Legislature(1999 - 2000)
03/04/1999 01:20 PM House TRA
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE TRANSPORTATION STANDING COMMITTEE
March 4, 1999
1:20 p.m.
MEMBERS PRESENT
Representative Beverly Masek, Chair
Representative Andrew Halcro, Vice Chair
Representative Bill Hudson
Representative John Cowdery
Representative Jerry Sanders
Representative Albert Kookesh
MEMBERS ABSENT
Representative Allen Kemplen
COMMITTEE CALENDAR
* HOUSE BILL NO. 84
"An Act relating to international airports revenue bonds; and
providing for an effective date."
MOVED HB 84 OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 84
SHORT TITLE: INTERNATIONAL AIRPORTS REVENUE BONDS
SPONSOR(S): RULES BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
2/10/99 184 (H) READ THE FIRST TIME - REFERRAL(S)
2/10/99 185 (H) TRANSPORTATION, FINANCE
2/10/99 185 (H) FISCAL NOTE (REV)
2/10/99 185 (H) GOVERNOR'S TRANSMITTAL LETTER
3/04/99 (H) TRA AT 1:00 PM CAPITOL 17
WITNESS REGISTER
KURT PARKAN, Deputy Commissioner
Department of Transportation and Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
Telephone: (907) 465-6977
POSITION STATEMENT: Testified on purpose of HB 84 and answered
questions.
JOSEPH L. PERKINS, Commissioner
Department of Transportation and Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
Telephone: (907) 465-3901
POSITION STATEMENT: Answered questions on HB 84.
DEVEN MITCHELL, Acting Debt Manager
Treasury Division
Department of Revenue
P.O. Box 110405
Juneau, Alaska 99811-0405
Telephone: (907) 465-3750
POSITION STATEMENT: Testified on HB 84; discussed the process of
securing and selling the bonds authorized the
previous year.
CLIFFORD T. ARGUE, Staff Vice President
Properties and Facilities
Alaska Airlines
P.O. Box 68900
Seattle, Washington 98168-0900
Telephone: (206) 433-3184
POSITION STATEMENT: Testified in support of HB 84.
ACTION NARRATIVE
TAPE 99-7, SIDE A
Number 0001
CHAIR BEVERLY MASEK called the House Transportation Standing
Committee meeting to order at 1:20 p.m. Members present at the
call to order were Representatives Masek, Halcro, Sanders and
Kookesh. Representatives Hudson and Cowdery arrived at 1:21 p.m.
and 1:22 p.m., respectively.
HB 84 - INTERNATIONAL AIRPORTS REVENUE BONDS
Number 0051
CHAIR MASEK announced the committee would hear House Bill No. 84,
"An Act relating to international airports revenue bonds; and
providing for an effective date."
Number 0093
KURT PARKAN, Deputy Commissioner, Department of Transportation and
Public Facilities (DOT/PF), came forward to explain the purpose of
the bill. He reminded members that the original bond authorization
bill was approved by the legislature the previous year by a vote of
58-2; he said HB 84 is the final piece of authorization required
for the second phase of bonding for the funding requirements for
the Anchorage International Airport (AIA) Terminal Redevelopment
Project. He then called attention to three handouts: a full-color
article from a trade magazine, "Passenger Terminal World," which
discusses the terminal project; a page titled, "Uses of Funds"; and
another page titled, "Summary Project Schedule."
MR. PARKAN informed members that following his brief overview,
Deven Mitchell from the Department of Revenue would discuss the
process they had gone through in securing and selling the bonds
authorized the previous year. Following that, David Eberle
[Director, Construction and Operations, Central Region, DOT/PF],
who is program manager for Gateway Alaska in charge of the terminal
development project, would briefly review the "Summary Project
Schedule." Mr. Parkan offered to provide a detailed briefing on
the terminal project at a later date.
Number 0285
MR. PARKAN testified as follows:
As you know, last year we presented to the legislature a $230
million package for redevelopment of the Anchorage
International Airport terminal. That bill was reduced by the
legislature by approximately $25 million, in anticipation of
the DOT successfully securing additional federal dollars to
... plug that hole. We'd applied for the federal dollars
early on, but weren't as optimistic in our ultimate success,
and so we included the full $230 [million] in our proposal.
Well, we were successful in getting the letter of intent
[LOI], the federal dollars - discretionary dollars - from the
FAA [Federal Aviation Administration]. We had applied for
about $67 million. ... I think our final approval was about
$48 million, of which $25 million is for projects related to
the terminal development project. The rest of the LOI funds
are for a couple of other projects, one being the resurfacing
of "6-left, 24-right" runway, the second phase, the first
phase of which ... has just been completed.
