Legislature(1995 - 1996)

01/31/1996 01:42 PM House TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
            HOUSE TRANSPORTATION STANDING COMMITTEE                            
                        January 31, 1996                                       
                           1:42 p.m.                                           
                                                                               
                                                                               
 MEMBERS PRESENT                                                               
                                                                               
 Representative Gary Davis, Chairman                                           
 Representative Beverly Masek, Vice Chair                                      
 Representative Jeanette James                                                 
 Representative Tom Brice                                                      
 Representative Jerry Sanders                                                  
 Representative Bill Williams                                                  
 Representative Don Long                                                       
                                                                               
 MEMBERS ABSENT                                                                
                                                                               
 All members were present                                                      
                                                                               
 COMMITTEE CALENDAR                                                            
                                                                               
 HOUSE BILL NO. 362                                                            
 "An Act extending the motor fuel tax exemption for fuel sold for              
 use in jet propulsion aircraft to fuel used in those aircraft for             
 flights that continue from a foreign country."                                
                                                                               
      - MOVED OUT OF COMMITTEE                                                 
                                                                               
 * HOUSE BILL NO. 352                                                          
 "An Act giving notice of and approving a lease-purchase agreement             
 with the City of Palmer for a fire management facility at the                 
 Palmer Airport."                                                              
                                                                               
      - MOVED OUT OF COMMITTEE                                                 
                                                                               
 (* First public hearing)                                                      
                                                                               
 PREVIOUS ACTION                                                               
                                                                               
 BILL:  HB 362                                                               
 SHORT TITLE: AVIATION FUEL TAX EXEMPTION                                      
 SPONSOR(S): REPRESENTATIVE(S) THERRIAULT                                      
                                                                               
 JRN-DATE     JRN-PG            ACTION                                         
 12/29/95      2360    (H)   PREFILE RELEASED                                  
 01/08/96      2361    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 01/08/96      2361    (H)   TRANSPORTATION, FINANCE                           
 01/24/96              (H)   TRA AT 01:00 PM CAPITOL 17                        
 01/24/96              (H)   MINUTE(TRA)                                       
 01/31/96              (H)   TRA AT 01:00 PM CAPITOL 17                        
                                                                               
 BILL:  HB 352                                                              
 SHORT TITLE: APPROVE PALMER AIRPORT FIRE BLDG.                               
 SPONSOR(S): REPRESENTATIVE(S) OGAN                                            
                                                                               
 JRN-DATE     JRN-PG            ACTION                                         
 05/16/95      2220    (H)   READ THE FIRST TIME - REFERRAL(S)                 
 05/16/95      2220    (H)   TRANSPORTATION, FINANCE                           
 01/31/96              (H)   TRA AT 01:00 PM CAPITOL 17                        
                                                                               
 ACTION NARRATIVE                                                              
                                                                               
 TAPE 96-3, SIDE A                                                             
 Number 000                                                                    
                                                                               
 WITNESS REGISTER                                                              
                                                                               
 M. CLYDE STOLTZFUS, Special Assistant                                         
 Office of the Commissioner                                                    
 Department of Transportation and Public Facilities                            
 3132 Channel Drive                                                            
 Juneau, Alaska  99801-7898                                                    
 Telephone:  (907) 465-3906                                                    
 POSITION STATEMENT:  Testified on HB 362                                      
                                                                               
 BOB BARTHOLOMEW, Deputy Director                                              
 Income and Excise Audit Division                                              
 Department of Revenue                                                         
 P.O. Box 110420                                                               
 Juneau, Alaska  99811-0420                                                    
 Eleventh Floor State Office Building                                          
 Telephone:  (907) 465-2320                                                    
 POSITION STATEMENT:  Testified on HB 362                                      
                                                                               
 JEFF COOK, Vice-President                                                     
 Mapco Alaska Petroleum                                                        
 1180 H and H Lane                                                             
 Fairbanks, Alaska  99705                                                      
 Telephone:  (907) 488-2741                                                    
 POSITION STATEMENT:  Testified on HB 362                                      
                                                                               
