Legislature(2005 - 2006)CAPITOL 17

02/08/2005 01:30 PM TRANSPORTATION


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01:37:09 PM Start
01:41:54 PM HB115
02:38:11 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ HB 42 JOE WILLIAMS, SR., COASTAL TRAIL TELECONFERENCED
Moved Out of Committee
*+ HB 115 AIRPORT CUSTOMER FACILITY CHARGES TELECONFERENCED
Moved CSHB 115(TRA) Out of Committee
                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE TRANSPORTATION STANDING COMMITTEE                                                                           
                        February 8, 2005                                                                                        
                           1:36 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Jim Elkins, Co-Chair                                                                                             
Representative Carl Gatto, Co-Chair                                                                                             
Representative Mark Neuman                                                                                                      
Representative Bill Thomas                                                                                                      
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Vic Kohring                                                                                                      
Representative Mary Kapsner                                                                                                     
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 42                                                                                                               
"An Act naming the Joe Williams, Sr., Coastal Trail."                                                                           
                                                                                                                                
     - MOVED HB 42 OUT OF COMMITTEE                                                                                             
                                                                                                                                
HOUSE BILL NO. 115                                                                                                              
"An Act relating to charges paid or collected by users or                                                                       
occupants of an airport facility owned or controlled by the                                                                     
state."                                                                                                                         
                                                                                                                                
     - MOVED CSHB 115(TRA) OUT OF COMMITTEE                                                                                     
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB  42                                                                                                                  
SHORT TITLE: JOE WILLIAMS, SR., COASTAL TRAIL                                                                                   
SPONSOR(S): REPRESENTATIVE(S) ELKINS                                                                                            
                                                                                                                                
01/10/05       (H)       PREFILE RELEASED 12/30/04                                                                              
01/10/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/10/05       (H)       CRA, TRA                                                                                               
01/20/05       (H)       CRA AT 8:00 AM CAPITOL 124                                                                             
01/20/05       (H)       Moved Out of Committee                                                                                 
01/20/05       (H)       MINUTE(CRA)                                                                                            
01/21/05       (H)       CRA RPT 5DP                                                                                            
01/21/05       (H)       DP: SALMON, LEDOUX, NEUMAN, OLSON,                                                                     
                         THOMAS                                                                                                 
01/21/05       (H)       FIN REFERRAL ADDED AFTER TRA                                                                           
02/08/05       (H)       TRA AT 1:30 PM CAPITOL 17                                                                              
                                                                                                                                
BILL: HB 115                                                                                                                  
SHORT TITLE: AIRPORT CUSTOMER FACILITY CHARGES                                                                                  
SPONSOR(S): LABOR & COMMERCE                                                                                                    
                                                                                                                                
01/26/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/26/05       (H)       TRA, FIN                                                                                               
02/08/05       (H)       TRA AT 1:30 PM CAPITOL 17                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOS GOVAARS, Staff                                                                                                              
to Representative Jim Elkins                                                                                                    
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 42 on behalf of Representative                                                                
Elkins, sponsor.                                                                                                                
                                                                                                                                
REPRESENTATIVE TOM ANDERSON                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  As chair of the House Labor and Commerce                                                                   
Standing Committee, sponsor of HB 115, presented the bill.                                                                      
                                                                                                                                
MARK PFEFFER, Co-Owner                                                                                                          
Venture Development Group                                                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Provided comments during discussion of HB                                                                  
115 and responded to questions.                                                                                                 
                                                                                                                                
JOHN STEINER, Assistant Attorney General                                                                                        
Transportation Section                                                                                                          
Civil Division (Anchorage)                                                                                                      
Department of Law (DOL)                                                                                                         
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Recommended changes to HB 115.                                                                             
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CO-CHAIR   GATTO  called   the   House  Transportation   Standing                                                             
Committee  meeting  to  order at  1:37:09  PM.    Representatives                                                             
Elkins, Gatto,  Thomas, Salmon,  and Neuman  were present  at the                                                               
call to order.                                                                                                                  
                                                                                                                                
