Legislature(2009 - 2010)CAPITOL 17
03/23/2010 01:00 PM House TRANSPORTATION
| Audio | Topic |
|---|---|
| Start | |
| HJR47 | |
| HB357 | |
| SB272 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HJR 47 | TELECONFERENCED | |
| += | HB 257 | TELECONFERENCED | |
| += | HB 357 | TELECONFERENCED | |
| + | SB 272 | TELECONFERENCED | |
| + | TELECONFERENCED |
ALASKA STATE LEGISLATURE
HOUSE TRANSPORTATION STANDING COMMITTEE
March 23, 2010
1:03 p.m.
MEMBERS PRESENT
Representative Peggy Wilson, Chair
Representative Kyle Johansen
Representative Cathy Engstrom Munoz
Representative Tammie Wilson
Representative Max Gruenberg
Representative Pete Petersen
MEMBERS ABSENT
Representative Craig Johnson, Vice Chair
COMMITTEE CALENDAR
HOUSE JOINT RESOLUTION NO. 47
Urging the United States Coast Guard to amend its regulations
relating to small vessels transporting fuel and supplies to
remote communities and businesses in the state.
- MOVED HJR 47 OUT OF COMMITTEE
HOUSE BILL NO. 357
"An Act relating to the sale of land owned by the Alaska
Railroad that is not needed for railroad purposes."
- MOVED CSHB 357(TRA) OUT OF COMMITTEE
SENATE BILL NO. 272
"An Act relating to charges for rented motor vehicles, including
cost recovery fees, and making a violation of the rented motor
vehicle charge provisions an unfair trade practice."
- MOVED SB 272 OUT OF COMMITTEE
HOUSE BILL NO. 257
"An Act relating to prohibiting the use of cellular telephones
when driving a motor vehicle; and providing for an effective
date."
- BILL HEARING CANCELED
PREVIOUS COMMITTEE ACTION
BILL: HJR 47
SHORT TITLE: SMALL VESSEL CARGO EXEMPTION
SPONSOR(s): REPRESENTATIVE(s) JOHANSEN
02/23/10 (H) READ THE FIRST TIME - REFERRALS
02/23/10 (H) TRA
03/23/10 (H) TRA AT 1:00 PM CAPITOL 17
BILL: HB 357
SHORT TITLE: AK RAILROAD CORP. LAND SALES
SPONSOR(s): REPRESENTATIVE(s) STOLTZE
02/19/10 (H) READ THE FIRST TIME - REFERRALS
02/19/10 (H) TRA
03/16/10 (H) TRA AT 1:00 PM CAPITOL 17
03/16/10 (H) Heard & Held
03/16/10 (H) MINUTE(TRA)
03/23/10 (H) TRA AT 1:00 PM CAPITOL 17
BILL: SB 272
SHORT TITLE: RENTAL CAR CHARGES
SPONSOR(s): SENATOR(s) HUGGINS
02/10/10 (S) READ THE FIRST TIME - REFERRALS
02/10/10 (S) TRA, L&C
02/23/10 (S) TRA AT 1:00 PM BUTROVICH 205
02/23/10 (S) Moved SB 272 Out of Committee
02/23/10 (S) MINUTE(TRA)
02/24/10 (S) TRA RPT 4DP
02/24/10 (S) DP: MENARD, MEYER, PASKVAN, DAVIS
03/11/10 (S) L&C AT 1:30 PM BELTZ 105 (TSBldg)
03/11/10 (S) Moved SB 272 Out of Committee
03/11/10 (S) MINUTE(L&C)
03/12/10 (S) L&C RPT 5DP
03/12/10 (S) DP: PASKVAN, MEYER, THOMAS, BUNDE,
DAVIS
03/15/10 (S) TRANSMITTED TO (H)
03/15/10 (S) VERSION: SB 272
03/17/10 (H) READ THE FIRST TIME - REFERRALS
03/17/10 (H) TRA, L&C
03/23/10 (H) TRA AT 1:00 PM CAPITOL 17
WITNESS REGISTER
DAVID SCOTT, Staff
Representative Kyle Johansen
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified on behalf of the prime sponsor
during the discussion of HJR 47
DAVID SPOKELY
Power Systems and Supply Alaska
Ketchikan, Alaska
POSITION STATEMENT: Testified during the discussion of HJR 47.
REPRESENTATIVE BILL STOLTZE
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified and answered questions as prime
sponsor of HB 357.
JIM KUBITZ, Vice President
Real Estate and Facilities
Alaska Railroad Corporation (ARRC)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 357.
PHYLISS JOHNSON, Vice-President and General Counsel
Alaska Railroad Corporation (ARRC)
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 357.
JOHN COAN, Staff
Representative Bill Stoltze
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Testified during the discussion of HB 357.
MARK STEARNS, Owner
Alaska Wood Molding
Anchorage, Alaska
POSITION STATEMENT: Testified during the discussion of HB 357.
PAT GAMBLE, President and CEO
Alaska Railroad Corporation (ARRC)
Anchorage, Alaska
POSITION STATEMENT: Testified and answered questions during the
discussion of HB 357.
EDRA MORLEDGE, Staff
Senator Charlie Huggins
Alaska State Legislature
Juneau, Alaska
POSITION STATEMENT: Presented SB 272 on behalf of the prime
sponsor of SB 272.
SHANE SKINNER, Controller
Enterprise Rent-A-Car
Seattle, Washington
POSITION STATEMENT: Testified during the discussion of SB 272.
ACTION NARRATIVE
1:03:43 PM
CHAIR PEGGY WILSON called the House Transportation Standing
Committee meeting to order at 1:03 p.m. Representatives P.
Wilson, Munoz, Petersen, and T. Wilson, and were present at the
call to order. Representatives Gruenberg and Johansen arrived
as the meeting was in progress.