 REPRESENTATIVE SCOTT OGAN                                                     
 Alaska State Legislature                                                      
 State Capitol, Room 409                                                       
 Juneau, Alaska  99801                                                         
 Telephone: (907) 465-3878                                                     
 POSITION STATEMENT:  Sponsor of HB 352                                        
                                                                               
 THOMAS H. BOUTIN, State Forester                                              
 Director's Office                                                             
 Division of Forestry                                                          
 Department of Natural Resources                                               
 400 Willoughby Avenue, Third Floor                                            
 Juneau, Alaska  99801-1724                                                    
 Telephone:  (907) 586-3133                                                    
 POSITION STATEMENT:  Supported HB 352                                         
                                                                               
 DEAN BROWN, Deputy State Forester, Management                                 
 Central Office                                                                
 Division of Forestry                                                          
 Department of Natural Resources                                               
 3601 C Street, Suite 1034                                                     
 Anchorage, Alaska  99503-1724                                                 
 Telephone:  (907) 762-2508                                                    
 POSITION STATEMENT:  Supported HB 352                                         
                                                                               
 TOM SMITH, City Manager                                                       
 City of Palmer                                                                
 231 West Evergreen Street                                                     
 Palmer, Alaska  99645                                                         
 Telephone:  (907) 745-3271                                                    
 POSITION STATEMENT:  Supported HB 352                                         
                                                                               
 LARRY TEAGUE, Building Inspector                                              
 City of Palmer                                                                
 231 West Evergreen Street                                                     
 Palmer, Alaska  99645                                                         
 Telephone:  (907) 745-3271                                                    
 POSITION STATEMENT:  Supported HB 352                                         
                                                                               
 The House Transportation Standing Committee was called to order by            
 Chairman Gary Davis at 1:42 p.m.  Members present at the call to              
 order were Representatives G. Davis, Masek, Long, Brice and                   
 Williams.  A quorum was present.  This meeting was teleconferenced            
 to Anchorage and Palmer.                                                      
                                                                               
 CHAIRMAN GARY DAVIS said the agenda was HB 362 and HB 352.                    
 HB 362 AVIATION FUEL TAX EXEMPTION                                        
                                                                               
 CHAIRMAN GARY DAVIS said HB 362 was a carry over from last week.              
 He added that there seems to be agreement on the policy issue, a              
 great deal of concern on the funding issue.  He requested that this           
 committee focus on the policy issue and let the finance committee             
 be concerned about the funding issue.  At the last meeting all                
 parties presented their case including the Department of Revenue              
 and the in-state refineries.                                                  
                                                                               
 Number 304                                                                    
                                                                               
 M. CLYDE STOLTZFUS, Special Assistant, Office of the Commissioner,            
 Department of Transportation and Public Facilities (DOT/PF) was               
 first to testify.  He said DOT/PF has had discussions with the                
 municipality of Anchorage within the last week to share                       
 information.  Another meeting between DOT/PF and Anchorage is                 
 scheduled this afternoon at 3:00 p.m. to deal with issues around              
 Foreign Trade Zone (FTZ).  He said, to reiterate his point from               
 last weeks meeting, he would like to share joint management between           
 the state of Alaska and the municipality of Anchorage of the FTZ              
 within the International Airport.  He said he had information                 
 gathered from Anchorage and the DOT/PF and would share information            
 regarding the development of the FTZ.                                         
                                                                               
 MR. STOLTZFUS said DOT/PF believes the FTZ is a good concept and              
 one of the tools you want to have in your economic development                
 arsenal.  The issue presented in HB 362 is whether, in terms of               
 costs and benefits, the FTZ is being properly utilized.  The DOT/PF           
 is able to quantify what the costs have been, but are not sure what           
 the benefits have been.  Anchorage referenced the FTZ as an                   
 economic development issue in the letters Mr. Stoltzfus presented             
 to the committee.                                                             
                                                                               
 MR. STOLTZFUS said in 1994, the state relinquished a landing tax at           
 rural airports and replaced those revenues with an aviation fuel              
 tax.  The proposed elimination of the aviation fuel tax now raises            
 the problem of how to collect that revenue.  He said he would not             
 know more until after the 3:00 p.m. meeting.                                  
                                                                               