So, we did go after the federal dollars; we were successful in
getting the federal dollars. The problem that we have
experienced, though, is that the LOI - the letter of intent,
the discretionary dollars - will come to us over a period of
ten years. We need - to complete this project on time, and to
satisfy our cash flow requirements - to get that money now.
The purpose of this bill is to give us the authorization for
the additional $25 million, to essentially borrow so that we
can complete the project within the four-year time frame that
the project should be completed.
The money, the bonds, will not increase the cost of the
project. The funds to repay the bonds will come out of the --
essentially, the funds that we will be getting from the LOI,
from the FAA. It's a pretty simple bill, actually: No new
money, no cost to the users, essentially. The federal
government is going to be repaying the bonds, essentially.
And we absolutely need to get these bonds sold this year in
order to keep on with the schedule.
Number 0497
MR. PARKAN referred to the handout titled, "Uses of Funds." He
emphasized that $230 million has always been the cost of the
project, and is still the cost today. The first of the 1999 Series
Bonds was sold in February for approximately $179 million. The
Phase II bonds, which are the subject of HB 84, would be for the
$24.5 million. In the FHWA [Federal Highway Administration]
column, the $26,300,000 is earmarked from federal highway dollars
for the roadway that approaches the terminal; that has always been
part of the project, as well. Mr. Parkan concluded, "We told the
airlines that we would attempt to get additional federal dollars
when we brought this project to them for their approval, and we
have accomplished that, as well."
Number 0574
REPRESENTATIVE JOHN COWDERY said as he recalled, when the $179
million was proposed the previous year, the project could be built
for that. Although legislators had known the federal funds would
be available, he believes they also knew that it wouldn't be in the
form of cash. He asked whether Mr. Parkan believed they would get
the extra money from the federal government as cash or in some
other form.
MR. PARKAN replied, "At the time when we were discussing this last
year, the LOI application had been prepared. ... Basically, the LOI
is a reimbursement. But it would be a certain amount of money to
... plug that hole that was taken out of the original $230
[million]. ... The scale of the project was never reduced. The
project has always been a $230 million project. A portion of it
would be funded out of the bonds, and a portion of it was hoped to
be funded out of the LOI. The problem with the LOI is that we
don't get it in one lump sum. If we'd gotten it in one lump sum,
it'd be much easier to deal with our cash flow problem. But since
... it's spread out over time, we do need to get that bonding
authority."
REPRESENTATIVE COWDERY said he would ask his staff to review that,
but he recalled that the airport was going to be built with the
$179 million. He requested that the current committee hold an
oversight hearing the next week, before passing HB 84 out, to see
how the project is going, what the expenditures have been, and what
design changes there have been.
CHAIR MASEK indicated she and the department representatives had
already discussed having such an overview.
Number 0860
MR. PARKAN said last year's legislation had required the DOT/PF to
provide the legislature with an expenditure report by January 1; he
believes they had submitted a copy to every member. In addition,
the legislature had assigned a staff member to sit in on the
meetings, to do a review and oversight of the process for the
project. Bob Walsh in Anchorage, who has been attending those
meetings regularly, would be available for the legislature's
assistance, as well. However, Mr. Parkan himself offered to
provide an updated report on the project.
MR. PARKAN restated that the project has always been characterized
by the DOT/PF as a $230 million project. He explained, "We've
never really said that it could be done for $179 million. If we
only had $179 million, we would certainly have to cut something out
of the original plan of finance." He said the airlines have
approved a full-scale project. This is merely giving the DOT/PF
the opportunity to take advantage of the federal dollars that they
sought and got the discretionary funds for.
Number 0938
CHAIR MASEK and REPRESENTATIVE COWDERY both said they had seen
copies of the report; Chair Masek offered to have it at next week's
hearing, in order to discuss any questions that might arise.
MR. PARKAN agreed to that. He pointed out that in a project of
this size, little things may change as they go from a conceptual
design to the actual project design. He offered to share with the
committee the latest developments in the schedule. He noted that
they are getting ready to tear down Concourse "C" this spring and
summer, for example, and are moving ahead fairly aggressively to
get this down. They want to minimize impact to the traveling
public.