1:03:54 PM
HJR 47-SMALL VESSEL CARGO EXEMPTION
CHAIR P. WILSON announced that the first order of business would
be HOUSE JOINT RESOLUTION NO. 47, Urging the United States Coast
Guard to amend its regulations relating to small vessels
transporting fuel and supplies to remote communities and
businesses in the state.
1:05:56 PM
DAVID SCOTT, Staff, Representative Kyle Johansen, Alaska State
Legislature, on behalf of the prime sponsor, explained that HJR
47 would urge the U.S. Coast Guard (U.S.C.G.) to amend it
regulations relating to small vessels transporting fuel and
supplies to remote communities and businesses in the state. A
constituent brought this matter to Representative Johansen's
attention. Mr. Spokely is on-line to testify today, he stated.
DAVID SPOKELY, Power Systems and Supply Alaska, stated that
problems exist in delivering fuel and freight to Southeast
Alaska and remote sites. He explained that twenty years ago
logging barges were available in Southeast Alaska to help move
goods. He modified a vessel for fuel delivery. He then built a
brand new vessel and worked with the Department of Environmental
Conservation (DEC) to develop a spill response that meets the
U.S. Environmental Protection Agency's (EPA) 2010 standards.
The vessel he designed and built is a triple-hull high-speed
landing craft. Although the local and state branches of the
U.S.C.G. liked his system, when he applied for an exemption to
the federal law, the national offices limited him to one vessel
until the matter could be further investigated. He would like
to have several ships in order to serve local communities, but
has since been advised that due to cutbacks the U.S.C.G. would
not develop any regulations to allow operation of his vessels.
1:09:15 PM
MR. SPOKELY restated that the local and state U.S.C.G. "liked
what his company was doing." He explained that his spill
response plan meets the EPA's 2010 standards that the state will
implement for fuel delivery. His triple-hull lightweight vessel
cruises at 23 knots and can navigate into shallow waters, which
allows him to traverse bays and rivers. During its five years
of operation his vessel has never "spilled any fuel". He
detailed other aspects of his vessel's system, including the
self-regulating pumping system. The state DEC and the local
U.S.C.G. offices assisted him with the vessel design, certified,
and inspected his vessel as a passenger vessel, a bulk fuel
carrier, and a bulk cargo carrier. He reported that as of today
his vessel is the only vessel in the U.S. that has obtained all
three designations at once. The U.S.C.G. did not identify any
issues or request any modifications or changes to his vessel.
In fact, the state DEC office would like his company to expand
throughout the state to serve coastal areas, he stated.
MR. SPOKELY, in response to Chair Wilson, replied that his
vessel delivers fuel, cargo, and passengers. The difficulty is
that the regulations that apply to his vessel were developed for
supertankers. Thus, the U.S.C.G. has not addressed the
requirements that apply to smaller vessels. So long as his
vessel remains under 15 gross tons the bulk of the regulations
do not really apply, but since his tanks are internal, he must
meet the cargo tanker vessel regulations intended for large oil
tankers. In order to obtain relief, the U.S.C.G. must create a
new subchapter in regulation that would apply to smaller vessels
transporting fuel, freight, and passengers. He said, "We
addressed that through this exemption. They thought it was
great. They loved what we did. They agreed we should be
building more of these and supplying them everywhere. Maine has
been calling us and asking if they can get our boats." The
limitation arises since his vessel is built from aluminum and
the regulations require tankers to be built from steel. Thus,
his issue requires the U.S.C.G. to create a new category of
vessel. The U.S.C.G. was moving forward on regulations and then
decided on other priorities to fund. Therefore, no funding or
staff has been authorized to write the regulations.
1:13:58 PM
MR. SPOKELY reported that he has worked with the local U.S.C.G.
office on draft regulations, but the Juneau office does not have
resources to move forward, either. Meanwhile, he is "stuck"
with one boat in Ketchikan while Alaska needs more boats like
his to serve the small Alaskan communities. He pointed out the
exemption would apply to all companies providing similar
service, not just his company.
1:14:57 PM
CHAIR P. WILSON related her understanding that this resolution,
HJR 47, would ask the U.S.C.G. to create a new category of
vessel and separate it out from the requirements for larger
vessels.
1:15:47 PM
MR. SCOTT, in response to Representative Gruenberg, explained
that he had an expert witness lined up to testify but the person
was not able to make the meeting. He explained that the
U.S.C.G. personnel offered to answer any questions that are
submitted in writing.
REPRESENTATIVE GRUENBERG offered his belief that it sounds like
the statutory authorization exists but the U.S.C.G. must publish
a regulation to cover vessels that carry fuel, cargo, and
passengers concurrently at the same time.
MR. SCOTT agreed.
1:17:08 PM
REPRESENTATIVE GRUENBERG stated that he does not have any
problem passing HJR 47 out of committee. He asked why the
U.S.C.G. has not yet adopted regulations since not doing so
makes it tough for Southeast Alaska businesses. He asked what
needs to happen, whether a U.S.C.G. Admiral could come before
the committee or if the U.S. Congressional delegation would need
to assist in addressing the issue.
REPRESENTATIVE JOHANSEN said he appreciated Representative
Gruenberg's point of view. He would like to see the resolution
keep moving through the process.
CHAIR P. WILSON said she would also like to pass the resolution
out of committee. She asked the sponsor's staff to contact the
U.S.C.G.
1:18:36 PM
REPRESENTATIVE MUNOZ related her understanding that the U.S.C.G.
in Alaska is supportive but the matter just needs attention at
the national level.
MR. SCOTT agreed.
CHAIR P. WILSON commented that she hoped this resolution would
help alleviate the problem.
1:19:17 PM
REPRESENTATIVE PETERSEN asked whether the Ketchikan boat
building facility could build boats of that size.
MR. SCOTT answered yes.
REPRESENTATIVE PETERSEN expressed support for using this type of
vessel in Western Alaska. He offered his strong for HJR 47.
1:20:21 PM
REPRESENTATIVE GRUENBERG asked whether this vessel was built
from the hull up.
