Legislature(2007 - 2008)

03/04/2008 02:06 PM House TRA


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Audio Topic
02:06:36 PM Start
02:08:09 PM Overview: Alaska Marine Highway System
03:31:06 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE TRANSPORTATION STANDING COMMITTEE                                                                           
                         March 4, 2008                                                                                          
                           2:06 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kyle Johansen, Chair                                                                                             
Representative Mark Neuman, Vice Chair                                                                                          
Representative Anna Fairclough                                                                                                  
Representative Wes Keller                                                                                                       
Representative Mike Doogan                                                                                                      
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Craig Johnson                                                                                                    
                                                                                                                                
OTHER LEGISLATORS PRESENT                                                                                                     
                                                                                                                              
Representative Peggy Wilson                                                                                                     
Representative Andrea Doll                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
OVERVIEW:  ALASKA MARINE HIGHWAY SYSTEM                                                                                         
                                                                                                                                
     - HEARD                                                                                                                    
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to report                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
DENNIS HARDY, Deputy Commissioner of Marine Operations                                                                          
Marine Highway System                                                                                                           
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented an overview of the Alaska Marine                                                               
Highway System, and responded to questions.                                                                                     
                                                                                                                                
CAPTAIN JOHN FALVEY, General Manager                                                                                            
Ketchikan Office                                                                                                                
Marine Highway System                                                                                                           
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Responded to  questions and offered comments                                                             
during an overview of the Alaska Marine Highway System.                                                                         
                                                                                                                                
MALCOLM MENZIES, Regional Director                                                                                              
Southeast Region                                                                                                                
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Juneau, Alaska                                                                                                                  
POSITION   STATEMENT:     Responded  to   questions  during   the                                                             
presentation on the Alaska Marine Highway System.                                                                               
                                                                                                                                
ANDY HUGHES, Planning Chief                                                                                                     
Southeast Region                                                                                                                
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:    Responded to  questions  during  overview                                                             
presentation of Alaska Marine Highway System.                                                                                   
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR  KYLE JOHANSEN  called  the  House Transportation  Standing                                                             
Committee  meeting  to  order at  2:06:36  PM.    Representatives                                                             
Johansen,  Fairclough, Neuman,  Doogan, Salmon,  and Keller  were                                                               
present  at  the  call  to   order.    Also  in  attendance  were                                                               
Representatives Wilson and Doll.                                                                                                
                                                                                                                                
^OVERVIEW:  ALASKA MARINE HIGHWAY SYSTEM                                                                                      
                                                                                                                                
2:08:09 PM                                                                                                                    
                                                                                                                                
CHAIR JOHANSEN  announced that the  only order of  business would                                                               
be the overview on the Alaska Marine Highway System.                                                                            
                                                                                                                                
2:08:51 PM                                                                                                                    
                                                                                                                                
DENNIS HARDY,  Deputy Commissioner  of Marine  Operations, Marine                                                               
Highway System, Department of  Transportation & Public Facilities                                                               
(DOT&PF),   recognized  that   an   aging   fleet  makes   vessel                                                               
replacement a critical  issue for the marine highway  system.  He                                                               
reported that of the eleven  AMHS vessels, four vessels are about                                                               
45  years old,  and three  vessels are  about 35  years old.   He                                                               
allowed that  the useful life of  the vessels is about  60 years,                                                               
except for  the fast ferries, which  have a useful life  of about                                                               
25 years.   He explained  that it can take  up to six  years from                                                               
its design for a vessel to be put  in service.  He relayed that a                                                               
shuttle  vessel will  cost $85  million, and  a main  line vessel                                                               
will cost $250 million.                                                                                                         
                                                                                                                                
CHAIR JOHANSEN  asked if there  are any vessels currently  in the                                                               
planning process.                                                                                                               
                                                                                                                                
MR. HARDY  noted that the  Malaspina is due  to reach the  end of                                                               
its  useful life  in  2016.   Currently,  the  concept study  for                                                               
replacement  boats  is on  hold  pending  a  peer review  of  the                                                               
Southern Gateway shuttle and the Southeast Alaska shuttle.                                                                      
                                                                                                                                
CAPTAIN JOHN  FALVEY, General  Manager, Ketchikan  Office, Marine                                                               
Highway System, Department of  Transportation & Public Facilities                                                               
(DOT&PF),  explained  that  there  are concept  designs  for  the                                                               
southeast shuttle and southern gateway shuttle.                                                                                 
                                                                                                                                
2:12:16 PM                                                                                                                    
                                                                                                                                
CHAIR JOHANSEN clarified that the  southern gateway is Ketchikan,                                                               
and the southeast is Lynn Canal and Juneau.                                                                                     
                                                                                                                                