 Number 569                                                                    
                                                                               
 REPRESENTATIVE JERRY SANDERS asked if there were any fuel purchases           
 covered by this currently in Fairbanks.  If this is the case, does            
 the Anchorage FTZ have any affect on those fuel purchases.                    
                                                                               
 Number 602                                                                    
                                                                               
 MR. STOLTZFUS said there are no fuel purchases in Fairbanks that              
 are affected by this situation.  He added that one of the policy              
 issues of a FTZ is that fuel can't leave the premises of the FTZ              
 without losing the power of the FTZ.  If you were going to have               
 tax-free aviation fuel bought in Fairbanks, you would have to have            
 a FTZ corridor.                                                               
                                                                               
 Number 626                                                                    
                                                                               
 REPRESENTATIVE SANDERS asked and received confirmation that there             
 was fuel being purchased in Fairbanks under which this aviation               
 fuel tax was applicable.  He then asked if this was the case, why             
 would you want to give up that tax revenue.                                   
                                                                               
 Number 659                                                                    
                                                                               
 MR. STOLTZFUS said the DOT/PF's position was clear, they do not               
 want to give up that tax.                                                     
                                                                               
 REPRESENTATIVE SANDERS asked if they could limit HB 362 to the FTZ            
 or does it have to be applied statewide.  He also asked, if HB 362            
 was applicable to only Anchorage, would jet fuel consumers purchase           
 all their fuel from Anchorage.                                                
                                                                               
 REPRESENTATIVE TOM BRICE said HB 362 represents a large loss of               
 revenue.  He said a tax can not be levied in the FTZ.  He said by             
 limiting HB 362 to the Anchorage International Airport, a                     
 significant amount of revenue would not be gained from other                  
 airports.                                                                     
                                                                               
 Number 692                                                                    
                                                                               
 MR. STOLTZFUS said Fairbanks represents between 5 percent and 10              
 percent market for AvJet sold, so it is a small amount of revenue.            
                                                                               
 Number 797                                                                    
                                                                               
 CHAIRMAN GARY DAVIS said there is construction of a fuel tank                 
 facility at the Anchorage airport which is being done to replace an           
 outdated storage facility.                                                    
                                                                               
 Number 850                                                                    
                                                                               
 MR. STOLTZFUS confirmed this and added that the storage facility is           
 not currently part of the FTZ.  In response to CHAIRMAN GARY DAVIS            
 question, he said the state would like to have authority in the               
 FTZ.                                                                          
                                                                               
 Number 888                                                                    
                                                                               
 BOB BARTHOLOMEW, Deputy Director, Income and Excise Audit Division,           
 Department of Revenue (DOR) was next to testify.  He said DOR did             
 another exchange of numbers with representatives of the refineries.           
 He said he did not wish to go into the details because the                    
 agreement seemed to be that there should be disagreement.  The DOR            
 is continuing to look at it and are comfortable in the position               
 that it will not be economically sound to import fuel and because             
 of this large importations will not happen.                                   
                                                                               
 Number 963                                                                    
                                                                               
 CHAIRMAN GARY DAVIS asked if the position of the DOR was also                 
 derived from assurances by the consortium of aviation fuel                    
 purchasers.                                                                   
                                                                               
 Number 1033                                                                   
                                                                               
 MR. BARTHOLOMEW said the position was derived by looking at how the           
 aviation fuel and petroleum industry work.  The consortium is going           
 to buy the most economic product.  Alaska's refineries can not meet           
 the aviation fuel needed in the state of Alaska, based on the last            
 five year average, so fuel will need to be imported despite                   
 expansions to capacity to refine and expansions for the usage.  The           
 commissioner communicated with the experts in the petroleum issues            
 from other states and has verified that the numbers he used were              
 reasonable.  They said the numbers were not that far off how the              
 world market works and what people will be paying for jet fuel.               
                                                                               