MR. SPOKELY explained that his vessel is a one of a kind vessel.
This vessel is 44 feet long and he plans to keep any future
vessels under 65 feet and under 10,500 gallons. He stated that
his company does not want to compete with "giant barges" but
would like to deliver small quantities of fuel in a safe manner
to rural areas. He envisioned using the 50 to 60 foot vessels
as well as the 40-foot vessel designed specifically for shallow
water navigation. It takes less than ten minutes to convert his
vessel from a freight or passenger vessel to a fuel vessel.
Fuel transport operations cannot occur while passengers are on
board, which he characterized as a good policy.
CHAIR P. WILSON related her understanding that Mr. Spokely has a
"sister ship" waiting in the wings to be built.
MR. SPOKELY answered yes.
REPRESENTATIVE MUNOZ thanked Mr. Spokely for his investment and
transportation in the Southeast Alaska region.
1:22:42 PM
CHAIR P. WILSON, after first determining no one else wished to
testify, closed public testimony on HJR 47.
REPRESENTATIVE JOHANSEN remarked that the vessel Mr. Spokely
designed is in demand. He characterized the vessel as an
"amazing vessel" manufactured and designed in Alaska, with
potential applications statewide. He said he is proud to
represent District 1. He wants to "cut that red tape" and allow
Mr. Spokely to move forward with his second ship. He said, "We
should all get behind it and make it happen."
REPRESENTATIVE JOHANSEN removed his objection.
REPRESENTATIVE MUNOZ moved to report HJR 47 out of committee
with individual recommendations and the accompanying fiscal
notes. There being no objection, HJR 47 was reported from the
House Transportation Standing Committee.
1:24:24 PM
REPRESENTATIVE GRUENBERG added he was on a landing ship tank
(LST) in Vietnam, which he thought was very similar to this
vessel. He stated that the LSTs hauled cargo and people, but
did not need a pier to unload.
HB 357-AK RAILROAD CORP. LAND SALES
1:25:27 PM
CHAIR P. WILSON announced that the next order of business would
be HOUSE BILL NO. 357, "An Act relating to the sale of land
owned by the Alaska Railroad that is not needed for railroad
purposes."
1:25:43 PM
REPRESENTATIVE BILL STOLTZE, Alaska State Legislature,
introduced his staff.
JOHN COAN, Staff, Representative Bill Stoltze, Alaska State
Legislature, on behalf of the prime sponsor, related that two
questions arose at the last hearing: whether the ARRC land is
considered state land and if it is, whether any legal
ramifications to in stating a right of first refusal on the
land. He stated that the Alaska Railroad Corporation (ARRC)
land is state land and the legislature approves any land sales
and disposals. Thus, a right of first refusal is fine, he
stated.
1:27:12 PM
REPRESENTATIVE STOLTZE offered that this bill really represents
a policy call for the legislature. The purpose of the bill is
captured by the letter from the Alliance in members' packets.
The Alliance called the bill a "pro-business, pro-private
sector, pro-investment, pro-jobs, and pro-Alaska Railroad" bill.
He said he said he stumbled into this "unrest." He bill has
spurred lots of discussion from the business community. Without
the ability to have the opportunity to own the land, the
business owners do not have the confidence to make the business
investments. He remarked on the breadth of letters he received
on this matter.
1:29:44 PM
REPRESENTATIVE T. WILSON asked whether the bill would give the
Alaska Railroad Corporation (ARRC) the option to sell land.
REPRESENTATIVE STOLTZE answered that the bill provides the
permission to do so. He remarked on what he termed as
"arrogance" that the ARRC has shown to private businesses. He
offered that the ARRC properties are taxable properties, which
will likely only increase in value. He anticipated that lessees
would be more likely to improve the property if they owned it,
similar to how homeowners versus renters are more apt to invest
and care for property.
1:32:21 PM
REPRESENTATIVE GRUENBERG referred to the sponsor statement,
which read:
To spur economic development throughout the state, House
Bill 357 adds a fourth clause to the existing language
governing how the Alaska Railroad Corporation may dispose
of land. House Bill 357 will enable the railroad to sell
land that is not needed for essential railroad purposes.
This bill does not ask for any irresponsible disposal of
land, as the sale must be initiated by the board of
directors on two conditions. The first condition is that
the land is not essential to railroad operations, and the
second condition is that the sale is in the best interest
of the state of Alaska.
As support has shown, current leaseholders are very unhappy
with the inability to purchase their leased properties from
the railroad. In general real estate dealings, private
purchases are made in mutually beneficial sales. House Bill
357 encourages these sales after determination by the board
of directors of the railroad looks at each sale with the
overall benefit to the state of Alaska as the key driver.
Not only will the private sector benefit from this addition
to state law, the railroad will also have increased ability
to make decisions regarding their overall real estate
portfolio.
The sale and relationship of private and public lands are
vital to the economic growth of the state of Alaska. I ask
for your consideration and support of House Bill 357 to
promote Alaskan growth through the diversification of land
ownership, increasing the tax base of the state, and
encouraging responsible development of Alaskan land.
REPRESENTATIVE GRUENBERG stated that the sponsor statement
outlines the first condition for sale would be that "the land is
not essential to railroad operations..." He referred to page 1,
lines 11-12, which read, "the land is not necessary for
essential railroad purposes,..." He pointed out the language is
not the same.
1:33:09 PM
REPRESENTATIVE STOLTZE asked members to refer to the bill and
not his letter for the true meaning.
1:33:28 PM
REPRESENTATIVE GRUENBERG offered his belief that the bill would
provide the Alaska Railroad Corporation (ARRC) a little more
flexibility.
REPRESENTATIVE STOLTZE agreed that is his intent. He said he
hoped the ARRC would not abuse the business owner's trust by
being inflexible.
1:33:51 PM
REPRESENTATIVE MUNOZ asked whether the leases generate more
money at eight percent interest than the ARRC would earn through
investments, in practical terms if the ARRC would have a
compelling case to sell the land.