CAPTAIN FALVEY agreed  and explained that the  concept design for                                                               
the  southern gateway  shuttle  is a  long,  slender, steel,  day                                                               
shuttle vessel with a reduced crew  who will go home every night.                                                               
The vessel  will be very  fast, 23-24  knots, and will  consume a                                                               
lot of fuel.  He allowed that  there is a similar concept for the                                                               
southeast  shuttle,  though this  vessel  will  not be  as  fast,                                                               
because there  are shorter  distances.   The department  hired an                                                               
engineering firm to do a peer  review for an outside look at both                                                               
shuttle concepts.  The peer  review weighed escalating fuel costs                                                               
against labor costs  and recommended a review of the  12 hour day                                                               
boat concept.   The new idea presented is to  slow the boats down                                                               
to  burn less  fuel,  to  have a  more  automated  vessel with  a                                                               
reduced crew, and  to not have passenger cabins.   The department                                                               
is currently examining this alternative.                                                                                        
                                                                                                                                
2:14:24 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FAIRCLOUGH  asked if the cost  analysis takes into                                                               
consideration for the  initial capital investment cost  of a fast                                                               
ferry versus a larger ferry.                                                                                                    
                                                                                                                                
CAPTAIN FALVEY asked for clarification.                                                                                         
                                                                                                                                
REPRESENTATIVE  FAIRCLOUGH requested  a comparative  initial cost                                                               
and  operational cost  analysis  for a  vessel  that lasts  20-25                                                               
years versus a vessel that lasts 60 years.                                                                                      
                                                                                                                                
CAPTAIN FALVEY  noted that  an aluminum vessel  will not  last as                                                               
long as a steel vessel.                                                                                                         
                                                                                                                                
2:15:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FAIRCLOUGH allowed  that hull  material would  be                                                               
part of the analysis.                                                                                                           
                                                                                                                                
CAPTAIN FALVEY  asked if  Representative Fairclough  is referring                                                               
to the initial decision to build fast ferries.                                                                                  
                                                                                                                                
REPRESENTATIVE  FAIRCLOUGH said  that she  assumes that  the cost                                                               
analysis  was done  before the  decision to  build fast  ferries.                                                               
She posed  that the discussion is  now about a day  boat, and she                                                               
would  like  to see  a  comparative  cost analysis  for  aluminum                                                               
versus steel hulled boats.                                                                                                      
                                                                                                                                
CAPTAIN FALVEY replied  that the current shuttle  concept will be                                                               
a  steel  hulled,   300  foot  boat,  capable   of  carrying  500                                                               
passengers and 65 vehicles.                                                                                                     
                                                                                                                                
2:16:57 PM                                                                                                                    
                                                                                                                                
CHAIR JOHANSEN asked  if the cost is compared for  the life cycle                                                               
of the aluminum fast boat versus the steel slow boat.                                                                           
                                                                                                                                
CAPTAIN FALVEY  clarified that the  current discussions  are only                                                               
for steel boats, not aluminum fast ferries.                                                                                     
                                                                                                                                
CHAIR JOHANSEN  asked if  the faster,  steel day  boat has  had a                                                               
life cycle cost comparison to the suggested slower boat.                                                                        
                                                                                                                                
CAPTAIN  FALVEY reported  that  more than  50  vessel types  were                                                               
studied and the review group made this recommendation.                                                                          
                                                                                                                                
2:19:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FAIRCLOUGH   asked  to   see  the   analysis  for                                                               
comparison.    She  asked  if  a green  house  analysis  of  fuel                                                               
consumption comparing  the new  versus the  old vessels  has been                                                               
done.                                                                                                                           
                                                                                                                                
CAPTAIN FALVEY said that it will be done.                                                                                       
                                                                                                                                
CHAIR JOHANSEN asked if the new vessels will be sister ships.                                                                   
                                                                                                                                
CAPTAIN FALVEY  expressed his  belief that this  may be  the best                                                               
direction to proceed.  He noted  that this will allow that vessel                                                               
parts will be interchangeable.                                                                                                  
                                                                                                                                
2:20:22 PM                                                                                                                    
                                                                                                                                
CHAIR JOHANSEN  asked if the  department has done an  analysis of                                                               
other ferry routes, in case the road is built in Lynn Canal.                                                                    
                                                                                                                                
CAPTAIN FALVEY agreed that the  boat will be interchangeable with                                                               
other locations.                                                                                                                
                                                                                                                                
CHAIR JOHANSEN  asked what are  the advantages  and disadvantages                                                               
to having sister ships.                                                                                                         
                                                                                                                                
CAPTAIN FALVEY  pointed out that  parts are  interchangeable with                                                               
sister  ships.   He expressed  the possibility  that the  two new                                                               
steel  shuttle   boats  will  replace   the  Malaspina   and  the                                                               
Matanuska.                                                                                                                      
                                                                                                                                
2:22:40 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FAIRCLOUGH asked  if  the fast  ferries have  had                                                               
engine problems.                                                                                                                
                                                                                                                                