MR. PARKAN explained that an LOI is an application to the federal
government for discretionary dollars. He stated, "The FAA looks at
discretionary funds, and they sort of prioritize them. They won't
give high ranking in a priority for a building. For the terminal
building, for example, we wouldn't be able to really get funding -
an LOI funding - for a terminal project; probably we'd be the only
ones in the country that were ever successful to do that. They
look at the asphalt and the aprons and the airside projects as
higher priorities. So, we went after the airside portions of the
terminal development project for our request, for the LOI. They
look at that and say, ... 'It's our intent to give you X amount of
dollars over the course of ten years.' And subject to the
availability of congressional legislative funding, they will commit
to giving us about $3-$3.5 million a year over the next ten years.
So, it's basically a promise to us, so that we can count on that
funding coming in for the purposes of establishing our CIP [capital
improvement project] program.
Number 1065
CHAIR MASEK asked what the time frame is to get this LOI.
MR. PARKAN replied, "The LOI, we will start getting our first
payment on that in March. As you may know, ... the authorization
for the AIP [airport improvement program] runs out March 31 of this
year. The FAA has committed to us that they will award that money
to us - that first payment this year - by March 31. So, we're
going to start getting it this year, and it runs out to the year
2008."
REPRESENTATIVE COWDERY asked when the money will be paid out for
the different expenditures.
Number 1133
JOSEPH L. PERKINS, Commissioner, Department of Transportation and
Public Facilities, came forward and answered as follows:
You have to have sufficient money on hand for the contract
amount. It has nothing to do with when you pay people. If I
award you a $10 million contract, and I pay it over two years,
I have to have $10 million sitting in the bank the day we sign
the contract. This is the problem in this case. When we move
on with this, if we don't have this $25 million to back us up,
then we will not award these contracts.
REPRESENTATIVE COWDERY asked whether they would award all the
contracts for 1999 right now for the whole project.
COMMISSIONER PERKINS replied:
We will be awarding a lot of them. However, if there is any
question whatsoever about this $25 million not coming, then we
are going to award no contracts in '99, because we're going to
have to reduce the scope of this project, which means that
we're not going to start off and do demolition and all of
that. We'll have to fall back because our entire design, our
entire contract development, has been based ... on a project
for $230 million.
And the $179 [million]: we never agreed that we were going to
bring this project in for a bonded amount of $179 [million].
... We asked for $203 or $204 [million], and we fully expected
to get that other $25 million. In fact, in some of the
discussions was that, 'Hey, we'll take the $25 million out,
and if you can't get it from the feds, come back next year and
we'll figure out another way to get it.' Well, we got it from
the feds, so we're not coming back and asking for new money.
All we're asking for is to let us bond with the equity against
the bonds, the money that we got from the feds. That's really
all we're asking. But to not approve this will stop this
project for a year, completely, while we repackage, because
we'll have to delete something.
It gets fairly simple if you'll look at this sheet ["Uses of
Funds"]. You're not going to take the FHWA money out. What
you're going to probably do is you're not going to do the
existing terminal renovation.
Number 1259
REPRESENTATIVE COWDERY said he has information that the scope of
the project has changed, and he provided examples including the
baggage facility and additional office space. He asked for
confirmation.
COMMISSIONER PERKINS responded:
Representative Cowdery, what you do on a project like this,
when you're in the planning stage, you've got all of these
general-scope ideas; then you fill the scope in. And this is
just like if I was to ask all the [legislators] how big you
want me to build your office. It's going to be all big. ...
When we opened this up, to go into design, then you had
everybody wanting everything, from every airline and every
user there.
To give you an example, we did not have a baggage system in
our original proposal. We have a proposal from the airlines.
They want to put an $11 million baggage system in; we're not
going to do that. We had a proposal, and we had looked at
connecting the two terminals. Well, the connector is fine, as
long as you walk on it. Now, ... we have people who want a
moving walkway; so, instead of going to a $2 or $3 million
connector, a moving walkway is probably going to get us up
around $15 million. So, we have made decisions in that regard
... on the project.
Number 1329
REPRESENTATIVE COWDERY asked whether they were still going to have
the connection, without the moving walkway.
COMMISSIONER PERKINS replied:
We may or we may not, because as these numbers change, and as
we finalize the various things, we are constantly looking at
... our end product. And what we do, and what you always do
on a major project like this, is you manage contingency; and
that is exactly what we're managing right now, is the
contingency that we have, as we distribute it out to those
items ... that we would like to have. You will not get, in
this project, everything that everybody wants; it'd cost
another $100 million. And this is true no matter what you
build, even in your own house. So, ... there's things that
we're going to scope back, but I don't know exactly what
they'll be as we're moving along.