REPRESENTATIVE STOLTZE again noted that this is a policy call.
He suggested that the bill is not just about enhancing the
state's revenue, but is about the ARRC's impact on jobs in the
private sector. He characterized the provisions in the bill as
"a balancing act" that the legislature must weigh in on. In
terms of pure revenue, he considered that it is probably a
better deal for the ARRC "to have a hammer over lessee," but the
correspondence he received reflects that HB 357 may promote
business and "spur" more activity.
1:35:25 PM
REPRESENTATIVE MUNOZ supported fostering business growth and
opportunities for business. She wondered whether the language
is strong enough. She asked whether the sponsor believes that
HB 357 will lead to opportunities for individual businesses to
acquire the properties.
REPRESENTATIVE STOLTZE said he hoped the bill would alert the
ARRC that the legislature is interested in the ARRC developing a
better working relationship with businesses operating on
railroad property. He recalled anecdotal comments from lessees
who would like to make investments but cannot due to the
uncertainty of "dealing with the railroad." This is not just
about the financial aspect but is also about how the ARRC will
react to lessees in five years. He recalled the terms
"arbitrary and capricious" have been used in relation to the
ARRC. He related his understanding that lease terms are
erratic. He has observed this first hand when working with the
ARRC on other issues. He believed that fiscal certainty and
right of first refusal is important to lessees, he stated.
1:37:39 PM
REPRESENTATIVE GRUENBERG referred to page 1, line 12, to the
word "essential" yet the language on page 2, line 3 does not
refer to "essential." He asked whether the sponsor would
consider deleting "essential" from the provision on the first
page.
1:38:20 PM
REPRESENTATIVE STOLTZE responded that the change may read
better, although he would probably prefer adding "essential" to
the language on page 2.
REPRESENTATIVE GRUENBERG suggested that he would prefer not to
say "essential" in order to give ARRC more leeway.
REPRESENTATIVE STOLTZE offered his belief that the ARRC already
has a lot of flexibility. He stated that "essential" was to
protect the ARRC.
REPRESENTATIVE GRUENBERG asked whether the language was
discretionary.
REPRESENTATIVE STOLTZE stated that he would leave the
punctuation and grammar to Representative Gruenberg to consider.
1:39:26 PM
REPRESENTATIVE GRUENBERG referred to page 2, lines 8-11 to
subsection (c). He asked whether the funds are deposited to
general fund (GF) or to a separate account.
REPRESENTATIVE STOLTZE stated that the funds are not deposited
to the GF, but are retained by the ARRC. Thus, the land
proceeds are not used for the general ARRC operations.
1:40:33 PM
REPRESENTATIVE GRUENBERG referred to page 2, lines 10-11, which
read, "Money in the account may be appropriated in accordance
with 45 U.S.C. 1207(a) (5)(Alaska Railroad Transfer Act of
1982)." He inquired as to whether the legislature appropriates
these funds.
REPRESENTATIVE STOLTZE did not recall. He stated that the state
must comply with the Alaska Railroad Transfer Act of 1982. He
explained that the ARRC does not appear in the state budget. He
thought the language referred to activities within the ARRC.
REPRESENTATIVE GRUENBERG asked whether "appropriated" is the
correct term since that is generally reserved for legislative
bodies.
REPRESENTATIVE STOLTZE responded that the legislature is at a
disadvantage since the ARRC does not fall under the Executive
Budget Act.
1:42:48 PM
JIM KUBITZ, Vice President, Real Estate and Facilities, Alaska
Railroad Corporation (ARRC), introduced himself. He explained
that "appropriated" is not likely the best term. He suggested
that the ARRC's legal counsel is on-line.
REPRESENTATIVE GRUENBERG also asked the ARRC to comment on the
word "essential" that he previously mentioned.
CHAIR P. WILSON opened up public testimony on HB 357.
PHYLISS JOHNSON, Vice President & General Counsel, Alaska
Railroad Corporation (ARRC) introduced herself. In response to
Representative Gruenberg, said she thought that deleting
"essential" on page 1 would give the ARRC more flexibility.
REPRESENTATIVE GRUENBERG referred to page 2, line 10, and asked
whether some other language than "appropriated" should be used.
She recommended that "expended" be used.
1:45:25 PM
MS. JOHNSON, in further response to Representative Gruenberg,
stated that she did not have any other recommended changes to
the bill. In response to Chair P. Wilson, she responded that
having the reference to the Alaska Railroad Transfer Act was a
good to have in the bill, since "railroad funds be used for
railroad and related purposes." She also recalled similar
language in the state transfer act, as well. She stated that
this language helps to clarify the continued use of railroad
funds for railroad purposes.
1:46:49 PM
REPRESENTATIVE GRUENBERG referred to two fiscal notes. He
pointed out that one fiscal note was approved on 3/23/10. He
assumed that the fiscal note supersedes the one with an earlier
signature date.
MR. KUBITZ answered yes. He believed that was correct.
1:47:37 PM
MR. KUBITZ referred to page 1, line 12, and read: "...(2) the
sale of the land is in the best interest of the state." He
explained that the determination must be made by the ARRC's
Board of Directors in order to sell land. He offered his belief
that what is in the best interest of the state may not mesh with
what is in the best interest of the ARRC, since economic
development and self-sufficiency are listed in the ARRC's
mission statement. The state's historic properties group may
have a best interest statement that may be contrary to the ARRC.
He suggested that this may not be a huge problem but he related
that this language would require the ARRC's Board to consider
what is in the best interest of the state.
1:49:07 PM
REPRESENTATIVE GRUENBERG offered his belief that this is "the
heart of the bill." The ARRC's board must make a finding. He
Normally, when a court makes a finding it is not usually
reviewable by a higher court unless it is clearly erroneous.