HB 42 - JOE WILLIAMS, SR., COASTAL TRAIL                                                                                      
                                                                                                                                
CO-CHAIR GATTO announced  that the first order  of business would                                                               
be  HOUSE BILL  NO.  42 "An  Act naming  the  Joe Williams,  Sr.,                                                               
Coastal Trail."                                                                                                                 
                                                                                                                                
JOS  GOVAARS, Staff  to Representative  Jim Elkins,  Alaska State                                                               
Legislature, sponsor, said on behalf of Representative Elkins:                                                                  
                                                                                                                                
     [House  Bill  42]  will  name   three  miles  of  trail                                                                    
     alongside the  South Tongass Highway  between Ketchikan                                                                    
     and  Saxman, the  "Joe  Williams  Sr., Coastal  Trial."                                                                    
     Joe was  an advocate  for the  construction of  a trail                                                                    
     because residents for many years,  without the means of                                                                    
     transportation,   commonly  walked   the  three   miles                                                                    
     between   Saxman   and  Ketchikan   with   often-tragic                                                                    
     results.   When  the  trail was  completed, it  quickly                                                                    
     became a  favorite walking and  bicycling path  used by                                                                    
     many  visitors as  well  as locals.    Set between  the                                                                    
     ocean  and the  highway, the  Joe Williams  Sr. Coastal                                                                    
     Trail  will  be  a scenic  and  historically  important                                                                    
     trail  for  the  people  of  Southeast  Alaska.    This                                                                    
     legislation  will   honor  the   memory  of   a  highly                                                                    
     respected person in the  Native community in Southeast,                                                                    
     and  included in  the committee  packet are  letters of                                                                    
     support  from the  City of  Ketchikan, City  of Saxman,                                                                    
     and the Ketchikan Gateway Borough.   In addition, a new                                                                    
     zero  fiscal  note  has  been  introduced  because  the                                                                    
     Department  of Transportation  has  agreed  to eat  the                                                                    
     $2,000 it will cost for making and posting the signs.                                                                      
                                                                                                                                
REPRESENTATIVE  NEUMAN  stated that  he  has  heard support  from                                                               
people from the  community, and it is a "very  fine thing that we                                                               
do this."                                                                                                                       
                                                                                                                                
REPRESENTATIVE  THOMAS moved  to report  HB 42  out of  committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
notes.   There being no  objection, HB  42 was reported  from the                                                               
House Transportation Standing Committee.                                                                                        
                                                                                                                                
HB 115 - AIRPORT CUSTOMER FACILITY CHARGES                                                                                    
                                                                                                                                
1:41:54 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  announced that the  next order of  business would                                                               
be  HOUSE BILL  NO.  115  "An Act  relating  to  charges paid  or                                                               
collected by users  or occupants of an airport  facility owned or                                                               
controlled by the state."                                                                                                       
                                                                                                                                
REPRESENTATIVE TOM  ANDERSON, Alaska State  Legislature, speaking                                                               
as the chair of the  House Labor and Commerce Standing Committee,                                                               
sponsor of  HB 115, said that  HB 115 would implement  a valuable                                                               
private-market   tool  to   construct   improvements  to   Alaska                                                               
airports,  specifically a  new  rental car  facility  at the  Ted                                                               
Stevens    Anchorage   International    Airport,   without    the                                                               
expenditures  of  public  funds.    "It's  somewhat  of  a  novel                                                               
approach,"  he added.   He  said  it will  improve the  amenities                                                               
provided to the traveling public.   The bill provides a mechanism                                                               
called  Customer  Facility  Charge   (CFC),  to  improve  airport                                                               
facilities without the  expenditure of state funds,  and the most                                                               
common project that CFCs are  used for are rental car facilities,                                                               
he  stated.   The  bill will  also provide  a  revenue stream  to                                                               
maintain and operate  such a facility, he stated,  and this would                                                               
not  require an  increase in  the airport  operating budget.   In                                                               
2001 the  legislature authorized  the imposition  of this  CFC to                                                               
fund improvements on airport properties.                                                                                        
                                                                                                                                