But one thing that you've always got to look at is if you are
going to do something and forever keep an addition being built
on it, by putting an extra foundation wall in, we should do
that, so you can have the potential of expanding out. We're
looking at those type[s] of things. And I attended a meeting
about a month ago where we went through all of those various
options that we have in the project. I'm pretty happy. I
think they're doing a darn good job with it, and to tell you
whether this walkway will go or not is going to depend a
little bit on how much money we have left in this contingency
as we go along. I would hope that we get something in; but we
want to put something in that would preserve the ability to
put a moving belt in, because I think ultimately you're going
to need that.
Number 1415
REPRESENTATIVE COWDERY stated his understanding that there was a
Senate hearing the previous week about passenger facility charges
(PFCs) that could add up to $5 million per year. He said this
project will go for four or five years from the time it is begun,
and it seems that PFCs could solve some of the funding problems.
He asked whether the DOT/PF has drafted any application for the
PFCs.
MR. PARKAN replied:
We have started a process ... to draft up the PFC application.
As we discussed in the recent PFC hearing that the committee
had, we will go forward with an application, once we've
satisfied the exemption requirements that we feel we need to
have before we can get the PFC approved. ... We are in the
process of drafting up our exemption requests. We'll be
putting together our project lists; we have a meeting next
week to discuss this internally with our consultant who is
helping us with this project. That application, if the
exemption language is approved administratively or through the
legislative fix which we think is going to be necessary, could
be ... as soon as this spring or as late as the fall. We
won't go forward with an application until we have the
exemption language, however.
MR. PARKAN said they are getting the wheels turning. They will get
it up to the point of whether or not the exemptions are included,
to basically exempt rural communities not connected by a road
system, and then they will go forward with that. He emphasized
that LOIs are not used for terminal projects; in contrast, PFCs are
almost always used for building projects, and not used as much for
the airside projects. If they used PFCs instead of the LOI, they
would potentially lose the LOI.
REPRESENTATIVE COWDERY asked that someone from the DOT/PF come by
his office in order to save the committee's time, to discuss some
of these matters before the oversight next week.
MR. PARKAN agreed to work that out.
Number 1609
REPRESENTATIVE BILL HUDSON stated his understanding that HB 84
increases the bond authorization from $280 million to $305 million,
which is the $25 million mentioned. The additional bonds for $25
million would be underwritten by the proceeds or receipts over a
ten-year period, through the LOI from the federal government. It
would not cost anything in general fund monies. Furthermore, the
previous year the legislature had dealt with the need to expand the
airport terminal and had authorized the sale of bonds to cover
that, which would in turn be paid for by the users of the airport.
MR. PARKAN affirmed that.
REPRESENTATIVE HUDSON asked what the time line is for selling the
bonds. He asked whether any had been advertised or sold yet.
MR. PARKAN said Deven Mitchell would address that in more detail,
but yes, they had sold the initial bonds for which they received
authorization the previous year; they had sold them in early
February for $179 million. They hope to sell these bonds this
summer. The process they went through with the bond rating
agencies included this second issuance, and they have done a lot of
the "due diligence" necessary up front with the bond rating
agencies.
REPRESENTATIVE HUDSON noted that last year the legislature had
authorized the sale of $280 million in bonds. He asked why it had
been that amount, rather than $180 million.
MR. PARKAN replied that they have outstanding bonds for the parking
structure at the airport, so it includes the existing
authorization; it is a consolidation. He believes the last bonds
were sold in 1986. Time is critical for this additional $25
million; those bonds need to be sold this year.
Number 1729
COMMISSIONER PERKINS explained:
If you [were] to look at the schedule, Representative Hudson,
these items that are listed, we've got to have the money at
the front end of all these items, as we award the contracts.
So, you can see that the majority of the contracts are '99 and
2000. This time next year, we will have already needed to
award the contracts that these bonds will support.
Number 1776
REPRESENTATIVE ALBERT KOOKESH expressed concern about taking too
much time on a minuscule $25 million to hold up a project worth
$230 million. He said he wants to do everything he can to help
Anchorage gets a good airport, which he uses frequently. He
emphasized the need for the $25 million.
Number 1814
MR. PARKAN informed members that because there would be a briefing
the next week on the total project, he would hold David Eberle's
testimony on the schedule until then.
REPRESENTATIVE HALCRO pointed out that as someone whose district
borders the airport, the airport is very important to him; he
doesn't want to hold the project up and believes the additional
bonds are important. However, he believes that any time elected
officials ask questions about $25 million of taxpayers' money, the
questions are probably well-asked.