That term means the court is left with a definite and firm
conviction that the facts the lower body found were wrong or
else the court misapplied the law. This forms the twin basis
for determining an erroneous decision. He said he does not know
whether that applies to a finding of the board, but the sponsor
says that this is discretionary. Further, the use of the term
"may" on line ll makes it discretionary. He asked Ms. Johnson
if she thought he was correct in his assessment.
1:49:51 PM
MS. JOHNSON said, "Certainly it's discretionary with the use of
the word 'may.'" She agreed with Mr. Kubitz, that the ARRC
Board's has a lack of familiarity in applying the state's best
interest standard. She said to use this standard casts us "a
little bit adrift in an area of expertise that previously the
ARRC has not been called upon to consider. She offered that the
best interest of the ARRC is more economically based than the
state's best interest. She recalled that if the Department of
Natural Resources (DNR) was considering whether to lease land,
the department must consider other things such as fish habitat
or game management since the state is comprised of multi-use
agencies. She suggested that the standard of appeal would
generally be determined by the Superior Court.
1:52:10 PM
REPRESENTATIVE GRUENBERG related that the ARRC may tactfully be
suggesting that on page 1, line 13 and on page 2, line 4, that
the committee consider changing "state" to "railroad."
MS. JOHNSON answered yes. She thought the language would be
more satisfactory.
REPRESENTATIVE MUNOZ asked to hear from the sponsor. She asked
whether the sponsor intended that this language would apply to
the best interest of the economic vitality of the area.
1:53:11 PM
JOHN COAN, Staff, Representative Bill Stoltze, Alaska State
Legislature, on behalf of the prime sponsor, offered his belief
that the intent of the specific language "in the best interest
of the state" was multi-faceted. He suggested that the language
would provide another vehicle for responsible sale of land, and
for the ARRC to take a greater role in community development
instead of being a hindrance. He further thought that the ARRC
should facilitate a better level of contact between the quasi-
public agency and the private sector. He related his
understanding that replacing "state" with "railroad" might
change the focus of the bill.
1:54:28 PM
MARK STEARNS, Owner, Alaska Wood Molding, stated that he has a
business located at the Port of Anchorage. He said that he is a
nine-year leaseholder and the ARRC has generally been
supportive. He stated that one source of frustration that many
have is the issue of uncertainty. He explained that the terms
of his lease went from $790 per month in 2001 to over $1600 over
a three-year period and then increased to $3000 per month. He
related that the terms contained in leases typically restrict
any increases to 135 percent of the lease payment over a five
year period. He pointed out that his business was not afforded
similar terms or any official notification process. Changes to
the terms of his lease have created a climate of uncertainty and
makes it difficult for him to consider any improvements. He
recapped that having lease terms dramatically increase by nearly
400 percent over nine years without an explanation clearly
created uncertainty. He described the situation as "random" and
"a scary situation."
1:58:17 PM
MR. STEARNS explained that lessees do not have any process for
relief. The ARRC "pretty much does what the railroad would like
to do." He urged members to support HB 357 to afford businesses
an opportunity to have some certainty.
1:58:57 PM
CHAIR P. WILSON asked for the length of his lease.
MR. STEARNS responded that he is in the process of extending
their lease to 35 years, but he has not yet heard back from the
ARRC. He said he hopes the lease will not allow the ARRC to
increase payments more than 35 percent over a five-year period.
In further response to Chair P. Wilson, he explained that he has
read his lease but some question remains as to which is the
valid lease. He pointed out that the potential to own the
property would afford him greater flexibility to make
investments.
CHAIR P. WILSON commented that the newer ARRC leases contain the
language.
MR. STEARNS agreed that the provision limiting the increase is
in the new lease.
2:01:35 PM
PAT GAMBLE, President and CEO, Alaska Railroad Corporation
(ARRC), offered his belief that the dialogue is healthy. He
referred to page 2, line 2, to the public notice, best interest
of the state, and to the first right of refusal. He described a
scenario in which a parcel is for sale and the current
leaseholder makes an offer to purchase the property. If a
member of the public makes a higher offer, he wondered if that
would be considered as acquiring the best interest for the state
or if some other determination would be made. He acknowledged
that if the scenario arose that he would recommend the ARRC
board take the higher offer. However, he was not certain how
that would "square with the first right of refusal" or obtains
the best return for the state. He concluded that practical
issues like this arise, but overall the discussion has been
large healthy discussion.
2:03:30 PM
CHAIR P. WILSON asked whether first right of refusal refers to
paying the "going rate" and when another offer is made that the
"going rate" would prevail.
2:03:46 PM
REPRESENTATIVE GRUENBERG clarified that this raises issues that
are addressed in the memorandum from the Division of Legal
Services. He asked whether Ms. Johnson has reviewed the March
20, 2010 memo.
MS. JOHNSON answered no.
REPRESENTATIVE GRUENBERG suggested that the ARRC's lawyers
should review the memo.
MS. JOHNSON agreed to do so.
REPRESENTATIVE GRUENBERG referred to a letter August 25, 2004,
from Steve Van Sant, State Assessor, to Marty McGee, the
Municipality of Anchorage's Assessor, and asked for its
relevance to the bill.
MR. KUBITZ replied that he made copies of the letter for the
committee. He explained the contention was that selling
railroad land would increase local tax revenue. He acknowledged
tenants are taxed following a somewhat complicated formula.
Basically as the lease approaches the termination date, the
actual value goes down. The letter of August 25, 2004 informed
the MOA that it needed to tax the tenants as though they owned
the land. Thus, this letter provided the justification for the
lessee's taxes on ARRC leased land and the reason that the taxes
will not go up.
2:07:15 PM
MR. KUBITZ, in response to Representative Gruenberg, related
that the tenants understood the reason the leased property was
being tax. He said that represents one reason that some tenants
believe they "may as well" own the land since they must pay
taxes on the land. In further response to Representative
Gruenberg, he agreed that the assessed amount is reduced as the
lease draws closer to the end of the term.