1:45:09 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ANDERSON said a private  bond market has developed                                                               
that is  willing to rely solely  on the revenue provided  by CFCs                                                               
collected from rental car users  to issue bonds used to construct                                                               
a  new  rental   car  facility  at  the   Ted  Stevens  Anchorage                                                               
International Airport.   He  said it  is important  that it  is a                                                               
private bond  and not attached  to state  credit.  He  noted that                                                               
the  CFC  process has  been  "really  successful" in  Dallas  and                                                               
Denver.    He  said  that   a  private  industry  initiated  this                                                               
legislation,  and it  is sponsored  by the  Anchorage rental  car                                                               
companies.  He explained the purpose for HB 115:                                                                                
                                                                                                                                
     During   negotiations   with   the   state   over   the                                                                    
     implementation  of   the  project,  the   bond  council                                                                    
     identified certain  issues with the language  set forth                                                                    
     by  Chapter 99,  SLA 2001,  which they  felt should  be                                                                    
     clarified   to  ensure   that   the   bonds  would   be                                                                    
     marketable,  hence  this  legislation.    Those  issues                                                                    
     essentially  revolve  around  clarifying that  the  new                                                                    
     revenue  stream  generated by  this  CFC  would not  be                                                                    
     considered  revenue of  the state  when the  bond is  a                                                                    
     private   initiative,  and   ensuring  that   the  bond                                                                    
     trustee,  not the  state, takes  custody of  the funds.                                                                    
     Without that clarification, which  is in this bill, the                                                                    
     bond council  was concerned that the  2001 language did                                                                    
     not adequately clarify that the CFCs were not revenues                                                                     
     of the state.  So this just clarifies this so that we                                                                      
     can have a strong bond at a higher rating.                                                                                 
                                                                                                                                
1:47:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ANDERSON  said  that because  the  facility  will                                                               
revert to the state  at the end of the term,  it was also decided                                                               
to  implement a  customer facility  maintenance charge  to ensure                                                               
that the  facility is well maintained.   He said that  will avoid                                                               
any impact on  the airport's operating budget.  He  added that he                                                               
is making some  procedural adjustments so the  rental car dealers                                                               
can  build the  facility and  then add  a fee  which is  somewhat                                                               
dedicated to  this facility.   "Alamo" and "National  Car Rental"                                                               
sent the committee a "fairly  detailed" analysis of the bill, and                                                               
there is a letter of support from  Hertz, he said.  He noted that                                                               
patrons will benefit.                                                                                                           
                                                                                                                                
1:50:07 PM                                                                                                                    
                                                                                                                                
MARK PFEFFER,  Co-Owner, Venture Development Group,  said that in                                                               
2000,  his company  was approached  by the  rental car  companies                                                               
that  operated out  of the  Ted  Stevens Anchorage  International                                                               
Airport.  He  stated that the airport had a  master plan to build                                                               
a consolidated  rental car facility in  designated wetlands three                                                               
quarters of  a mile  away from  the airport,  and the  rental car                                                               
industry wanted a  facility closer to the airport  that was built                                                               
with private money to control costs.   Mr. Pfeffer said that [the                                                               
terrorist attacks of  September 11, 2001] put  the discussions on                                                               
hold, but it is  now moving ahead.  In the  last eight months, he                                                               
added, the  companies have  been working  with airport  staff and                                                               
the  Office of  the Attorney  General  to assess  how a  facility                                                               
could be built using the CFC.                                                                                                   
                                                                                                                                
MR.  PFEFFER  mentioned  that   immediately  upon  completion  of                                                               
construction, the facility ownership  transfers to the state, and                                                               
the  lessor will  maintain the  facility  for thirty  years.   He                                                               
added that  when the  lease is  up, the state  will have  a fully                                                               
funded facility in good shape.                                                                                                  
                                                                                                                                
