Legislature(2003 - 2004)
05/12/2003 05:36 PM House TRA
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= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
May 12, 2003
5:36 p.m.
MEMBERS PRESENT
Representative Jim Holm, Co-Chair
Representative Beverly Masek, Co-Chair
Representative Hugh Fate
Representative Vic Kohring
Representative Dan Ogg
MEMBERS ABSENT
Representative Mary Kapsner
Representative Albert Kookesh
COMMITTEE CALENDAR
HOUSE BILL NO. 304
"An Act naming the Jack Coghill Bridge to the Interior."
- MOVED HB 304 OUT OF COMMITTEE
HOUSE BILL NO. 315
"An Act relating to international airports revenue bonds; and
providing for an effective date."
- MOVED HB 315 OUT OF COMMITTEE
PREVIOUS ACTION
BILL: HB 304
SHORT TITLE:JACK COGHILL BRIDGE TO THE INTERIOR
SPONSOR(S): REPRESENTATIVE(S)COGHILL
Jrn-Date Jrn-Page Action
05/07/03 1416 (H) READ THE FIRST TIME -
REFERRALS
05/07/03 1416 (H) TRA, STA
05/12/03 (H) TRA AT 5:30 PM CAPITAL 102
BILL: HB 315
SHORT TITLE:INTERNATIONAL AIRPORTS REVENUE BONDS
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR
Jrn-Date Jrn-Page Action
05/09/03 1518 (H) READ THE FIRST TIME -
REFERRALS
05/09/03 1518 (H) TRA, FIN
05/09/03 1518 (H) FN1: (REV)
05/09/03 1518 (H) GOVERNOR'S TRANSMITTAL LETTER
05/10/03 (H) TRA AT 9:30 AM CAPITAL 17
05/10/03 (H) -- Meeting Canceled --
05/12/03 (H) TRA AT 5:30 PM CAPITAL 102
WITNESS REGISTER
REPRESENTATIVE JOHN COGHILL
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented sponsor statement for HB 304.
MIKE BARTON, Commissioner
Department of Transportation & Public Facilities (DOT&PF)
Juneau, Alaska
POSITION STATEMENT: Presented sponsor statement for HB 315,
which was sponsored by the House Rules Standing Committee by
request of the governor.
KEN SURA, Vice President
Financial Planning & Program Implementation
Landrum & Brown, Inc.
Chicago, Illinois
POSITION STATEMENT: Testified on HB 315, providing details
pertaining to the Alaska International Airports System Business
Planning Information.
ACTION NARRATIVE
TAPE 03-22, SIDE A
Number 0001
CO-CHAIR JIM HOLM called the House Transportation Standing
Committee meeting to order at 5:36 p.m. Representatives Holm,
Masek, Fate, Kohring, and Ogg were present at the call to order.
HB 304-JACK COGHILL BRIDGE TO THE INTERIOR
CO-CHAIR HOLM announced that the first order of business would
be HOUSE BILL NO. 304, "An Act naming the Jack Coghill Bridge to
the Interior."
CO-CHAIR HOLM began the meeting by referring to pictures of the
bridge [supplied by the Department of Transportation & Public
Facilities (DOT&PF)] which crosses the Nenana River at the area
called "Rex Crossing."
Number 0148
REPRESENTATIVE JOHN COGHILL, Alaska State Legislature, speaking
as the sponsor of HB 304, clarified that the bridge is currently
called "Bridge #216." He said there is a story behind naming of
the bridge, and there is also a story behind the bridge itself.
He told the committee of a conversation that his middle son,
Joshua, had with Joshua's grandpa [Jack Coghill]. One day, as
they were driving across this bridge on their way to Healy,
grandpa told the story of how this bridge came to be, and ever
since hearing that story, Joshua "put it in his head that he
wanted to do something about it" - that is, to name the bridge
after his grandfather.