 Number 1057                                                                   
                                                                               
 CHAIRMAN GARY DAVIS referred to the letters from the major air                
 carriers and suggested that they might not want to go to outside              
 sources, but that they might depending on prices of jet fuel.  He             
 then said according to the numbers presented last week by DOR, it             
 appeared that the in-state refineries could remain competitive.               
                                                                               
 Number 1109                                                                   
                                                                               
 REPRESENTATIVE JEANNETTE JAMES referred to the price differentials            
 in the refinery costs of in-state refineries as compared to                   
 imported fuel refinery costs.  She asked if DOR was still                     
 maintaining that they were the same.                                          
                                                                               
 Number 1262                                                                   
                                                                               
 MR. BARTHOLOMEW said DOR did not ask the petroleum experts to                 
 verify the individual components of what it costs to refine in                
 state rather than out of state.  In these discussions, one of the             
 factors that was verified was that the spot market price is a solid           
 price on which to base numbers.  The spot price does move up and              
 down, but it is what the market revolves around.   The cost of                
 transportation of imported fuel raises the price of the fuel to a             
 higher cost than what can be produced by the in-state refineries.             
                                                                               
 Number 1320                                                                   
                                                                               
 REPRESENTATIVE JAMES wished for clarification that the position DOR           
 was offering was that in-state refineries could remain competitive            
 with the fuel tax.                                                            
                                                                               
 Number 1381                                                                   
                                                                               
 MR. BARTHOLOMEW said that this was the position.                              
                                                                               
 Number 1407                                                                   
                                                                               
 REPRESENTATIVE JAMES said there would be no harm to the in-state              
 producers if you were to pass HB 362.                                         
                                                                               
 MR. BARTHOLOMEW reiterated DOR's position and said that removing              
 the aviation fuel tax would be additionally helpful.                          
                                                                               
 REPRESENTATIVE JAMES said that is where she agreed to disagree.               
                                                                               
 Number 1432                                                                   
 JEFF COOK, Vice-President, Mapco Alaska Petroleum, was next to                
 testify.  He said that the jet fuel industry is competitive and               
 contracts would be lost as a result of tenths of a penny price                
 differentials.  He said Mapco was not able to give detailed costs             
 in a public forum in front of competitors.  He said Mapco, Tesoro,            
 and PetroStar are in agreement that the FTZ is an unfair situation            
 that they did not create.  He said the aviation fuel tax is paid by           
 the buyers of the jet fuel not the refineries.  Mapco would, of               
 course, have to absorb the cost of the tax if they wanted their               
 fuel to remain competitive, but stated on an equity issue, Mapco              
 should not have to absorb that tax.  He mentioned the benefits that           
 Mapco provides to the state, such as the purchase of North Slope              
 fuel and employment.  He cited high safety standards in the in-               
 state refineries as well as the wages being paid which limits its             
 competitive advantage.                                                        
                                                                               
                                                                               
 MR. COOK said that buyers have already chosen to purchase imported            
 fuel.  The buyers have stated their position in the letters from              
 FedEx and NorthWest Airlines.  He cited the declines in services,             
 that have occurred at the Anchorage airport which have been lost to           
 Seattle, as an example of how competitive the market is.  He said             
 he had a letter from Steve Lewis of PetroStar in which he                     
 reiterates his testimony from last week.                                      
                                                                               
 Number 1667                                                                   
                                                                               
 MR. COOK said in regards to the Fairbanks issue, eliminating the              
 jet fuel tax in the FTZ would reroute airline traffic because jet             
 fuel consumers will look for the 3.2 cents savings.  He encouraged            
 the support of HB 362 and concluded that this issue did not have              
 the luxury of waiting around to see what will happen.  Changing the           
 status of the FTZ will take some time.  The tax revenues lost have            
 already been lost because it is clear that airline fuel buyers will           
 purchase the cheapest fuel which will be imported fuel.                       
                                                                               
 Number 1735                                                                   
                                                                               
 REPRESENTATIVE JAMES received confirmation that some imported fuel            
 had been purchased to meet demand.  Prior to the tankers that came            
 in last year, she asked where that imported fuel had come from.               
                                                                               