REPRESENTATIVE GRUENBERG remarked that the property tax amount
is less at the end of the lease than it would be if the lessee
was a fee simple owner.
MR. KUBITZ agreed.
2:07:59 PM
CHAIR P. WILSON related that the committee must consider the
reason the ARRC does not request state funding, which is that as
a quasi-independent agency it owns land and has the ability to
earn income.
MR. KUBITZ, in response to Representative T. Wilson, explained
that the appraisal and appeal process is up to the tenants.
Typically, tenants often appeal tax assessments and that is a
relationship with the taxing agency. Some tenants are
successful in their appeals and others are not.
2:09:40 PM
REPRESENTATIVE T. WILSON related a scenario in which the ARRC
appraisal is set at $500,000, but the borough assessment is set
at $400,000. She asked whether the tenant could appeal by
furnishing the borough assessment.
MR. KUBITZ answered that the tenant has the right to obtain a
third party appraisal and can present that to the ARRC for
consideration. Per a mechanism in the lease, if the tenant and
the ARRC cannot reach an agreement, the matter would go to
binding arbitration for a decision. A third party appraisal
must be performed by a "Member of the Appraisal (MAI)"
appraiser.
2:10:39 PM
MR. KUBITZ, in response to Representative T. Wilson, he
explained that the ARRC appraises its property every five years.
He pointed out that Mr. Stearns will be operating under a new
lease, which provides adequate protection. Previously, Mr.
Stearns was operating under a 50-year old federal lease that did
not contain any cap. Thus, any time an appraisal increased the
property value, the lease also increased accordingly, as per the
lease terms. He pointed out that the ARRC's leases limit the
term increases to 135 percent over a five-year period.
2:11:34 PM
CHAIR P. WILSON asked whether the amount of the lease increases
applied to all tenants.
MR. KUBITZ explained that not all the leases are ARRC leases and
a few leases remain that date back to the 60s, although little
time remains on those leases. The old leases did not even
contain environmental language. He assured Chair P. Wilson that
the ARRC strives to have everyone under the new leases for
everyone's benefit.
2:12:13 PM
CHAIR P. WILSON, after first determining no one else wished to
testify, closed public testimony on HB 357.
2:12:33 PM
REPRESENTATIVE GRUENBERG made a motion to adopt Conceptual
Amendment 1, on page 1, line 12 to delete "essential."
REPRESENTATIVE T. WILSON objected for purpose of discussion.
REPRESENTATIVE GRUENBERG expanded Conceptual Amendment 1, on
page 1, line 10 to delete "essential." He explained that
removing the two references to "essential would conform to the
language on page 2, line 3. This would give the corporation
more flexibility and would lower the standard in instances in
which the ARRC board determines the land is necessary for ARRC
purposes. He offered that this would avoid the discussion of
deciding the whether the land is essential for railroad
purposes. He commented that the sponsor does not oppose
Conceptual Amendment 1 and the ARRC supports Conceptual
Amendment 1.
REPRESENTATIVE T. WILSON removed her objection.
There being no objection, Conceptual Amendment 1 was adopted.
2:14:28 PM
REPRESENTATIVE GRUENBERG made a motion to adopt Conceptual
Amendment 2, on page 1, line 1, in the title, to replace
"needed" with "necessary".
REPRESENTATIVE T. WILSON objected for purpose of objection.
REPRESENTATIVE GRUENBERG offered his belief that this change
would be grammatically correct.
MR. COAN suggested that pending the legal drafter's consent that
the change should be fine.
REPRESENTATIVE T. WILSON removed her objected. There being no
further objection, Conceptual Amendment 2 was adopted.
2:15:46 PM
REPRESENTATIVE GRUENBERG made a motion to adopt Conceptual
Amendment 3, on page 2, line 10, to remove "appropriated" and
insert "expended."
REPRESENTATIVE T. WILSON objected. She asked whether funds
could be deposited so the ARRC could spend the interest instead
of spending the principal.
REPRESENTATIVE GRUENBERG explained that Conceptual Amendment 3
provides a grammatical change, which is that the ARRC can
"expend" only in accordance with federal law.
REPRESENTATIVE PETERSEN recalled that the federal definition in
45 U.S.C. 1207(a) (5) (Alaska Railroad Transfer Act of 1982)
required that the funds be used for railroad purposes. Thus,
the funds would be "expended" for railroad purposes. He agreed
the term "appropriate" referred to legislative action.
REPRESENTATIVE MUNOZ suggested that "expend" means to spend so
she thought it may be clearer to use "budgeted." She explained
that the ARRC may want to invest the funds.
MS. JOHNSON offered that her first response is that using "may
be expended" would also give the ARRC the latitude to save the
funds in an account. She pointed out reference to "45 U.S.C.
1207 (a) (5) (Alaska Railroad Transfer Act of 1982)" was to
ensure the funds are spent for railroad and related purposes.
She recalled when another committee member summarized the
federal law that the member left out "related purposes" which
could be significant.
2:19:00 PM
REPRESENTATIVE T. WILSON stated that she preferred "invested"
for the intent it implies since she would rather see the funds
invested and "to send the ARRC a better message."
MR. COAN pointed out that he not an attorney, but he believed
the drafter used the term "appropriated" since it is the term
used in Alaska Railroad Act of 1982. He said, 45 U.S.C. 1207
(a) (5) reads, "Revenues generated by the state-owned railroad,
including any amount appropriated or otherwise made available to
the state-owned railroad should be retained and managed by the
state-owned railroad for railroad and related purposes."
2:20:18 PM
MR. COAN, in response to Representative Gruenberg, re-read the
federal law.
CHAIR P. WILSON said she thought that the language referred to
an appropriation made to the legislature.
REPRESENTATIVE GRUENBERG agreed. He said this language seems to
be just the opposite of the language in the bill.
MR. COAN related his understanding that the specific section in
federal law references "appropriation" so using "appropriation"
in the bill is correct.