Number 0177
REPRESENTATIVE COGHILL then told the committee that in the early
1960s, during the time his father [Jack Coghill] was in the
Senate, before there was even a road coming to or from the
bridge, it received appropriation under his guidance. After
construction, there wasn't a road to or from the bridge for
another 15 months. He said that he's had a difficult time
finding people who were in the legislature during that time who
could tell him more of the story. He explained that he doesn't
have more of the story from his dad because he hasn't told him
about HB 304 and is hoping that the naming of the bridge would
come as a surprise.
CO-CHAIR HOLM commented that a lot of the people who served with
Jack Coghill are no longer with us. For the record, he noted
the passing of former Senator Bill Waugaman that morning, a
great man who would be missed.
CO-CHAIR MASEK said this honoring of the Representative's father
was well deserved.
Number 0501
CO-CHAIR MASEK moved to report HB 304 out of committee with
individual recommendations and the accompanying fiscal note.
There being no objection, HB 304 was reported from the House
Transportation Standing Committee.
HB 315-INTERNATIONAL AIRPORTS REVENUE BONDS
CO-CHAIR HOLM announced that the next order of business would be
HOUSE BILL NO. 315, "An Act relating to international airports
revenue bonds; and providing for an effective date."
Number 0620
MIKE BARTON, Commissioner, Department of Transportation & Public
Facilities (DOT&PF), presented the sponsor statement for HB 315,
which was sponsored by the House Rules Standing Committee by
request of the governor. He said the bill would raise the
bonding authorization for revenue bonds for the Ted Stevens
Anchorage International Airport and the Fairbanks International
Airport by $76.6 million and that the request is for
authorization to sell revenue bonds to finance the additional
costs. He said that a briefing of the additional costs had been
provided in mid-March.
COMMISSIONER BARTON said his intent was to provide some
background information and that people were on line to answer
questions in greater detail. He began by saying that the
Fairbanks and Anchorage airports were operated as a system. The
operation is governed by what's known as an "airport operating
agreement," which is essentially a contract between airports and
airlines and establishes a business relationship between the two
parties. It obligates the airlines to pay for the cost of
running and maintaining the airport, including capital projects
and bonded indebtedness, through the fees that are charged at
the airport. It also obligates the airport to a secure
agreement on costs including capital projects.
COMMISSIONER BARTON said that in 1997 the airlines agreed to
fund the terminal re-development projects. Two sets of revenue
bonds were previously issued, one in 1999 and one in 2002, and
HB 315 is somewhat similar in that it does not constitute an
obligation to the state, the bonds are insured, and it does not
involve general fund monies.
COMMISSIONER BARTON continued that there have been discussions
with the airlines since January about how to cover the
additional costs and agreements have been reached on a number of
things. One is that Concourse C needs to be completed; the
airlines agree with that. The department has agreed to defer
$60 million in capital projects to later years in order to
minimize the impact of this on the airlines, and has also
agreed to continue with capital projects that are largely funded
by federal money. Commissioner Barton mentioned that Dave
Eberle [DOT&PF] was on line, and could walk the committee
through the "Legislative Briefing" in the committee packet,
although it would largely be a repetition of what was presented
in mid-March.
CO-CHAIR HOLM responded that it wasn't necessary to review the
briefing, as it was presented during a subcommittee meeting as
well as at an [overview on March 13, 2003].
COMMISSIONER BARTON then referred to the "Alaska International
Airports System Business Planning Information" included in the
committee packet that was put together by a financial
consultant, and in particular, Ken Sura of Landrum & Brown,
Inc., in Chicago, a company that's been involved with various
airport projects, including projects in Chicago, Toronto,
Cleveland, San Jose, and San Diego. He directed the committee
to page 18, indicating the request for a bonding authority
amount of $76.6 million. He pointed out that of that amount,
$48.0 million is for the terminal project, $10.0 million is for
the capital improvement project (CIP) for Anchorage for fiscal
year 2004 (FY 04) - and is the match money for federal funds -
and $3.5 million is for CIP funding for Fairbanks, which is also
match money for federal funding, and there are other financing
costs for the bond package, which is $15.1 million.