CAPTAIN FALVEY  replied that the  fast ferries have  had multiple                                                               
problems.  He  noted that the warranty coverage  of the vibration                                                               
issue has  been resolved.   He explained the other  major problem                                                               
to be  the recommendation of  the engine manufacturer to  use the                                                               
wrong coolant  which tends to  corrode the cylinder linings.   He                                                               
said that the department is  working toward a resolution for this                                                               
problem.                                                                                                                        
                                                                                                                                
                                                                                                                                
REPRESENTATIVE  FAIRCLOUGH asked  what  type of  engines will  be                                                               
used in the new design.                                                                                                         
                                                                                                                                
CAPTAIN   FALVEY   responded   that  the   high   speed,   highly                                                               
turbocharged engines  used in the  current fast ferries  are very                                                               
complex, so he  suggested using more conventional  engines in the                                                               
slower steel boats.                                                                                                             
                                                                                                                                
2:25:25 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  asked if  there was full  reimbursement on                                                               
any warranty work  that was proven to be  a manufacturer problem.                                                               
He also asked if there is an extended maintenance schedule.                                                                     
                                                                                                                                
CAPTAIN FALVEY  said that the fast  ferries are no longer  in the                                                               
warranty period,  but a resolution  has been worked out  with the                                                               
manufacturer.                                                                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN asked what the cost to the state is.                                                                      
                                                                                                                                
CAPTAIN FALVEY  responded that there  is a small amount  that may                                                               
not have been reimbursed.                                                                                                       
                                                                                                                                
REPRESENTATIVE NEUMAN  repeated his question regarding  long term                                                               
maintenance and repairs and he  asked if there are cost estimates                                                               
for maintenance of these new boats.                                                                                             
                                                                                                                                
CAPTAIN FALVEY  stated that  there are  cost estimates,  and they                                                               
tend to be more costly than the conventional ferries.                                                                           
                                                                                                                                
REPRESENTATIVE NEUMAN asked if these  have been tested and proven                                                               
in conditions similar to Alaska with severe weather and tides.                                                                  
                                                                                                                                
CAPTAIN FALVEY said that the  high capacity steel shuttle vessels                                                               
have  a proven  hull  form.   He  expressed  his  comfort with  a                                                               
conventional steel shuttle vessel.                                                                                              
                                                                                                                                
2:29:05 PM                                                                                                                    
                                                                                                                                
CHAIR JOHANSEN posed  that the recommendation will be  for a more                                                               
proven dependable engine.                                                                                                       
                                                                                                                                
CAPTAIN  FALVEY  agreed.   He  explained  that with  the  current                                                               
aluminum fast  ferries all  of the  equipment is  lightweight for                                                               
speed and the equipment is built  to be "on the edge of capacity"                                                               
in order to achieve high speeds.                                                                                                
                                                                                                                                
CHAIR   JOHANSEN  asked   about  the   progress  of   the  vessel                                                               
replacement study.                                                                                                              
                                                                                                                                
MR. HARDY  replied that  a vessel  utilization plan  is currently                                                               
being tabulated by the Marine  Highway System, which will include                                                               
an inventory  of the boats,  the years for replacement,  the life                                                               
cycle costs, and  the capital costs.  He added  that this plan is                                                               
being done  in conjunction with  the master plan, which  is being                                                               
written by  the Alaska  University Transportation  Center (AUTC).                                                               
This is a two year project.                                                                                                     
                                                                                                                                
CHAIR JOHANSEN asked when this plan will be completed.                                                                          
                                                                                                                                
MR. HARDY reported that the project  is in two phases.  The first                                                               
phase  is a  background  of  information to  be  included in  the                                                               
decision making, and  this will be completed  by September, 2008.                                                               
The second phase will be completed by September, 2009.                                                                          
                                                                                                                                
2:32:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN  asked  if  the plan  will  study  freight                                                               
shipment, including refrigeration systems,  to increase the ferry                                                               
revenues.                                                                                                                       
                                                                                                                                
CAPTAIN FALVEY agreed that the  southern gateway will accommodate                                                               
refrigerated  freight.   He allowed  that a  conventional shuttle                                                               
ferry system  will need to  "get it right."   He stated  that the                                                               
department is  moving forward  with this  concept in  parallel to                                                               
the master plan.                                                                                                                
                                                                                                                                
MR. HARDY  added that every  new boat  will have the  capacity to                                                               
carry any highway vehicle, including the large shipping vans.                                                                   
                                                                                                                                
CHAIR  JOHANSEN pointed  out  that both  Captain  Falvey and  Mr.                                                               
[Jim]  Beedle have  extensive experience  working onboard  boats,                                                               
and they understand the challenges.                                                                                             
                                                                                                                                
CAPTAIN FALVEY related his experience.                                                                                          
                                                                                                                                
CHAIR JOHANSEN noted Mr. Beedle's experience.                                                                                   
                                                                                                                                