2:21:14 PM
REPRESENTATIVE GRUENBERG offered his belief that the federal
language the sponsor's staff read is correct, but he opined that
it is not correct to use "appropriated" in the bill. He said he
believes that a person can "budget money without spending it."
He said he prefers not to use the term "budget" and that
"expended" is the legal term.
CHAIR P. WILSON preferred the use of "expended."
REPRESENTATIVE T. WILSON disagreed, stating that the language
"expended" sends the wrong message to the ARRC.
2:22:14 PM
REPRESENTATIVE GRUENBERG related that this provision sets out a
limitation, which is that the funds could only be expended in
accordance with the federal law. He asked Ms. Johnson for
clarification.
MS. JOHNSON answered yes, that Representative Gruenberg is
correct.
REPRESENTATIVE PETERSEN asked whether "money in account may be
used" is a possible clarification.
MS. JOHNSON stated that "used" is acceptable.
REPRESENTATIVE GRUENBERG explained that a person does not "use"
money in an account, but "spends it." He offered his belief
that "spend" or "expended" is the normal legal term.
2:24:37 PM
REPRESENTATIVE PETERSEN made a motion to amend Conceptual
Amendment 3, to delete "appropriated" and insert "used." There
being no objection, the amendment to Conceptual Amendment 3 was
adopted.
2:25:01 PM
REPRESENTATIVE T. WILSON removed her objection.
There being no further objection, Conceptual Amendment 3, as
amended, was adopted. Thus, subsection (c) read:
(c) The corporation shall separately account for the
proceeds from the sale of land under this section and
shall report the earnings and balance in the account
in the annual report required by AS 42.40.260. Money
in the account may be used in accordance with 45
U.S.C. 1207(a)(5) (Alaska Railroad Transfer Act of
1982).
2:25:25 PM
REPRESENTATIVE T. WILSON moved to report HB 357, as amended, out
of committee with individual recommendations and the
accompanying fiscal notes. There being no objection, the CSHB
357(TRA) was reported from the House Transportation Standing
Committee.
2:25:40 PM
SB 272-RENTAL CAR CHARGES
CHAIR P. WILSON announced that the final order of business would
be SENATE BILL NO. 272, "An Act relating to charges for rented
motor vehicles, including cost recovery fees, and making a
violation of the rented motor vehicle charge provisions an
unfair trade practice."
2:25:54 PM
EDRA MORLEDGE, Staff, Senator Charlie Huggins, Alaska State
Legislature, paraphrased from the sponsor statement, as follows
[original punctuation provided]:
SB 272 is a technical bill that would allow rental car
companies to do in Alaska what they already do in thirty
other states. Alaska law is currently silent on the issue
of separately-listed charges on rental car statements for
the recovery of fees. This bill would require those fees to
be listed separately and clearly identified on the rental
car agreement.
The industry standard is to turn over the rental car fleet
every twelve months and to associate the costs of licensing
the vehicles, concessions, and airport or facility-related
costs with the vehicles themselves. In addition to
government taxes and surcharges, rental car companies
assess additional "cost recovery fees" to offset those
costs. Consumers should be made aware, and be able to see
the fees they are charged, on both the rental bill and in
an online quote. This bill would provide full disclosure
and transparency of "cost recovery fees" included in rental
car agreements. In addition, this legislation would make
violating the provision an unfair trade practice.
2:27:32 PM
MS. MORLEDGE explained that the bill passed the other body
without any opposition. The Department of Law supports the
bill, as does the industry, she stated.
2:29:00 PM
REPRESENTATIVE MUNOZ referred to the "Business Advisory" dated
August 30, 2006 from the Department of Law and asked whether the
bill is necessary.
MS. MORLEDGE explained that the "Business Advisory" resulted
because complaints arose that fees were being charged that may
be in violation of the federal Consumer Protection Act.
However, it came to the attention of the Department of Law that
the state did not have any enforceable laws.
2:29:54 PM
CHAIR P. WILSON passed the gavel to Representative Munoz.
2:30:15 PM
SHANE SKINNER, Controller, Enterprise Rent-A-Car, explained that
he represents Enterprise Rent-A-Car in Alaska and Washington
State. He concurred that the current Alaska statute is silent
and this bill would create clarity since it would require full
disclosure of all taxes and fees. The bill would limit the fee
amounts to the amounts paid to government entities, including
rental taxes, airport fees, or license and registration fees.
2:31:13 PM
REPRESENTATIVE GRUENBERG referred to Section 1, and related that
the fees must be listed in the rental car agreement, which is a
document people sign before "they take the keys to the car." He
stated that if the intent is disclosure, that the fees should be
clear in any advertising and quotes, not just be contained in
the "fine print."
MS. MORLEDGE agreed the intent is full disclosure, which
includes when potential customers are perusing quotes and at the
time that the car is being returned to the car rental agency.
REPRESENTATIVE GRUENBERG suggested that it should be clear in
the bill. He referred to page 2, line 1, which he suggested
should read, "in the written car rental agreement" for better
disclosure. He then referred to page 2, line 3, to "government
tax, or government surcharge." He offered his belief that this
language is broader than the sponsor's intent, since government
taxes could include withholding or municipal property taxes. He
related his understanding that the sponsor would like to limit
the tax to certain types of taxes.
MS. MORLEDGE agreed that is the sponsor's intent.
2:35:07 PM
MR. SKINNER explained that the current statute allows car rental
agencies to pass through property taxes or employment taxes but
car rental companies do not currently assess those types of
charges. Currently, a facility management charge (FMC) is
assessed at the Anchorage airport, through an agreement with the
concessionaire. He expressed concern that if the language is
narrowed down that the effect may be to disrupt the agreement
currently in place with the state.
2:36:06 PM
REPRESENTATIVE GRUENBERG said he did not intend to do so. He
did not want additional government charges to be passed through
to customers.