 Number 1765                                                                   
                                                                               
 MR. COOK said it had come from BP, the ARCO Cherry Point refinery,            
 and other west coast refineries.  In most cases, it is jet fuel               
 derived from North Slope crude.                                               
                                                                               
 REPRESENTATIVE JAMES asked if that fuel was subject to tax.                   
                                                                               
 MR. COOK said that fuel, because it was domestic fuel, was taxable.           
                                                                               
 Number 1780                                                                   
                                                                               
 REPRESENTATIVE JAMES expressed concern over possible lost railroad            
 revenue.                                                                      
                                                                               
 Number 1802                                                                   
                                                                               
 CHAIRMAN GARY DAVIS said this was a difficult situation in lieu of            
 the current revenue situation.                                                
                                                                               
 Number 1822                                                                   
                                                                               
 REPRESENTATIVE BRICE made a motion to move HB 362 with the                    
 accompanying fiscal note.  Hearing no objections, HB 362 was moved            
 out of the House Standing Committee on Transportation.                        
                                                                               
 CHAIRMAN GARY DAVIS said, despite the decision, the committee is              
 sensitive to the issue of lost revenues and the position of the               
 DOR.                                                                          
 HB 352 APPROVE PALMER AIRPORT FIRE BLDG.                                  
                                                                               
 Number 1911                                                                   
                                                                               
 REPRESENTATIVE SCOTT OGAN, sponsor of HB 352, said HB 352 is a                
 consolidation of the Division of Forestry's (DOF) fire fighting               
 facilities.  HB 352 authorizes the state of Alaska to enter into a            
 lease-purchase agreement with the city of Palmer for a fire                   
 management facility at the Palmer airport.  HB 352 cuts costs and             
 increases efficiency in wild land fire fighting.  Currently there             
 are four facilities in Anchorage, Eagle River, Big Lake and Palmer.           
                                                                               
 REPRESENTATIVE OGAN referred to a map of south central Alaska, he             
 said the Anchorage facility houses the management.  He said most of           
 the materials, pumps, hoses, hand tools and fire fighting                     
 implements are stored at the Eagle River location, Big Lake is                
 where support services are located and Palmer rents out hangar                
 space at the airport for dispatching and running their air                    
 operations.                                                                   
                                                                               
 Number 2012                                                                   
                                                                               
 REPRESENTATIVE OGAN referred to the Governor's budget summary for             
 fiscal year 1997 mentioned the consolidation of DOF and estimated             
 an $8 million savings over the 20 year project life.  The DOF                 
 proposed a lease finance approach.  He mentioned the city of                  
 Palmer's track record and referred specifically to the courthouse             
 which was built under budget and ahead of schedule.                           
                                                                               
 REPRESENTATIVE OGAN said Palmer is a good location because the                
 Palmer airport site has undeveloped land, has  a paved runway of              
 6,000 feet in length which can handle the heavy aircraft used to              
 transport fire retardant chemicals.  The location is centrally                
 located in the wildland fire protection area and the DOF is                   
 currently operating out of this location.  Community services and             
 commercial support options are available.  Palmer is supportive of            
 HB 352 and has passed a resolution to that effect.  He concluded              
 that HB 352 will save the state money and allow for better public             
 protection capabilities.                                                      
                                                                               
 Number 2087                                                                   
                                                                               
 THOMAS H. BOUTIN, State Forester, Director's Office, Division of              
 Forestry, Department of Natural Resources was next to testify.  He            
 said DNR supports HB 352.  He said the DOF proposed the                       
 consolidation because DOF believes that it is cost effective.  He             
 mentioned the costs of having four facilities and the logistical              
 problems of being spread out.  He said interest rates have dropped            
 dramatically and there would be a net present savings of a little             
 over $2 million.  He referred to Representative Ogan's testimony              
 about the courthouse.                                                         
                                                                               