2:35:08 PM                                                                                                                    
                                                                                                                                
CHAIR  JOHANSEN  asked to  discuss  the  South Berth,  the  layup                                                               
facility,  and  the south  end  terminal  for Prince  Rupert  and                                                               
Metlakatla.    He  opined  that these  last  two  projects  might                                                               
alleviate future pressure on the South Berth.                                                                                   
                                                                                                                                
REPRESENTATIVE  FAIRCLOUGH  asked  what parameters  and  criteria                                                               
were given to the AUTC team  for the master plan, specifically if                                                               
this is a vessel utilization plan  or a total master plan for the                                                               
ferry system.                                                                                                                   
                                                                                                                                
MR. HARDY explained that the primary  criterion is to look at the                                                               
system over the  next 30 years, recognizing that there  will be a                                                               
transition from the  existing fleet to the  implementation of the                                                               
Southeast Alaska  Transportation Plan,  which will  combine roads                                                               
and shuttle  ferries.  He  offered to  provide the scope  of work                                                               
given to AUTC.                                                                                                                  
                                                                                                                                
2:37:05 PM                                                                                                                    
                                                                                                                                
CHAIR JOHANSEN  requested that the committee  members receive the                                                               
criteria.                                                                                                                       
                                                                                                                                
CAPTAIN FALVEY  stated that he  will address South  Berth, Alaska                                                               
Ship and  Drydock (ASD),  and the  lay up  facilities.   He noted                                                               
that Mr. Menzies is also available.                                                                                             
                                                                                                                                
CHAIR  JOHANSEN referred  to  the aerial  photo  in the  members'                                                               
packets, and  explained that South  Berth is the ferry  [dock] in                                                               
the middle.                                                                                                                     
                                                                                                                                
CAPTAIN FALVEY  explained that  South Berth  has the  capacity to                                                               
handle  cars and  passengers, allowing  it  to be  used when  the                                                               
adjacent main  AMHS berth  is occupied.   It has  been used  as a                                                               
layup facility to  perform warranty work.  Ketchikan  is busy and                                                               
the South Berth  is shared with the  Inter-Island Ferry Authority                                                               
(IFA) and  with the  Lituya.   The shipyard  (ASD) would  like to                                                               
have possession of  the South Berth.  He explained  that AMHS and                                                               
ASD  are working  on  developing a  long term  plan.   They  have                                                               
agreed  to  an area  for  ASD  to  begin  work on  a  maintenance                                                               
facility,  a boundary  shift  of another  area,  and a  hazardous                                                               
materials warehouse  right of  way adjustment.   All  the parties                                                               
are working to  find a middle ground.  There  is still discussion                                                               
of the use  of South Berth and  a lay up facility.   He explained                                                               
that the  engineers have offered several  alternatives, including                                                               
a  layup facility  on Gravina  Island, directly  across from  the                                                               
shipyard.                                                                                                                       
                                                                                                                                
2:43:49 PM                                                                                                                    
                                                                                                                                
CHAIR JOHANSEN  opined that this  is the narrowest,  fastest tide                                                               
running portion of the channel.                                                                                                 
                                                                                                                                
CAPTAIN FALVEY  agreed that this  location will not work,  as the                                                               
wind  and the  logistics are  both  difficult.   He allowed  that                                                               
there   are  numerous   spots  in   Ward  Cove   which  are   all                                                               
substantially more expensive.                                                                                                   
                                                                                                                                
CHAIR  JOHANSEN asked  how long  Department  of Transportation  &                                                               
Public  Facilities (DOT&PF)  has  had the  appropriation for  the                                                               
layup facility.                                                                                                                 
                                                                                                                                
2:45:24 PM                                                                                                                    
                                                                                                                                
CAPTAIN FALVEY replied that the  appropriation has been available                                                               
for more than a  year.  He offered that it  will be difficult for                                                               
DOT&PF  to  replace South  Berth,  as  it is  used  as  a lay  up                                                               
facility,  with  the  capability for  vehicles,  passengers,  and                                                               
ticketing.                                                                                                                      
                                                                                                                                
CHAIR JOHANSEN asked how often South Berth is used for lay up.                                                                  
                                                                                                                                
CAPTAIN FALVEY  reported that  it has been  used quite  often for                                                               
the fast  ferries over the past  year, but on the  average, it is                                                               
not used  a lot.   He explained that  the Kennicott is  moored at                                                               
the downtown dock,  and AMHS will not be paying  for that moorage                                                               
if the layup dock is available.                                                                                                 
                                                                                                                                
CHAIR  JOHANSEN said  that they  can  talk more  about the  layup                                                               
facility at  a later date.   He  explained to the  committee that                                                               
the shipyard is  owned by the State of Alaska,  and is managed by                                                               
ASD.  He  allowed that DOT&PF "is working with  the operator of a                                                               
state  owned asset,  figuring out  who  gets to  put their  ships                                                               
where."                                                                                                                         
                                                                                                                                