1:52:56 PM                                                                                                                    
                                                                                                                                
MR. PFEFFER  stated that the  purpose of this legislation  is "to                                                               
clarify the  flow of  the CFCs  so that the  bond holders  have a                                                               
greater  assurance that  they are  going to  continue during  the                                                               
life  of the  bonds,"  and to  "allow for  the  inclusion of  the                                                               
maintenance and operation costs of  the facility over the life of                                                               
the bonds."  He said the  facility will be constructed at the Ted                                                               
Stevens  Anchorage  International   Airport  between  the  Alaska                                                               
Railroad  depot and  the  Federal  Aviation Administration  (FAA)                                                               
tower, and  customers will  be able to  walk from  baggage claim,                                                               
through  an extended  tunnel, and  up  into a  car rental  lobby.                                                               
There will be  a covered, well-lit, safe place to  pick up rental                                                               
cars, he  said.  He added  that when the cars  are returned, they                                                               
will be cleaned and put right  back into service, whereas now car                                                               
rental employees  have to take  the cars to an  offsite facility,                                                               
which adds to traffic congestion.                                                                                               
                                                                                                                                
REPRESENTATIVE  NEUMAN  asked if  the  facility  will be  on  the                                                               
property already used by the rental car companies.                                                                              
                                                                                                                                
MR. PFEFFER responded in the affirmative.                                                                                       
                                                                                                                                
REPRESENTATIVE  NEUMAN  asked  if  other parking  areas  will  be                                                               
affected.                                                                                                                       
                                                                                                                                
MR. PFEFFER said  that a few parking spaces will  be taken by the                                                               
new  facility, namely  the under-utilized  spaces for  over-sized                                                               
vehicles, like  campers.  He  said there  will be 85  spaces left                                                               
for over-sized vehicles.                                                                                                        
                                                                                                                                
REPRESENTATIVE NEUMAN asked  if the fee would be added  on to the                                                               
daily rental car fee.                                                                                                           
                                                                                                                                
MR. PFEFFER said, "Yes, it's a customer facility charge."                                                                       
                                                                                                                                
REPRESENTATIVE  SALMON  asked  if  the  legislation  affects  the                                                               
entire state.                                                                                                                   
                                                                                                                                
MR.  PFEFFER   said  that  the  legislation   would  allow  other                                                               
locations to pursue a similar  project, but the only project that                                                               
that he  is working on  is the one  at the Ted  Stevens Anchorage                                                               
International Airport.                                                                                                          
                                                                                                                                
CO-CHAIR  ELKINS said  he  was confused  because  he thought  Mr.                                                               
Pfeffer  said the  area was  a wetlands,  "and now  you're saying                                                               
it's a parking lot."                                                                                                            
                                                                                                                                
MR.  PFEFFER  said that  an  earlier  airport master  plan  study                                                               
suggested that  one possible location  for a rental  car facility                                                               
was three quarters of a mile  away, and it would have impacted 25                                                               
acres of wetlands.  The industry  did not like that idea, so they                                                               
petitioned  the airport  to allow  them to  offer a  proposal, he                                                               
said, and the proposal is the  one that is being discussed today,                                                               
which is to put the facility at the airport.                                                                                    
                                                                                                                                
REPRESENTATIVE ANDERSON said the  legislation could be applied to                                                               
other  communities,   but  he   expressed  doubt   whether  rural                                                               
communities  were large  enough to  benefit.   He said  he thinks                                                               
this  fund  would  be  "sub-sectioned  out" to  go  only  to  the                                                               
Anchorage facility,  "but all communities  in the state,  if they                                                               
have enough  people to  pay the  fees, could  do the  same thing,                                                               
which is exciting."                                                                                                             
                                                                                                                                
1:58:54 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ANDERSON stated that the  project would have to go                                                               
through all  zoning and established procedures  for construction,                                                               
and that this language just helps establish the fee system.                                                                     
                                                                                                                                
MR.  PFEFFER added  that there  will be  a standard  ground lease                                                               
application,  and  then there  will  be  regular building  permit                                                               
process.                                                                                                                        
                                                                                                                                
REPRESENTATIVE ANDERSON said that even  if this facility does not                                                               
get built, the ability  to do it will be in  place for any future                                                               
efforts.                                                                                                                        
                                                                                                                                
CO-CHAIR GATTO asked what Mr. Pfeffer's role is.                                                                                
                                                                                                                                