Number 1048
COMMISSIONER BARTON explained the context for the bond request
and the expectations regarding economic activity and continued
airport operations over the next several years. He said that no
general fund monies are involved, nor is the credit of the state
involved; the bonds are secured by the revenues generated by
Anchorage and Fairbanks, and the insurance company is the
ultimate payor in the event of a problem.
CO-CHAIR HOLM inquired about [previous] testimony regarding net
revenues amounting to 1.25 times [the Aggregate Annual Debt
Service].
COMMISSIONER BARTON responded that the airport is required to
collect from the airlines 1.25 times the annual debt service.
CO-CHAIR HOLM asked if this amount - 1.25 times the annual debt
servicing - includes, with projections, the $76.6 million that
is being requested.
COMMISSIONER BARTON confirmed that this was the case.
CO-CHAIR HOLM thereby confirmed that projections indicate that
the amount can be managed. He then referred to the [House &
Senate joint overview meeting of March 13, 2003] in which fees,
including landing fees, were indicated, and asked why
Anchorage's fees were so low, noting that the amount was
significantly lower than that for Seattle or Los Angeles.
COMMISSIONER BARTON commented that the Anchorage airport is very
efficient, is well run, and is a reasonably low-cost operation.
Number 1236
KEN SURA, Vice President, Financial Planning & Program
Implementation, Landrum & Brown, Inc., said that primarily,
landing fees are a function of the structure of the operating
agreement as well as a function of where the airports are in
their particular development cycles - that is, the investments
being made in capital programs. He said that the taking of such
a "snapshot" presents an uneven comparison of Anchorage and
Fairbanks with other airports.
CO-CHAIR HOLM replied that this did not answer his question, and
asked if a "snapshot in time" was taken with given parameters
set, so that apples were being compared to apples rather than
comparing applies to oranges. He asked why the landing fees in
Anchorage are so much less than those of other airports.
MR. SURA said this was due in part to the take-off weight from
cargo carriers because that helps to reduce the landing fee, and
is a function of how the agreement with the airlines is
negotiated.
COMMISSIONER BARTON offered that Anchorage is the busiest cargo
airport in the country.
CO-CHAIR HOLM added that in addition to acknowledging that,
Alaskans pay the highest amount in the country for traveling
from points a-to-b. He questioned why the landing fees were so
low and what the correlation might be between these fees and the
high costs of travel in Alaska. He noted that a one-way ticket
from Fairbanks to Anchorage was $170, while flying from Seattle
to San Diego could be as low as $99.
MR. SURA responded that these prices were not a function of the
landing fees, terminal rentals, or other charges, but were a
function of what the market would bear. Because of the
necessity to have air service from Alaska to the Lower 48, in a
capitalistic market, the airlines will charge what they can
charge.
CO-CHAIR HOLM responded that he was aware of that, but wondered
if the cost of transportation in Alaska was being elevated by
virtue of subsidizing the landing and take-off fees for
commercial freight handling and wondered what the relationship
was between that and the cost of passenger travel. He mentioned
that he just flew roundtrip and the TSA [Transportation Security
Administration] fees were $52. He asked if there should be some
commensurate increase in the landing fee to offset some costs,
and asked if this had been addressed.
MR. SURA said this had not been addressed. He indicated that
across the country there is a lot of conversation regarding how
the new TSA security requirements would be funded, and airports
are working to get additional funding. Currently, there is no
funding specifically identified by the TSA or the DOT.