Number 1858
DEVEN MITCHELL, Acting Debt Manager, Treasury Division, Department
of Revenue, came forward. He stated:
To begin, I'll give you a little history on the issuance of
the $179 million in bonds from the authorization given last
legislative session. We were in mid-process, mid-issuance
process, when the LOI was approved, and we obtained the
authorization - or the authorization from the FAA - to receive
the $25 million over the next ten years. With that in mind,
we altered our issuance strategy somewhat, as Kurt [Parkan]
pointed out, to be sure to point out to the financial
community that we had the potential to issue this additional
$25 million, given legislative approval.
In that process, we met with the rating agencies who rate
municipal bonds: Moody's [Moody's Investors Service],
Standard and Poor's, and Fitch [Fitch IBCA]. The
presentations that were given included the possibility of an
additional $25 million in bonds. The result of those rating
presentations was very positive. The airport system was
upgraded by Moody's from A to A-1; upgraded by Standard and
Poor's from A-minus to A; and Fitch, who hadn't rated the
airport before, gave us an A-plus. And I don't know if you
know what that means, but of all the airports that are rated
across the country, that puts us in the top 15 to 20 percent.
And so, it really shows the quality, and the perception of
quality, that people have of the ... Alaska International
Airport system.
The next area that ... the possibility of an additional $25
million in bonds was discussed was the feasibility analysis
that was done. In order to issue the $179 million, we had to
have a feasibility study done to demonstrate that the airport
system was fiscally strong enough to support the payments on
those bonds. In that analysis, they included the potential,
again, of an additional $25 million piece, and the payments
that would be required for that additional piece. ... The
response from the feasibility consultant was that the airport
is more than strong enough to support the outstanding bonds,
as well as this additional $25 million piece.
The next area where ... the potential of a $25 million
issuance was discussed was within the official statement, the
official statement being the offering document for the $179
million in bonds that was sold. Again, the response was
overwhelmingly positive. ... The bonds were sold within the
state of Alaska more prolifically than any issuance had been
in the past, over $20 million sold to residents in the state
of Alaska. On a national level the original pricing, which
was considered to be aggressive by the financial experts who
were involved, the state bond committee and myself, the
response to that was that the bonds were oversold four times.
We had $800 million in orders for these bonds, that we only
had $179 million available. We were able to reprice, and the
result of that was that our average coupon for these bonds is
less than 5 percent, 4.95 percent.
The department has prepared a fiscal note for this additional
$25 million in bonds. The anticipated maturities of these
bonds are up to 25 years, that being based on the feasibility
consultant's analysis and the -- Kurt [Parkan] could probably
explain it more, but ... the FAA money being discretionary
funds, you want to ensure that your system has the ability to
meet the liabilities that it has incurred. So, if we were to
go out and issue a ten-year maturity, then the system would
have a harder time, if for some reason those discretionary
monies didn't come through. There is the letter of intent
that demonstrates that the monies are expected to come in, but
if they would not, then that would put an undue burden on the
system.
MR. MITCHELL concluded by saying that from a fiscal perspective,
the opportunity is there to ride the coattails of the very
successful issuance they just closed in February. The interest
rate jumped one-half percent recently, and there is no guarantee
there would be such a low interest rate for the next issuance.
However, they have positioned themselves to move forward if this
authorization is approved.
Number 2097
REPRESENTATIVE HALCRO asked whether there is any method of
recapturing the interest on the $25 million from the FAA or whether
the state will just be stuck with that cost.
MR. MITCHELL replied that the interest on these bonds would be paid
by the system; it would come from the revenue fund. It wouldn't be
captured, as currently anticipated. There is an anticipated
issuance size of $25 million, so the actual cost over the years
would be more than $25 million. He referred to the fiscal note.
REPRESENTATIVE HALCRO asked about the $2,189,000.
MR. MITCHELL explained that it would be the cost of the interest,
figured at 7 percent over 25 years. Although that is very
cautious, interest rates are subject to fluctuation and there is
that possibility. For planning purposes, the department will use
that $2.2 million as the annual expense. He added, "If it was the
committee's prerogative, the size of the issuance could be modified
to allow for the total of principal and interest, to equal the $25
million. That would be subject, again, to the DOT side and how
that would affect their ability to ... complete their project."
Number 2176
REPRESENTATIVE HALCRO asked whether this interest was taken into
account when the original cost of the project was figured.