MR.  PFEFFER answered  that the  Venture Development  Group is  a                                                               
real  estate  development  company that  provides  financing  and                                                               
construction  expertise to  help projects  through the  necessary                                                               
steps  to get  them built.   "The  true drivers  of this  are the                                                               
rental car  companies," he said.   He added that under  the terms                                                               
of the rental  car concession agreement with the  airport, if two                                                               
thirds of  the companies want  a CFC imposed on  their customers,                                                               
the airport can choose  to impose it.  He said  that in this case                                                               
a vast  majority of the market  share of the companies  have said                                                               
they want  to do  this.   Mr. Pfeffer added  that the  rental car                                                               
companies  don't have  the expertise  to manage  the project,  so                                                               
they  hired him.    Upon completion  of his  role,  he said,  the                                                               
building  reverts to  the ownership  of the  state, and  a single                                                               
service entity will step in  to maintain the facility, which will                                                               
be  owned by  the state,  and the  use of  it will  be under  the                                                               
airport concession agreement.                                                                                                   
                                                                                                                                
CO-CHAIR GATTO  asked about the  other rental car  companies that                                                               
operate at the Ted Stevens Anchorage International Airport.                                                                     
                                                                                                                                
MR.  PFEFFER said  he has  signed agreements  with all  companies                                                               
except  Payless.   Payless  has "been  kept in  the  loop of  the                                                               
process," but has  chosen not to participate  in the discussions.                                                               
"Dollar,  Budget,  Thrifty,  Avis, National,  Alamo,  Hertz,  and                                                               
Enterprise have  all signed  on in support  of this  project," he                                                               
concluded.                                                                                                                      
                                                                                                                                
2:02:46 PM                                                                                                                    
                                                                                                                                
JOHN   STEINER,   Assistant  Attorney   General,   Transportation                                                               
Section,  Civil Division  (Anchorage), Department  of Law  (DOL),                                                               
said  he is  the primary  council  to the  Ted Stevens  Anchorage                                                               
International  Airport and  the Fairbanks  International Airport,                                                               
and in  that capacity he  has "been a participant  in discussions                                                               
and negotiations  concerning this  proposed rental  car facility,                                                               
and  helping  to  set  up  documentation  in  a  manner  that  is                                                               
consistent with the needs of  the [Department of Transportation &                                                               
Public Facilities  (DOT&PF)], the state law,  and our commitments                                                               
under  various bond  resolutions."   He said  that upon  thorough                                                               
review of the bill,  he has noted a number a  things that the DOL                                                               
will recommend modifying.   He added that the  DOL is comfortable                                                               
with the concept,  but that it needs technical  changes, which he                                                               
does not want to  go through today.  He said  the DOL's intent is                                                               
to  make  sure  the  bill is  clear  regarding  the  relationship                                                               
between  the  charges  and the  obligation  under  existing  bond                                                               
covenants  that  support  airport projects  separate  from  this.                                                               
With  regard  to the  customer  facility  maintenance charge,  he                                                               
said, the  DOL will  suggest clarifying language.   He  said that                                                               
the DOT&PF has been working  with the project proponents, and the                                                               
DOL has  not had a chance  to discuss its technical  changes with                                                               
the two  groups, which he  said the DOL  would like to  do before                                                               
presenting the  changes to  the legislature.   He added  that the                                                               
DOL  has  no  objection  to  the  House  Transportation  Standing                                                               
Committee moving the bill forward as is.                                                                                        
                                                                                                                                
2:06:22 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO  asked if the  minor issues Mr.  Steiner mentioned                                                               
would be minor to the members of committee.                                                                                     
                                                                                                                                
MR.  STEINER said  he thinks  the  issues are  technical and  not                                                               
substantive.   He said  he is not  requesting that  the committee                                                               
withhold the  bill, because there  are time constraints  with the                                                               
project.   He said that the  DOL would like a  language change to                                                               
make sure the bill says what  it intends, and the primary concern                                                               
is  to  make  a  clearer  distinction between  the  CFC  and  the                                                               
customer facility maintenance charge.                                                                                           
                                                                                                                                