REPRESENTATIVE NEUMAN  asked if  it is time  to remove  AMHS from                                                               
the DOT&PF, and allow AMHS the opportunity for federal funding.                                                                 
                                                                                                                                
2:48:34 PM                                                                                                                    
                                                                                                                                
MR. HARDY  noted that  an "authority" bill  is being  prepared to                                                               
address these  issues.   He offered his  belief that  the biggest                                                               
problem  is  funding.   He  explained  that operating  costs  are                                                               
escalating, the fleet  is aging, and that any  decision will have                                                               
costs.                                                                                                                          
                                                                                                                                
REPRESENTATIVE  NEUMAN  pressed  that there  is  competition  for                                                               
funding  with the  road  projects,  and asked  for  a  yes or  no                                                               
response.                                                                                                                       
                                                                                                                                
MR. HARDY  responded that  this is  not a  yes or  no issue.   He                                                               
allowed that  the Commissioner of  DOT&PF has to balance  all the                                                               
transportation needs of the state.                                                                                              
                                                                                                                                
2:50:10 PM                                                                                                                    
                                                                                                                                
CHAIR JOHANSEN  expressed his belief  that when the roads  in the                                                               
state can pay  their own costs, then  it will be fair  to ask the                                                               
same from the AMHS.                                                                                                             
                                                                                                                                
REPRESENTATIVE  DOOGAN summarized  that  the  facilities are  all                                                               
state owned  and the  problem at South  Berth is  competition for                                                               
use.                                                                                                                            
                                                                                                                                
CAPTAIN FALVEY responded that South  Berth is a working berth, an                                                               
overflow berth, and a lay up facility.                                                                                          
                                                                                                                                
REPRESENTATIVE  DOOGAN asked  to verify  that it  will cost  $8.5                                                               
million for a layup facility to be built elsewhere.                                                                             
                                                                                                                                
CAPTAIN FALVEY  agreed that another  comparable facility  will be                                                               
needed if South Berth is no longer available.                                                                                   
                                                                                                                                
REPRESENTATIVE  DOOGAN asked  that if  the facility  is built  in                                                               
Ward Cove, it will be accessible for passengers and vehicles.                                                                   
                                                                                                                                
CAPTAIN FALVEY said that this  will not be possible everywhere in                                                               
Ward Cove, as there are covenants for specific areas.                                                                           
                                                                                                                                
REPRESENTATIVE  DOOGAN asked  that if  AMHS built  a facility  in                                                               
Ward Cove, what would happen to South Berth.                                                                                    
                                                                                                                                
CAPTAIN  FALVEY  replied  that  a  multiple  use  facility  could                                                               
replace South Berth.                                                                                                            
                                                                                                                                
REPRESENTATIVE  DOOGAN repeated  his  question of  who would  use                                                               
South Berth.                                                                                                                    
                                                                                                                                
CAPTAIN FALVEY replied that ASD will want to use it.                                                                            
                                                                                                                                
CHAIR JOHANSEN asked  if South Berth was an original  part of the                                                               
shipyard master plan.                                                                                                           
                                                                                                                                
CAPTAIN FALVEY asked to clarify.                                                                                                
                                                                                                                                
CHAIR  JOHANSEN asked  if South  Berth was  part of  the original                                                               
vision.                                                                                                                         
                                                                                                                                
MALCOLM MENZIES, Regional  Director, Southeast Region, Department                                                               
of  Transportation &  Public  Facilities  (DOT&PF), replied  that                                                               
South Berth was part of the plan.                                                                                               
                                                                                                                                
CAPTAIN FALVEY  repeated that  there has  been a  very productive                                                               
meeting with ASD, and the  department will pursue agreements.  He                                                               
explained that the  last issue to resolve will be  the need for a                                                               
new  warehouse and  office.    He stated  that  a small  clearing                                                               
warehouse will  be built  for equipment  which is  quickly coming                                                               
onto and  off the  docks, but  this will not  be large  enough to                                                               
replace the main warehouse and the office.                                                                                      
                                                                                                                                
2:55:16 PM                                                                                                                    
                                                                                                                                
CAPTAIN FALVEY said  that there is a need of  space for the extra                                                               
engineers with room for libraries, blueprints, and drafting.                                                                    
                                                                                                                                
CHAIR JOHANSEN  allowed that  this will  be discussed  during the                                                               
talk about the AMHS headquarters.                                                                                               
                                                                                                                                
REPRESENTATIVE  DOOGAN  asked  if  ASD   wants  to  use  all  the                                                               
facilities.                                                                                                                     
                                                                                                                                
CAPTAIN FALVEY said yes, they will.                                                                                             
                                                                                                                                
REPRESENTATIVE  DOOGAN  expressed  his  belief that  it  will  be                                                               
difficult to contain ASD.                                                                                                       
                                                                                                                                
REPRESENTATIVE SALMON asked how the future for AMHS appears.                                                                    
                                                                                                                                