 Number 2148                                                                   
                                                                               
 DEAN BROWN, Deputy State Forester, Management, Central Office,                
 Division of Forestry, Department of Natural Resources was next to             
 testify.  She stood by the map and discussed the fire situation               
 from last year.  She said last year ground fires had occurred in              
 alder trees, which was the first time DOF had seen that happen.               
 Twenty years ago, she said, having four facilities made sense.                
 Presently the office in Big Lake houses the initial attack.  It has           
 fire fighters ready to go with engines.  However, in 1993 the                 
 population base changed so that DOF could no longer cover this                
 initial attack from Big Lake.  At that time, the helicopter attack            
 operation and one of the initial attack crews moved to Palmer.                
 This crew is housed in a trailer with no sewer or water facilities.           
                                                                               
                                                                               
 Number 2230                                                                   
                                                                               
 MS. BROWN said HB 352 is driven by the need to consolidate the fire           
 fighting resources and also by the services DOF provides to the               
 public.  These services include woodland wood cutting permits, fire           
 permits, and general forestry information.  The DOF location at Big           
 Lake, that handles these public services, is eight miles on an                
 unpaved road and away from the population areas of that region.               
 She said fire needs are served by DOF in a region stretching from             
 the Canadian border, up through McGrath, all the way down to the              
 south and down the Aleutian Chain.  She pointed to the map and                
 referred to small warehouse locations which are designed to handle            
 the initial fire attacks.  She said DOF has fire retardant                    
 airplanes out of McGrath and Palmer which cover the whole region.             
 If the fire situation needs more equipment and personnel then the             
 warehouse can provide, the request is processed through the                   
 Anchorage location.  A total of 73 crews can be called up for                 
 support.  Anchorage gets this equipment and personnel through the             
 Eagle River location.                                                         
                                                                               
 Number 2331                                                                   
                                                                               
 MS. BROWN said a few years ago they came up with a plan to                    
 consolidate their facilities into one location.  This location                
 would house the dispatch, logistics, public services for any                  
 permitting, as well as airport and warehouse services.  This                  
 consolidation will also reduce the amount of time that is needed to           
 organize equipment and crews which might reduce the size of the               
 fires if they can be extinguished sooner.  She added that smaller             
 fires are also safer to put out.                                              
                                                                               
 Number 2433                                                                   
                                                                               
 MS. BROWN discussed the future for the closed facilities.  The                
 state owns the facility at Big Lake and there is current interest             
 by other state divisions for that property.  The Eagle River                  
 warehouse is portable and can be moved.  This warehouse is situated           
 on state land and there is interest by the Division of Geological             
 and Geophysical Surveys for this land.  The Anchorage space will be           
 vacated at $2.15 a square foot savings.                                       
                                                                               
 Number 2454                                                                   
                                                                               
 REPRESENTATIVE BRICE asked for information on the size of the                 
 Anchorage office.                                                             
                                                                               
 Number 2464                                                                   
                                                                               
 MS. BROWN said she thought is was around 1200 square feet.  Later             
 in her testimony it was corrected, the correct amount of the                  
 Anchorage office is 4,000 square feet.  She said in Palmer, the               
 lease was recently lost for the trailer which houses the initial              
 attack forces.  A space is rented above an air service for the                
 logistics, including radio dispatching for both the trucks, crews             
 and aircraft.  That facility would be vacated under HB 352.                   
                                                                               
 REPRESENTATIVE BRICE asked if this proposed facility was being                
 developed under special design or if it would be just a hangar.               
                                                                               
 MS. BROWN said this facility would essentially handle the aircraft            
 hangar, the shop where pumps and equipment are maintained, the                
 warehouse, and then the administrative offices.                               
                                                                               
 REPRESENTATIVE BRICE stated that it appeared there would be no                
 special codes or construction needs for the proposed facicility.              
 This statement was confirmed by Ms. Brown.  He asked who might be             
 contracting for the work.                                                     
 Number 2482                                                                   
                                                                               
 MR. BOUTIN said the Palmer courthouse was competitively bid.                  
                                                                               
 Number 2480                                                                   
                                                                               
 CHAIRMAN GARY DAVIS said representatives from the city of Palmer              
 were on teleconference who could answer that question.                        
                                                                               
 TAPE 96-3, SIDE B                                                             
 Number 000                                                                    
                                                                               