2:07:52 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  said a recent  news article  reported that                                                               
the fee would  be no more than $4  a day, so he asked  if it will                                                               
stay at $4 even if there are cost overruns.                                                                                     
                                                                                                                                
MR. PFEFFER  said, "Yes sir,  part of  the contract that  we will                                                               
provide  as part  of  our management  of the  project  will be  a                                                               
guaranteed  maximum price  contract  with  a guaranteed  schedule                                                               
fully bonded  and backed by  a reputable contractor  and bonding.                                                               
In  addition to  that we've  built reserves  into the  project so                                                               
there is  plenty of  room there.   We  don't have  any hesitation                                                               
whatsoever to  provide that guarantee  that will come in  on time                                                               
and on budget."                                                                                                                 
                                                                                                                                
REPRESENTATIVE NEUMAN asked if the CFC  might be lower than $4 if                                                               
all the reserves are used up.                                                                                                   
                                                                                                                                
MR. PFEFFER answered in the affirmative.                                                                                        
                                                                                                                                
REPRESENTATIVE THOMAS asked  what would happen in the  event of a                                                               
default.                                                                                                                        
                                                                                                                                
MR. PFEFFER  responded that  the bond  insurers would  be liable,                                                               
and he added that "bond  underwriters, according to the language,                                                               
the  way  it's set  up,  they  can  look  only to  that  customer                                                               
facility  charge,   and  in  general   those  number   of  rental                                                               
transaction days  have trended upward  over the past  ten, twenty                                                               
years, three, four percent per year."   He said there is a fairly                                                               
detailed study of  those predictions.  But, he said,  "At the end                                                               
of the  day, the  bond holders  can only  look to  those customer                                                               
facility charges."                                                                                                              
                                                                                                                                
2:10:12 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE THOMAS expressed that the  high tax on rental cars                                                               
is a  disincentive to  rent, and  he takes  a cab.   He  asked if                                                               
there is an effective date.                                                                                                     
                                                                                                                                
MR. PFEFFER said he thought the  bill should be amended to add an                                                               
immediate  effective date,  because the  industry wants  to begin                                                               
the project this summer.                                                                                                        
                                                                                                                                
REPRESENTATIVE  ANDERSON  suggested   that  the  committee  could                                                               
consider a  conceptual amendment  [to add an  immediate effective                                                               
date].                                                                                                                          
                                                                                                                                
CO-CHAIR ELKINS said  it sounds like there would  be two charges,                                                               
customer  charges  and facility  charges,  and  he asked  if  the                                                               
combined charge would not exceed $4.                                                                                            
                                                                                                                                
MR. PFEFFER said, "Correct."                                                                                                    
                                                                                                                                
CO-CHAIR GATTO listed  the current taxes imposed  on car rentals,                                                               
which total 29 percent.                                                                                                         
                                                                                                                                
MR. PFEFFER said the $4 would be in addition to those.                                                                          
                                                                                                                                
CO-CHAIR GATTO stated that if there  is a problem like a decrease                                                               
in use  of the facility,  customers would  have to pay  more than                                                               
$4.  He asked what the worst-case scenario might be.                                                                            
                                                                                                                                
MR.  PFEFFER  said  that  a  terrorist  attack  that  "tanks  the                                                               
industry,"  would be  the worst-case  scenario, but  he said  the                                                               
underwriters have planned for that  with the reserves and the way                                                               
they structured the  insurance.  He added that  Co-Chair Gatto is                                                               
correct that  "if people quit  using the facility, then  there is                                                               
less transactions, and that CFC can  be adjusted so if the number                                                               
of transactions go down but the  debt service stays flat the cost                                                               
per transaction could  go up."  He said that  there might be some                                                               
users  who  won't want  to  pay  the  extra  fee, and  there  are                                                               
provisions for customers  to use an off-airport rental  or take a                                                               
cab, and  those calculations are figured  in.  But he  said it is                                                               
reasonably certain  that the  $4 charge should  cover it,  and he                                                               
thinks it  will decrease  as the  demand goes  up.   The industry                                                               
fought the local  and state taxes, he said, but  it supports this                                                               
one.                                                                                                                            
                                                                                                                                