CAPTAIN  FALVEY said  that the  key is  South Berth;  as it  is a                                                               
working berth  and an  overflow berth, schedules  need to  be co-                                                               
coordinated to allow for its use.                                                                                               
                                                                                                                                
REPRESENTATIVE SALMON  asked how much  will it cost and  how long                                                               
this will take to build.                                                                                                        
                                                                                                                                
CAPTAIN FALVEY replied that ASD is building the structures.                                                                     
                                                                                                                                
CHAIR JOHANSEN asked  how AMHS is addressing a  number of issues,                                                               
which  include: the  Saxman vote  against  the terminal  facility                                                               
being located in their seaport,  the Annette Island road, and the                                                               
implications  of  the  Prince  Rupert   run  for  the  south  end                                                               
facility.                                                                                                                       
                                                                                                                                
CAPTAIN  FALVEY  replied  that  AMHS  is  still  looking  for  an                                                               
alternative  location to  Saxman.   He said  that as  the Annette                                                               
Island road  nears completion,  AMHS will  start building  a dock                                                               
and caretaker facility at Annette Bay.                                                                                          
                                                                                                                                
2:58:34 PM                                                                                                                    
                                                                                                                                
CHAIR  JOHANSEN  asked  for  the timeline  to  build  a  northern                                                               
terminus terminal for the Gateway shuttle.                                                                                      
                                                                                                                                
ANDY  HUGHES, Planning  Chief,  Southeast  Region, Department  of                                                               
Transportation  & Public  Facilities (DOT&PF),  explained that  a                                                               
reconnaissance effort  is underway,  and it will  take a  year to                                                               
resolve  the  site  option.    Once  the  preferred  location  is                                                               
determined,  it   will  take   a  few   years  to   complete  the                                                               
environmental  permits,   and  another  year  to   construct  the                                                               
building.                                                                                                                       
                                                                                                                                
CHAIR  JOHANSEN asked  when the  public response  period will  be                                                               
held.                                                                                                                           
                                                                                                                                
MR. HUGHES replied that  it will be held once there  is a list of                                                               
recommendations.                                                                                                                
                                                                                                                                
2:59:57 PM                                                                                                                    
                                                                                                                                
CHAIR JOHANSEN asked  if AMHS envisions this as  the terminus for                                                               
both Metlakatla and Prince Rupert.                                                                                              
                                                                                                                                
CAPTAIN FALVEY responded that the  concept was discussed, but one                                                               
problem was that the new shuttle  ferry concept for a long, steel                                                               
vessel did not  fit into the Saxman space.   He allowed that AMHS                                                               
will keep the possibility open.                                                                                                 
                                                                                                                                
CHAIR JOHANSEN posed  that the idea of a terminus  for both areas                                                               
is again a possibility.                                                                                                         
                                                                                                                                
CAPTAIN FALVEY agreed.                                                                                                          
                                                                                                                                
3:00:58 PM                                                                                                                    
                                                                                                                                
CHAIR  JOHANSEN asked  for  an update  on  the AMHS  headquarters                                                               
building in Ward Cove.                                                                                                          
                                                                                                                                
MR. HARDY  explained that  when DOT&PF  moved to  Ketchikan, they                                                               
considered purchasing the building in  Ward Cove for $1.9 million                                                               
with an additional $1.5 million  for renovation.  He described it                                                               
as  a 50  year old,  2 story,  26,000 square  foot building.   He                                                               
noted  that AMHS  currently leases  the  top floor.   During  the                                                               
appraisal,  the   AMHS  engineers   performed  a   due  diligence                                                               
inspection, and  expressed concern  for the general  condition of                                                               
the facility.  This survey  was completed in September, 2007, and                                                               
identified a  lot of deficiencies  in the building.   Even though                                                               
the upstairs has already been  renovated by the Ketchikan Gateway                                                               
Borough, the  downstairs has not,  and the cost estimate  is $7.1                                                               
million for  renovation.   He said that  AMHS sent  the condition                                                               
survey to  the borough  and requested  their review  and comment.                                                               
The borough responded on February  20 and DOT&PF is now reviewing                                                               
those  comments.   He  allowed that  once  this is  accomplished,                                                               
DOT&PF  will meet  with the  borough,  and decide  what the  next                                                               
action will  be.  He  noted that  DOT&PF is working  closely with                                                               
the  borough, and  the department  is not  making any  unilateral                                                               
decisions.   As the AMHS  has a lease, there  is no need  to rush                                                               
forward.                                                                                                                        
                                                                                                                                
CHAIR JOHANSEN asked what the cost  will be to bring the building                                                               
up to the standards.                                                                                                            
                                                                                                                                
MR. HARDY replied that this will cost about $7.1 million.                                                                       
                                                                                                                                
CHAIR JOHANSEN asked what class of office space this will be.                                                                   
                                                                                                                                
MR. HARDY replied that this will be B class, average to good.                                                                   
                                                                                                                                
