proposed legislation out of committee. He ventured
that if something of importance comes up, HB 316 could be heard
by the House Rules Standing Committee.
9:28:10 AM
REPRESENTATIVE P. WILSON said she also sees possibilities under
HB 316. Notwithstanding that, she questioned whether AIDEA and
AHFC might need broadened authority because the proposed
legislation. She ventured there are possibilities for every
military installation in Alaska under HB 316.
9:31:15 AM
REPRESENTATIVE JOHANSEN moved to report HB 316 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HB 316 was reported out of the
House State Affairs Standing Committee.
CHAIR LYNN asked the sponsor to consider the concerns that had
been raised by the committee.
9:32:08 AM
The committee took an at-ease from 9:32 a.m. to 9:34 a.m.
HB 2-DIVEST INVESTMENTS IN IRAN
[Contains mention of SB 131.]
9:34:12 AM
CHAIR LYNN announced that the final order of business was HB 2,
"An Act relating to certain investments of the Alaska permanent
fund, the state's retirement systems, the State of Alaska
Supplemental Annuity Plan, and the deferred compensation program
for state employees in certain companies that do business in
Iran, and restricting those investments; and providing for an
effective date."
9:34:34 AM
KAREN SAWYER, Staff, Representative Carl Gatto, Alaska State
Legislature, co-presented HB 2 on behalf of Representative
Gatto, joint prime sponsor. She noted that Senator Wielechowski
has a companion bill, SB 131, in the Senate. She said there is
a committee substitute, Version M, which makes changes to match
HB 2 with SB 131; it adds "or gas" after "oil" in certain
places. She relayed that Sam Gottstein would present a
PowerPoint presentation. She said because of scheduling
conflicts, there would not be a representative from the
Permanent Fund Corporation available to testify.
9:36:11 AM
REPRESENTATIVE KELLER moved to adopt the proposed committee
substitute (CS) for HB 2, Version LS0007\M, Wayne, 2/8/12, as a
work draft.
CHAIR LYNN objected for the purpose of discussion.
9:36:29 AM
SAM GOTTSTEIN, Staff, Senator Bill Wielechowski, Alaska State
Legislature, co-presented HB 2 on behalf of Senator
Wielechowski, sponsor of SB 131, the companion bill to HB 2. He
said HB 2 is the same bill as House Bill 241 of the previous
legislature and is identical to SB 131 of the current
legislature.
9:37:21 AM
MR. GOTTSTEIN gave a PowerPoint presentation. He stated that
the Iranian regime is a threat to national security, and not
having a divestment policy in place is financing America's
enemies. He stated that since 1984, the U.S. has listed Iran as
a state sponsor of terrorism, and Iran has known ties with
Hamas, Hezbollah, and the Taliban - groups that work against the
interests of the U.S. at home and abroad. He said Iran's
military has, in recent weeks, threatened to close the Strait of
Hormuz, which would disrupt worldwide oil supplies.
MR. GOTTSTEIN said the Iranian regime is under strong
international sanctions. Most recently, the U.S. Treasury
announced sanctions against Iran's national bank, and the
European Union has banned the purchase of Iranian oil and gas.
He said these unprecedented sanctions are forcing companies to
decide whether they will do business with the Western World or
with Iran. He stated that Iran continues to work toward
developing nuclear weapon capabilities; a recent International
Atomic Energy Agency Report stated that "information indicates
that Iran has carried out activities relevant to the development
of a nuclear explosion devise." He stated that the Iranian
regime has a long history of human rights violations; today
Amnesty International issued a statement that there are
widespread and persistent human rights violations occurring in
Iran.
MR. GOTTSTEIN stated that for all these reasons, divestment and
sanctioning policies have greater bi-partisan support today than
ever before, which he said is illustrated by a recent 100-0 vote
in the U.S. Senate to increase sanctions. He related that
Alaska Governor Sean Parnell has come out in support of Iran
divestment in a recent Anchorage Daily News "Compass" piece. He
said large companies still invest in Iran, which helps the
Iranian regime bring its oil and gas reserves to market. He
reported that Iran produces approximately 3.6 million barrels of
oil a day and is known to use its oil profits to advance the
regime's agenda. Mr. Gottstein read a quote by Timothy
Geithner, U.S. Secretary of the Treasury, as follows:
Iran's greatest economic resource is its oil exports.
Sales of crude oil line the ... regime's pockets,
sustain its human rights abuses, and feed its nuclear
ambitions like no other sector of the Iranian economy.
9:40:14 AM
MR. GOTTSTEIN opined that HB 2 is what the State of Alaska can
and should do to weaken the Iranian regime by cutting off
investment to Iran. The intent of the proposed legislation, he
said, is "to bring Alaska in line with America's foreign policy"
by slowing down Iran's nuclear program, weakening its ability to
support terrorism, and putting pressure on the regime for
political change.
9:40:37 AM
MR. GOTTSTEIN said under HB 2, the Department of Revenue (DOR)
would be directed to compile a list of companies that have
invested an aggregate of $20 million or more in Iranian oil and
gas development. The department would have some flexibility in
determining which companies would be on the scrutinized list and
could obtain a list from companies around the country that
specialize in Iran divestment policies. Once the list is
compiled, he explained, companies on the list will have 90 days
to justify this investment. If the company fails to do so
within 90 days, the department will ask the state's fund
managers, including the Permanent Fund [Corporation] to
liquidate assets of that company within 90 days. He said many
lists already exist for other states.