 CHAIRMAN GARY DAVIS asked if some space in the Anchorage office               
 would be retained.                                                            
                                                                               
 MR. BOUTIN said that some federally funded programs, urban and                
 community stewardship, a federally funded entomologist, et cetera             
 would remain in the Frontier Building, but the fire fighting                  
 logistics would be moved.  Other people from the various locations            
 would also be placed in the new facility.                                     
                                                                               
 Number 030                                                                    
                                                                               
 CHAIRMAN GARY DAVIS repeated his question whether some space would            
 be retained.                                                                  
                                                                               
 MR. BOUTIN said yes, some space would be kept in the Frontier                 
 Building.                                                                     
                                                                               
 CHAIRMAN GARY DAVIS asked if there have been discussions regarding            
 a lease billed situation.                                                     
                                                                               
 Number 040                                                                    
                                                                               
 MR. BOUTIN said there has been on going discussion on this issue.             
 The city of Palmer is aware of DOF's needs especially in regards to           
 specific needs such as hangar space, shop space, et cetera, as well           
 as compliance with the Americans with Disabilities Act.                       
                                                                               
 Number 049                                                                    
                                                                               
 CHAIRMAN GARY DAVIS received clarification that there is no water             
 or sewer services at the initial attack location in Palmer, but               
 Palmer has full facilities including natural gas at the airport               
 where the new building will be located.                                       
                                                                               
 Number 070                                                                    
                                                                               
                                                                               
 TOM SMITH, City Manager, City of Palmer testified via                         
 teleconference from Palmer.  He pointed out the city of Palmer                
 resolution which supports the proposed project.  Palmer will work             
 with the DOF to obtain authorization from the state for the                   
 certificate of participation to help finance such a project.                  
                                                                               
 Number 120                                                                    
                                                                               
 CHAIRMAN GARY DAVIS asked the proposed timing for the completion of           
 the facility.                                                                 
                                                                               
 Number 130                                                                    
                                                                               
 MS. BROWN said if HB 352 were approved this session, the next step            
 would be for the city of Palmer to issue certificates of                      
 participation for the design and construction of the facility.  Two           
 years from this spring would be the date it would be ready for                
 occupancy.                                                                    
                                                                               
 Number 150                                                                    
                                                                               
 CHAIRMAN GARY DAVIS asked if the fiscal note showing $9 million               
 savings over the next 20 years was based on expected growth within            
 the division and whether it allowed for expansion in the DOF.                 
                                                                               
 Number 167                                                                    
                                                                               
 MS. BROWN said that despite increased wild land urban interface and           
 increased population within these areas, situations would have to             
 be handled with emergency fire fighters because of the budget                 
 outlook.                                                                      
                                                                               
 Number 179                                                                    
                                                                               
 REPRESENTATIVE BRICE asked if there had been any preliminary                  
 discussions with contractors.                                                 
                                                                               
 Number 191                                                                    
                                                                               
 MR. SMITH said they haven't as they will go through a competitive             
 bidding process.                                                              
                                                                               
 Number 206                                                                    
                                                                               
 LARRY TEAGUE, Building Inspector, City of Palmer testified via                
 teleconference from Palmer.  He explained the courthouse project.             
 He said initially the court system approved the project.  The city            
 of Palmer then put the project out to bid and oversaw the actual              
 project construction and documentation agreements.  Then the city             
 turned over the facility to the state for occupancy.  The contract            
 was won by a construction company that is no longer in business.              
 The facility proposed under HB 352 would be put out for competitive           
 bid by state rules.                                                           
                                                                               
 Number 235                                                                    
 REPRESENTATIVE DON LONG asked when the new facility is constructed,           
 what will happen to the old facilities.                                       
                                                                               
 Number 250                                                                    
                                                                               
 MS. BROWN said that in Anchorage and Palmer the lease will not be             
 renewed.  In Eagle River and Big Lake, which are on state land                
 other state agencies have expressed interest in those land areas.             
                                                                               