Number 1548
COMMISSIONER BARTON told the committee that $20 million of the
added cost is a result of TSA security requirements, and
referred to page 20 [of the "Alaska International Airports
System Business Planning Information"] which addresses the
[Alaska International Airport System (AIAS) Plan of Finance,
Landing Fees], according to the anticipated completion of the
whole terminal project as well as some capital projects and
future bonding. To recapture the $20 million that has been
invested in Anchorage for TSA requirements; that is captured in
this landing fee. He said that the department is pursuing
direct reimbursement with the TSA as well, and that a number of
airports across the country are doing that, however, not very
successfully, so far.
REPRESENTATIVE OGG asked about the timeframe involved.
COMMISSIONER BARTON answered that the bonds would be paid off in
25 years.
CO-CHAIR HOLM referred to the [AIAS Plan of Finance] on page 20,
commenting that there is a significant difference between the
feasibility study and the plan for financing by nearly 50
percent.
MR. SURA replied that the 2002 feasibility study did not
contemplate this particular bond issue or the other bond issues
seen in this presentation. The 2002 feasibility study was based
on what at that time was a negotiated agreement between AIAS,
the airport system, and the airlines, to fund a $333 (indisc.)
five-year CIP. He reiterated that the feasibility study numbers
reflect the negotiated agreement between the airlines and the
airport system that was to fund $333 million over a five-year
period. The AIAS revised forecast includes the completion of
Concourse C as well as the expected funding for the completion
of Concourses A and B and the completion of the CIP program. He
said, "That's why the numbers vary in the years beyond what's
anticipated."
Number 1781
REPRESENTATIVE KOHRING asked if the original amount that was
authorized by the legislature several years ago was
approximately one-quarter million dollars.
COMMISSIONER BARTON said that $330 million was originally
authorized.
REPRESENTATIVE KOHRING, commenting that this amount was about
1/3 of $1 billion, questioned why more was needed than was
originally requested, asking if it was due to major
modifications made to the original design as well as from
accommodation overruns.
COMMISSIONER BARTON replied that the additional monies are
needed for the TSA requirement, in the amount of $20 million,
and that $30 million is for redesigning the structure as a
result of some differences in the early stages in interpretation
of seismic codes; the delay in resolving that, as well as the
changes, resulted in $30 million. He also said there were some
added space requirements that have been financed.
REPRESENTATIVE KOHRING asked, given the size of this major
project and the amount of debt, if the commissioner was
confident that the projected revenues would be available.
COMMISSIONER BARTON confirmed that the risk would be minimal.
REPRESENTATIVE KOHRING then asked what assurances were available
to indicate that the revenues would be adequate.
COMMISSIONER BARTON replied that the bulk of the revenue from
the airport comes from cargo carriers, and the cargo market
looks good, with the forecast for the improvement of cargo
looking good, as well. The Asian cargo market is projected to
be the leader of that increase. He said that there will be some
increase in passenger traffic. He referred to page 5 [AIAS
Business Planning Information] indicating a trend line that
shows what has happened over the past 40 years regarding how the
system has responded to various shocks; the trend line has grown
from 60 million [U.S. Revenue Enplanements] in 1960 to a
projection of about 650 million in 2001.
COMMISSIONER BARTON then referred to page 6, which shows what's
happening in the Asia cargo market, and page 8, which shows
cargo projections [Total Gross Take Off Weight] and lists
amounts such as 5 percent, or 3.4 percent.
REPRESENTATIVE KOHRING said he heard the original legislation
several years ago, perhaps in 1999, and that although he is
disappointed that the cost is greater, he recognizes the reasons
for the increase. He referred to the original design, which
called for a connection with the International Terminal, and
wondered why this had been changed.
COMMISSIONER BARTON responded that this was deferred as part of
a capital project deferral in order to minimize the impact [of
the increase]. He confirmed that this connection remains a plan
for the future.
Number 2174
CO-CHAIR MASEK moved to report HB 315 out of committee with
individual recommendations and the accompanying fiscal notes;
she requested unanimous consent. There being no objection, HB
315 was reported from the House Transportation Standing
Committee.
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 6:20
p.m.
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