CHAIR JOHANSEN  asked if the  department is currently  looking at                                                               
other options.                                                                                                                  
                                                                                                                                
MR. HARDY noted that an option  is to purchase a facility.  There                                                               
were plans  to move  the engineering  staff into  the downstairs,                                                               
however, the  department is  going to discuss  the status  of the                                                               
facility before making any more plans.                                                                                          
                                                                                                                                
CHAIR JOHANSEN asked if there  are other sites in Ketchikan being                                                               
contemplated.                                                                                                                   
                                                                                                                                
MR. HARDY reported  that a lot adjacent to the  facility is being                                                               
discussed for a new building, but  there are not any utilities to                                                               
the  lot.   He  noted  that  there is  also  real  estate in  the                                                               
terminal area.                                                                                                                  
                                                                                                                                
3:05:57 PM                                                                                                                    
                                                                                                                                
CAPTAIN  FALVEY said  that there  have  been conversations  about                                                               
sharing a facility with ASD.   He noted that AMHS needs more than                                                               
13,000 square feet.                                                                                                             
                                                                                                                                
CHAIR JOHANSEN asked what $7 million could purchase.                                                                            
                                                                                                                                
MR. HARDY  said that the  cost for new construction  in Ketchikan                                                               
is  $250-$300 square  foot, which  does not  include the  land or                                                               
utility cost.                                                                                                                   
                                                                                                                                
CHAIR JOHANSEN  explained that his  concern with building  in the                                                               
midst of the  shipyard, a finite space, is the  realization in 20                                                               
years  that the  space  is  more valuable  for  expansion of  the                                                               
industry.  He related the value  of the ship building industry to                                                               
the Ketchikan Gateway Borough.  He  said that the borough will be                                                               
flexible in  their negotiations  with AMHS  to help  protect this                                                               
space.                                                                                                                          
                                                                                                                                
3:12:58 PM                                                                                                                    
                                                                                                                                
CHAIR  JOHANSEN asked  what the  difference  is with  a "Class  B                                                               
office space"  and an "essential  facility."  He  understood that                                                               
an "essential facility" is built  to different standards and will                                                               
be more expensive to build.                                                                                                     
                                                                                                                                
MR. HARDY  said that  "essential facility"  means that  during an                                                               
emergency, its  service will  be critical  for health  and safety                                                               
for  the community,  and  it is  designed  for quick  restoration                                                               
should it be damaged.                                                                                                           
                                                                                                                                
CHAIR JOHANSEN  asked if this  has an  effect on the  bottom line                                                               
cost.                                                                                                                           
                                                                                                                                
MR.  HARDY  replied  that  the  classification  is  a  consultant                                                               
suggestion.                                                                                                                     
                                                                                                                                
CHAIR JOHANSEN asked if this has been factored into the cost.                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN  noted that the Matanuska-Susitna  area now                                                               
has  a  ferry terminal,  and  a  ferry  will be  delivered  soon.                                                               
However,  there is  not  a passenger  facility  on the  Anchorage                                                               
side.  He asked what the effect  will be for a passenger ferry to                                                               
dock at a freight terminal.                                                                                                     
                                                                                                                                
CAPTAIN  FALVEY   replied  that  the  first   concern  should  be                                                               
security.  He  expressed his belief that a  passenger terminal is                                                               
safer  when  it  is  located   away  from  a  commercial  freight                                                               
terminal.                                                                                                                       
                                                                                                                                
REPRESENTATIVE NEUMAN  asked if  he means for  the safety  of the                                                               
passengers,  the   people  working  in  the   industrial  docking                                                               
facility, or the safety of the boat.                                                                                            
                                                                                                                                
CAPTAIN FALVEY  said that  he is  not concerned  as much  for the                                                               
safety of the  boat however, he has much greater  concern for the                                                               
passengers  moving  around in  a  commercial  freight zone.    He                                                               
agreed  with  the  Anchorage transportation  committee  that  the                                                               
passenger ferry terminal  should be in a different  area than the                                                               
freight terminal.                                                                                                               
                                                                                                                                
REPRESENTATIVE  DOOGAN  asked how  much  square  footage will  be                                                               
renovated for $7.1 million.                                                                                                     
                                                                                                                                
MR. HARDY  said that it  will primarily  be for the  13000 square                                                               
feet of the first floor.                                                                                                        
                                                                                                                                
REPRESENTATIVE  DOOGAN posed  that  if new  construction is  $300                                                               
square foot, why will it cost $7.1 million for renovation.                                                                      
                                                                                                                                
MR.  HARDY   stated  that  there  is   exterior  renovation,  and                                                               
structural  renovation to  prepare for  a new  roof, so  the cost                                                               
will  be  almost  the  same  for renovating  or  building  a  new                                                               
building.                                                                                                                       
                                                                                                                                
REPRESENTATIVE DOOGAN  posed that land acquisition  and utilities                                                               
will  bring  additional costs  to  make  renovation and  building                                                               
costs similar.                                                                                                                  
                                                                                                                                