MS. MORLEDGE agreed that it is not the sponsor's intent to pass
on superfluous taxes. She pointed out that the intent of the
bill is to ensure that any taxes charged by a car rental company
must be included in the quote and agreement so the consumer
could make the choice.
2:37:31 PM
REPRESENTATIVE GRUENBERG clarified his understanding that this
is a disclosure bill and a car rental company could "do what it
wanted to do" but must disclose the fees.
MS. MORLEDGE answered yes.
REPRESENTATIVE GRUENBERG wanted the bill to provide clarity as
to whether companies are allowed to pass through a variety of
taxes, including corporate income taxes and employee withholding
taxes. He suggested that the sponsor should define government
taxes or surcharges.
MR. SKINNER reiterated that current Alaska statute provides "a
blank check." The intent of SB 272 is to "tighten up" and
create some foundation since no restrictions currently apply.
2:39:23 PM
REPRESENTATIVE T. WILSON related her understanding that this
bill is not telling a car rental company how to run its company.
MS. MORLEDGE answered that is correct.
REPRESENTATIVE T. WILSON summarized that SB 272 would require a
car rental company to disclose any charges to enable consumers
the ability to compare the car rental fees to another company's
fees. Thus, the consumer would have the information to make an
informed decision on the rental vehicle's cost.
REPRESENTATIVE PETERSEN offered his belief that this bill is
good idea for consumers. He related an anecdotal experience he
had trying to figure out the car rental costs. He offered that
Alaska has a tourism industry and his desire that it should be
easy for consumers to decipher the taxes and fees charged.
2:40:50 PM
REPRESENTATIVE GRUENBERG referred to page 2, line 22, to the
term "inspection" and he asked whether that term referred to
annual emission inspections, brake inspections, or what type of
inspection this would encompass.
MR. SKINNER related that the language in this bill or a close
variation of it was passed in 18 states. Some states have
initial inspection costs to put a vehicle on the road and that
is the intent of this provision.
MR. SKINNER, in response to Representative Gruenberg, clarified
that all fees are limited to what is paid to the government
authority. Thus, the consumer can go on-line to see the extreme
variations and this bill would disclose fees so the variations
in fees are not profit centers for companies.
REPRESENTATIVE GRUENBERG clarified that the inspection does not
refer to lubrication or brake inspections.
MR. SKINNER explained that this provision refers to government-
mandated inspections. Thus, the provision would allow the car
rental company to recoup fees and taxes it pays the government.
REPRESENTATIVE GRUENBERG suggested the language be clarified to
refer to government mandated inspections.
MS. MORLEDGE referred to page 2, line 22, and explained that
"inspection" refers to the "licensing cost" listed in line 21.
She referred to AS 45.45.460, which is the section that defines
vehicle licensing costs.
REPRESENTATIVE GRUENBERG related his understanding that some
types of inspections are required in the business by the
government and that is what is meant by licensing cost. He
stated that provision is clearer to him.
REPRESENTATIVE GRUENBERG suggested that at least one definition
could be eliminated from the bill. He offered that if the
agreements were called rental motor vehicle agreements, that
"car" would not need to be defined as "motor vehicle." He
pointed out that consumers may rent trucks.
MS. MORLEDGE offered her belief that the reason the "car rental
fees" was used is because it is the most common term and would
apply to the broader term, that car would apply to all motor
vehicles.
2:46:19 PM
REPRESENTATIVE GRUENBERG offered that this bill will be read as
a "consumer protection" bill. The current language could be
confusing for consumers and he hoped to make it "user friendly."
He suggested that someone renting a motorcycle could interpret
the language and may not think he/she was gaining the
protections in the bill. He asked if "car" could be changed to
"motor vehicle."
MS. MORLEDGE answered that she did not think the sponsor would
object to the type of improvements and "clean up" language that
Representative Gruenberg is suggesting. She offered her belief
that the sponsor would like to move the bill along, noting the
bill has another committee of referral.
2:47:25 PM
REPRESENTATIVE MUNOZ asked whether Representative Gruenberg
would work with the sponsor if the bill moved from committee.
REPRESENTATIVE GRUENBERG agreed to do so.
2:48:32 PM
REPRESENTATIVE T. WILSON offered work to improve the bill in the
next committee of referral in the House Labor and Commerce
Standing Committee.
2:48:51 PM
REPRESENTATIVE MUNOZ, after first determining no one else wished
to testify, closed public testimony on SB 272.
REPRESENTATIVE T. WILSON moved to report SB 272 out of committee
with individual recommendations and the accompanying fiscal
notes.
REPRESENTATIVE GRUENBERG objected.
2:49:45 PM
REPRESENTATIVE GRUENBERG explained that the statutes have
percentages, perhaps ceilings, but the bill does not contain any
ceiling or guidance for consumers. He wondered if some kind of
ceiling, perhaps geographic, could be added. Otherwise, the
marketplace is allowed to freely roam, he stated.
MS. MORLEDGE answered that a ceiling is not listed on the cost
recovery fees since those fees are mandated by the government
and varies between governments. Some of the fees are under
local control so they are not state-mandated fees.
REPRESENTATIVE GRUENBERG suggested that Arizona is allowing for
reimbursement of the licensing fees. He surmised that other
states are going beyond just disclosure.
2:52:44 PM
MS. MORLEDGE referred to Hawaii and reported that car rental
companies do not charge the licensing fees. The fees are not
capped because the bill contains a good faith estimate clause
under AS 45.45.460. That section explains how those fees are to
be calculated. She commented that Ed Sniffen, DOL, was
"comfortable with that." She explained that if an issue arose,
Mr. Sniffen believes that this bill would give him "the teeth"
to deal with the issue.
2:53:34 PM
REPRESENTATIVE GRUENBERG stated he was satisfied. He removed
his objection. There being no further objection, SB 272 was
reported from the House Transportation Standing Committee.
2:54:14 PM
ADJOURNMENT
There being no further business before the committee, the House
Transportation Standing Committee meeting was adjourned at 2:54
p.m.
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