MR. PARKAN referred to the "Uses of Funds" handout. He pointed out
that under Finance Costs, the $24,700,000 next to the asterisk
includes both issuances.
REPRESENTATIVE HALCRO asked whether the $24,700,000 includes that
amount, then.
MR. PARKAN affirmed that.
REPRESENTATIVE HALCRO asked what the interest rate had been on the
initial $179 million.
MR. MITCHELL replied that the average coupon was something like
4.94 or 4.96 percent, essentially 4.95; that is an average over the
25 years "from a low in the 3s to a high in the 5s, percents."
CHAIR MASEK noted that there were no other testifiers in Juneau.
Number 2243
MR. PARKAN informed Chair Masek that the DOT/PF had concluded its
testimony; Mort Plumb from the Anchorage International Airport and
others would be prepared to testify at the next week's project
overview.
Number 2268
CLIFFORD T. ARGUE, Staff Vice President, Properties and Facilities,
Alaska Airlines, testified via teleconference from Seattle,
Washington, in support of HB 84. He noted that he is also chairman
of the Anchorage and Fairbanks Airlines Airport Affairs Committee,
an organization that represents some 25 airlines which have signed
operating ageements and which serve those two airports. He
specified that his testimony would reflect the position of Alaska
Airlines, as well as most of the other members of the committee,
especially the following carriers: Reeve Aleutian Airways
Incorporated, Delta Air Lines, Northwest Airlines, Federal Express
("Fed-Ex"), United Airlines, Reno Air, United Parcel Service (UPS)
and American Airlines.
MR. ARGUE emphasized that HB 84 is not a request for new or
additional funding, but it simply provides dollars required on a
cash-flow basis to pay for the terminal project, as originally
approved by the airlines. The airport improvement program grant
from the FAA, contemplated as part of the finance package last
year, was not given in a lump sum but rather as a letter of intent,
to be paid over a ten-year period. The bond issue will permit the
project to be built on schedule, then be repaid over the life of
the LOI.
MR. ARGUE stated, "This bond issue was part of our original deal,
and HB 84 should be approved as quickly as possible. At the same
time, in accordance with earlier testimony that I and other airline
representatives gave to a recent joint Senate and House
Transportation hearing, the Alaska International Airport system
should immediately apply for - and this legislature should endorse
- the imposition and use of a $3 passenger facility charge to help
pay for the Anchorage terminal expansion project, as well as other
justified projects in Anchorage and Fairbanks airports. There is
no reason to further delay the realization of this valuable source
of revenue to the airport system, especially when Alaskans are
already paying PFCs, which benefit various airports throughout the
lower 48 states, and, more recently, to the municipal airport in
both Juneau and Ketchikan."
Number 2361
REPRESENTATIVE HUDSON stated, "We had last year indicated that we
needed this $25 million, and we anticipated getting it, apparently
in one lump sum, without debt service; and we cranked that cost
into the overall project. And now we find that we don't get it all
in one cost; we have to borrow it, and it will be paid for back
over a ten-year period of time. And I think, Representative
[Halcro], you asked the question of whether or not the interest
that would be accrued to this $25 million bond debt was to be
reduced from the overall project cost, or it looks to me like we're
2-point-some million dollars short on the overall project, or
2-point-some-odd million dollars more to be paid back, either by
user fees or some other source."
MR. PARKAN again referred to the "Uses of Funds" handout. He said
the $24,700,000 was for finance costs from the original plan of
finance, when they developed the project with a $204 million bond
issuance. He stated, "So, these are the same finance costs that we
had originally; they're not as a result of the $179 million bill,
but it was part of the original package."
Number 2441
MR. MITCHELL clarified that the $2 million is the cost of
capitalized interest for the first two years of the issuance.
There won't be any additional payments required of the air carriers
during the first two years, "as the interest payments will be made
from principal, and that's the $2 million that Representative
Halcro was referring to."
CHAIR MASEK asked if there were further questions, then noted that
HB 84 has another committee referral. She said that hearing the
testimony that day, and because of the urgency and nature of this
bill, she believes it would be good to move it forward.
Number 2467
REPRESENTATIVE HUDSON made a motion to move HB 84 from committee
with individual recommendations and the attached fiscal note(s).
He asked unanimous consent. There being no objection, HB 84 moved
from the House Transportation Standing Committee.
TAPE 99-7, SIDE B
Number 0006
CHAIR MASEK announced that the committee would invite the DOT/PF
and others involved with the airport to come before the committee
for an overview the following week, tentatively on Tuesday
afternoon.
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 2:10
p.m.
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