MR. HARDY stated  that the cost of $300 square  foot excludes the                                                               
cost of  land and utilities for  a new building.   The renovation                                                               
costs are estimated to be $270 square foot.                                                                                     
                                                                                                                                
CHAIR  JOHANSEN clarified  that  the top  and  bottom floors  are                                                               
identical.   He  asked  what  the borough  paid  to renovate  the                                                               
upstairs.                                                                                                                       
                                                                                                                                
CAPTAIN FALVEY  offered his belief  that the borough  spent about                                                               
$1 million to renovate the upstairs.                                                                                            
                                                                                                                                
MR.  HARDY said  that  his  recommendation is  to  not invest  $7                                                               
million in the current building, but  only to repair for any life                                                               
safety issues.  He  allowed that it will be a  huge expense to do                                                               
work on the downstairs.  He  said that the building has water and                                                               
foundation problems.                                                                                                            
                                                                                                                                
CHAIR JOHANSEN  posed that  AMHS hired a  consultant to  find out                                                               
the cost, yet Mr. Hardy does not agree with the consultant.                                                                     
                                                                                                                                
MR.  HARDY said  that he  is  in agreement  with the  consultant,                                                               
which  is to  only lease  the upstairs.   He  said the  condition                                                               
survey  was started  to  evaluate  the cost  of  moving into  the                                                               
downstairs.                                                                                                                     
                                                                                                                                
CHAIR JOHANSEN  asked to clarify that  he does not agree  that $7                                                               
million should be invested in building.                                                                                         
                                                                                                                                
MR. HARDY said that since the  cost of building a new building or                                                               
renovating a 50 year old building  is similar, and the life cycle                                                               
costs of  maintenance will be  higher for the older  building, he                                                               
will not recommend the renovation.                                                                                              
                                                                                                                                
CHAIR JOHANSEN asked what a  12,000 square foot new facility will                                                               
cost.                                                                                                                           
                                                                                                                                
CAPTAIN FALVEY  said that AMHS  will need at least  20,000 square                                                               
feet.                                                                                                                           
                                                                                                                                
CHAIR JOHANSEN  posed that the  AMHS will need to  move sometime,                                                               
and he asked the estimate of that cost.                                                                                         
                                                                                                                                
3:25:39 PM                                                                                                                    
                                                                                                                                
CHAIR  JOHANSEN  asked about  the  terms  of  the lease  for  the                                                               
building.                                                                                                                       
                                                                                                                                
CAPTAIN FALVEY replied that 16.5  years remain on the lease, with                                                               
a 10 year option for renewal.                                                                                                   
                                                                                                                                
CHAIR JOHANSEN asked who holds the option of renewal.                                                                           
                                                                                                                                
CAPTAIN FALVEY offered his belief that AMHS has the option.                                                                     
                                                                                                                                
CHAIR JOHANSEN asked if there is an out clause for the lease.                                                                   
                                                                                                                                
MR.  HARDY expressed  his  belief  that there  is  not an  escape                                                               
clause in the lease.  He opined  that the best action is to enter                                                               
into negotiations with the landlord for the necessary repairs.                                                                  
                                                                                                                                
CHAIR JOHANSEN asked what the option is.                                                                                        
                                                                                                                                
MR.  HARDY said  that  he  doesn't believe  AMHS  will lease  the                                                               
downstairs, but  if the  borough does  the renovation,  the money                                                               
will be paid by AMHS in increased lease costs.                                                                                  
                                                                                                                                
CHAIR JOHANSEN  speculated that the  appropriated money  is going                                                               
to be moved around the DOT&PF, and someone will benefit.                                                                        
                                                                                                                                
REPRESENTATIVE DOOGAN asked what the cost of the lease is.                                                                      
                                                                                                                                
MR. HARDY replied that it is $12000/month for 16 years.                                                                         
                                                                                                                                
3:28:37 PM                                                                                                                    
                                                                                                                                
CHAIR JOHANSEN summarized that AMHS  is working with the borough,                                                               
but  the department  does  not want  to put  any  money into  the                                                               
building.   The  DOT&PF position  is  that some  staff will  stay                                                               
upstairs, and  the engineers  will stay in  the trailers  for the                                                               
next 16.5 years.  He asked if  there will continue to be a search                                                               
for another building to house the engineers.                                                                                    
                                                                                                                                
CAPTAIN FALVEY offered  that one option will be  for the shipyard                                                               
to   accommodate  the   engineers,  though   it  is   an  outside                                                               
possibility.                                                                                                                    
                                                                                                                                
REPRESENTATIVE DOOGAN offered  that one option is to  buy out the                                                               
lease for $1.3  million, and it sounds like this  may be the best                                                               
option.                                                                                                                         
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Transportation  Standing  Committee   meeting  was  adjourned  at                                                               
3:31:06 PM.                                                                                                                   

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