CO-CHAIR  GATTO  asked if  the  current  taxes have  resulted  in                                                               
decreased rental car use.                                                                                                       
                                                                                                                                
MR. PFEFFER  said it  has not,  and that he  thinks, "They  had a                                                               
very strong year this year, so demand has gone up."                                                                             
                                                                                                                                
REPRESENTATIVE ANDERSON  said that he  was not supportive  of the                                                               
rental tax, but  this has a benefit  and is not just  a pure tax.                                                               
There has  been no default in  the other airports that  have done                                                               
this, and the  fees haven't been raised in Dallas  and Denver, he                                                               
said.  He offered his belief  that the governor is supportive and                                                               
acknowledges the time constraints.                                                                                              
                                                                                                                                
2:15:41 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ANDERSON  recommended that the bill  be amended to                                                               
[add  an immediate]  effective  date  and then  be  moved out  of                                                               
committee, with  the intention of  addressing the  DOL's concerns                                                               
in the Finance Committee.                                                                                                       
                                                                                                                                
[Although no formal  motion was made to  adopt the aforementioned                                                               
change as a  conceptual amendment, the bill was  later treated as                                                               
having been amended.]                                                                                                           
                                                                                                                                
REPRESENTATIVE  ANDERSON  asked  Mr.  Steiner if  the  DOL  could                                                               
submit its recommended changes by the end of the week.                                                                          
                                                                                                                                
MR. STEINER said he thinks that  is possible, but it is important                                                               
to  "bounce it  off the  underwriters for  the project,"  to make                                                               
sure there will be  no problems.  He added that  one of the legal                                                               
provisions  in the  contract between  the  Ted Stevens  Anchorage                                                               
International Airport  and the rental  car companies is  that all                                                               
on-site concessionaires will be required  to use the facility and                                                               
to charge  the fees.   "If one  wants to rent  at the  airport at                                                               
all, one would have to go  though this facility" and thus pay the                                                               
fee, he said.                                                                                                                   
                                                                                                                                
2:18:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO asked if people  could decide to rent elsewhere to                                                               
avoid the fee.                                                                                                                  
                                                                                                                                
MR.  STEINER responded  that there  are other  companies with  no                                                               
relationship with  the airport.   He said that if  travelers rent                                                               
from a company that  picks them up at the airport,  there is an 8                                                               
percent  fee.   He added  that many  of the  downtown rental  car                                                               
companies  are   also  located  at  the   Ted  Stevens  Anchorage                                                               
International  Airport,  and they  are  not  permitted to  divert                                                               
business to  downtown.  He said  savvy people who are  willing to                                                               
inconvenience themselves have options to avoid the fee.                                                                         
                                                                                                                                
2:20:23 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO asked if other  Alaska airports can use provisions                                                               
in the legislation without further changes.                                                                                     
                                                                                                                                
MR. PFEFFER said that he thinks that is correct.                                                                                
                                                                                                                                
MR.  STEINER stated  that  the portion  of  the legislation  that                                                               
deals  with the  international  airport revenue  fund deals  only                                                               
with Anchorage and Fairbanks.  Other  parts of the bill deal only                                                               
with  state-operated airports,  which  includes  all of  Alaska's                                                               
rural  airports.    So  it  "probably  would  make  this  concept                                                               
available  also  at  rural  airports,"  he  said,  but  municipal                                                               
airports, like those in Kenai and Juneau, would be excluded.                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN said  "as stated earlier, the  fee would be                                                               
no  more than  $4," and  he asked  if there  was anywhere  in the                                                               
legislation that  reduces the customer  fee if that  amount isn't                                                               
necessary  to cover  the costs.   He  also asked  if "that  $4 or                                                               
$3.50 would defer  to other airports around the  state that would                                                               
want to use this legislation."                                                                                                  
                                                                                                                                