 Number 309                                                                    
                                                                               
 CHAIRMAN GARY DAVIS said it appeared that the amount to lease the             
 new facilities would be less expensive then leasing the four                  
 facilities.                                                                   
                                                                               
 Number 339                                                                    
                                                                               
 REPRESENTATIVE OGAN made the comment that with today's budget                 
 environment we are looking for more efficient cost-effective plans            
 and HB 352 does this.  He made a note that there are approximately            
 100 buildings that the state leases out and cited specific                    
 examples.                                                                     
                                                                               
 Number 390                                                                    
                                                                               
 CHAIRMAN GARY DAVIS asked what the proposed footage of the new                
 lease facility.                                                               
                                                                               
 Number 400                                                                    
                                                                               
 MS. BROWN said it was 80,000 square feet.                                     
                                                                               
 Number 410                                                                    
                                                                               
 REPRESENTATIVE BRICE proposed that in HB 352, on line seven after             
 the period in Palmer airport, a new sentence be started saying,               
 "the city of Palmer shall enter into a project labor agreement for            
 it's construction".  He said this is to ensure that, on these types           
 of state projects, employment opportunities should be geared                  
 towards Alaskans.                                                             
                                                                               
 REPRESENTATIVE OGAN deferred to the city of Palmer to comment on              
 this proposed amendment.                                                      
                                                                               
 Number 520                                                                    
                                                                               
 MR. SMITH said the city of Palmer has a code which gives a 5                  
 percent preference to state and local businesses.  He said the                
 Davis-Bacon regulation would also be in effect.                               
                                                                               
 Number 542                                                                    
                                                                               
 REPRESENTATIVE LONG said he objected to the proposed amendment.  He           
 said it should be under the discretion of the city of Palmer as               
 they are investing money into the project.                                    
                                                                               
 Number 562                                                                    
                                                                               
 REPRESENTATIVE BRICE said the state of Alaska is being asked to               
 authorize HB 352 which means that the state is ultimately                     
 responsible for this project.  He said there are already                      
 stipulations in HB 352 from the state to the city of Palmer.                  
                                                                               
 Number 616                                                                    
                                                                               
 REPRESENTATIVE JAMES objected to the amendment.  She then stated              
 concerns over the purchasing of buildings due to the bad track                
 record in Alaska of the state maintaining public facilities.  She             
 said leasing a building provides for building maintenance.                    
                                                                               
 Number 660                                                                    
                                                                               
 CHAIRMAN GARY DAVIS said he agreed with both Representative Long              
 and Representative James in that it is important to give the city             
 of Palmer flexibility in their procedures to construct this                   
 facility.  He supported a lease-purchase agreement and felt the               
 proposed amendment would restrict that opportunity.                           
                                                                               
 Number 696                                                                    
                                                                               
 REPRESENTATIVE OGAN mentioned the 5 percent bidder option in Palmer           
 which gives the edge to the local and state contractors.  He added            
 that the cost of maintenance is figured into the 20 year lease-               
 purchase option for those 20 years.                                           
                                                                               
 Number 747                                                                    
                                                                               
 CHAIRMAN GARY DAVIS said he shared Representative James concern               
 over the lack of maintenance and expressed hope that within 20                
 years this problem would be addressed.                                        
                                                                               
 Number 773                                                                    
                                                                               
 REPRESENTATIVE BRICE proposed the adoption of Amendment 1 to HB
 352.  Representative Brice voted yea.  Representatives Davis,                 
 Masek, Williams, James, and Long voted nay.  The motion to adopt              
 Amendment 1 to HB 352 failed.                                                 
                                                                               
 Number 825                                                                    
                                                                               
 REPRESENTATIVE MASEK made a motion to pass HB 352 out of committee            
 with zero fiscal note and individual recommendations.  Hearing no             
 objections HB 352 was moved out of the House Standing Committee on            
 Transportation.                                                               
 Number 862                                                                    
                                                                               
 ADJOURNMENT                                                                   
                                                                               
 As there was no further business to come before the House                     
 Transportation Standing Committee, Chairman Gary Davis adjourned              
 the meeting at 2:48 p.m.                                                      
                                                                               

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