MR. GOTTSTEIN stated that Iran poses any even greater threat
today to the security of the U.S. than it did a few years ago.
The country is closer to obtaining nuclear weapons and
"continues to threaten to destabilize the region." He said
Alaska has a better understanding about the impacts of
divestment policies and what it would mean to the production on
the North Slope and rates of return for the permanent fund and
other accounts. Furthermore, he said, recent federal
legislation provides greater cover for state and local
governments to divest from Iran. Mr. Gottstein said federal
legislation alone cannot be relied upon for divestment, and the
federal government cannot dictate to states where they can and
cannot make investments. He said the federal legislation of
2010, urging states to divest from Iran, is as far as the
federal government can go.
9:42:34 AM
MR. GOTTSTEIN reported that over 20 states already have Iran
divestment policies in place, including: California, Florida,
Minnesota, Nevada, Colorado, Texas, and Washington. He said New
York recently passed Iran divestment legislation this year. He
reiterated that the European Union has banned the purchase of
Iranian oil and gas.
9:43:05 AM
MR. GOTTSTEIN offered some points targeted at common
misconceptions regarding HB 2, as follows:
First, no North Slope operators should be considered
for investment; this includes new entrants like ENI,
who have committed to pulling out of Iran. A great
legislative research report is included in your
committee packet to explain this, and I highly
recommend that committee members take the time to read
it.
Second, even if there were a North Slope operator that
did business with Iran, there will be no changes to
Alaska's oil and gas incentives on the North Slope for
any company through HB 2.
Third, because the United States does not allow any
domestic companies to invest in Iran, only foreign
companies would be subject to divestment. A good list
can be found in the legislative research report, and
you will see that under this legislation, we would
likely divest from companies based in China, Russia,
India, Malaysia, and Thailand.
Fourth, the legislative research report estimates that
about one-tenth of one percent of the state's holdings
would likely be subject to divestment, which was
valued at approximately $79 million as of September
30, 2011. ... There are three fiscal notes for this
bill, including two from the Permanent Fund
Corporation.
MR. GOTTSTEIN said Alaska is "behind the curve on this issue";
the state's inaction works against its own foreign policy
objectives. He quoted the late Martin Luther King, Jr., as
having said, "He who passively accepts evil is as much involved
in it as he who helps to perpetuate it." Mr. Gottstein opined
that Alaska should not passively stand by and accept the Iranian
regime's aggression. The proposed legislation would direct the
state to divest from companies that do business in Iranian oil
and gas to "ensure that our funds do not support our enemies."
9:45:11 AM
CHAIR LYNN posited that the state should not invest a single
penny in Iran. He relayed a story he had read about man who was
being executed in Iran for refusing to renounce his faith.
9:46:13 AM
REPRESENTATIVE KELLER indicated that he had read an article in
The Economist, which said the occurrence of a "strike" was a
matter of "when" not "if." He supported the movement of HB 2 as
timely.
9:46:36 AM
REPRESENTATIVE JOHANSEN noted that in a prior legislative
session there had been a bill to divest from Sudan, and
Worksilla was one of the companies on the list. He said that at
the same time, the state was writing checks from its capital
budget directly to Worksilla, to buy generators for rural
communities. He said this was not investing, but was direct
capital spending, and he asked if there has been any thought
given to "that."
9:48:21 AM
MR. GOTTSTEIN responded that as written, HB 2 would affect only
the Permanent Dividend Corporation and the Department of
Revenue; it would not affect purchases made by the state from
specific companies.
REPRESENTATIVE JOHANSEN said he thinks it is probably just as
egregious to buy products from a company on the list using
capital funds as it is to invest in a company on the list, and
he encouraged Representative Gatto and Senator Wielechowski to
find a way to let legislators know when the money they
appropriate is going to support Iran.
9:49:43 AM
CHAIR LYNN, after ascertaining that there was no one who wished
to testify, closed public testimony.
9:50:02 AM
REPRESENTATIVE JOHANSEN remarked upon the short time spent on a
complicated bill. He said, "Sometimes we mistake activity for
achievement."
9:50:32 AM
REPRESENTATIVE SEATON said social considerations in investing
have been made by Alaska for a while now, the countries in
question changing with time. He said he is happy to see repeal
language in HB 2 that would make it unnecessary for the
legislature to pass new legislation if, for example, Iran was
taken off the list in the future.
9:52:07 AM
CHAIR LYNN said there are social aspects of bill, but the
primary focus of HB 2 is national security.
9:52:46 AM
CHAIR LYNN removed his objection to the motion to adopt the
proposed committee substitute (CS) for HB 2, Version LS0007\M,
Wayne, 2/8/12, as a work draft. There being no further
objection, Version M was before the committee.
9:52:49 AM
REPRESENTATIVE KELLER moved to report CSHB 2, Version LS0007\M,
Wayne, 2/8/12, out of committee with individual recommendations
and the accompanying fiscal notes. There being no objection,
CSHB 2(STA) was reported out of the House State Affairs Standing
Committee.
9:54:04 AM
ADJOURNMENT
There being no further business before the committee, the House
State Affairs Standing Committee meeting was adjourned at 9:54
a.m.