MR. PFEFFER  responded that the  way the customer  service charge                                                               
will  be determined  will  be by  an estimate  of  the number  of                                                               
transaction days for  the first year.  He said  the interest rate                                                               
is not  known until  the bonds are  sold, so there  is no  way to                                                               
determine  the debt  service at  this time.   But  when the  debt                                                               
service is known,  it will be divided by the  number of estimated                                                               
transaction  days,  and  that  will  set  the  customer  facility                                                               
charge, he  said.   He added,  "The $4  was the  conceptual limit                                                               
that  the  car  rental  industry  put on  themselves."    If  the                                                               
calculation comes  out over  $4 per  transaction day,  the rental                                                               
car companies will decide whether to  go through with the plan or                                                               
not, he said.   The fee can  be adjusted at the end  of the year.                                                               
There won't be  extra funds to go to other  locations because the                                                               
charge will be specific to what the costs are, he said.                                                                         
                                                                                                                                
REPRESENTATIVE  NEUMAN  said  "So,   there  is  nothing  in  this                                                               
legislation that says it's going to be under $4?"                                                                               
                                                                                                                                
MR. PFEFFER said that he doesn't believe so.                                                                                    
                                                                                                                                
REPRESENTATIVE ANDERSON said  that fee changes must  go through a                                                               
notification process with  public comment.  He  asked Mr. Steiner                                                               
if that was correct, and if  that requirement is already in place                                                               
without HB 115 changing it.                                                                                                     
                                                                                                                                
2:26:11 PM                                                                                                                    
                                                                                                                                
MR.  STEINER said  that  is  correct with  one  adjustment:   the                                                               
commissioner  will be  required to  set the  fee at  a sufficient                                                               
level to  pay the obligation.   If transaction days go  down, the                                                               
fee would go  up, and it is possible that  the commissioner would                                                               
be obligated  to raise the fee  above $4, he added,  but it would                                                               
go through a public notice and comment process.                                                                                 
                                                                                                                                
REPRESENTATIVE NEUMAN asked if the fee  could be more than $4 per                                                               
day.                                                                                                                            
                                                                                                                                
MR. STEINER  said that could  happen if there were  cost overruns                                                               
or if there  were fewer transaction days than  anticipated.  But,                                                               
he said, "Mr. Pfeffer could  address the guaranteed maximum price                                                               
contracting procedures  that are  anticipated and  should provide                                                               
some  reasonable  assurance that  at  least  it will  not  happen                                                               
because of cost overruns."                                                                                                      
                                                                                                                                
REPRESENTATIVE  NEUMAN said,  "I  believe  Mr. Pfeffer  testified                                                               
that it would not be more than $4."                                                                                             
                                                                                                                                
MR. PFEFFER responded:                                                                                                          
                                                                                                                                
     I think what  my testimony was, is that  we're going to                                                                    
     provide a guaranteed maximum price  contract so that at                                                                    
     the time  the bonds  are sold  we will  be guaranteeing                                                                    
     the development cost  of the project, and so  if at the                                                                    
     time the bonds are ready  to be sold, for instance, the                                                                    
     cost  divided by  the transaction  days  into the  debt                                                                    
     service worked  out to be  $4.50 per square  foot, that                                                                    
     would be a  choice that would be made  primarily by the                                                                    
     industry and the commissioner.   They would all have to                                                                    
     say, "OK we still want  to go forward," but there would                                                                    
     be  nothing  that we  would  do  subsequent to  getting                                                                    
     started that would cause cost  increases.  So right now                                                                    
     the projection is actually that  the CFC would be $3.82                                                                    
     including  all   facility  maintenance   and  operation                                                                    
     charges based  on interest rates  of six or  seven days                                                                    
     ago.   The CFC  will be  set at whatever  it is  at the                                                                    
     time the bonds are sold.                                                                                                   
                                                                                                                                
2:30:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  asked if  the fee would  be "locked  in at                                                               
the beginning  of operations,  if you did  have cost  overruns it                                                               
still would have to be locked in."                                                                                              
                                                                                                                                
MR. PFEFFER replied:  "Cost overruns  are going to be on my side.                                                               
I am  providing the guarantee  that there won't be  cost overruns                                                               
contractually and  backing that up  with a fully  bonded contract                                                               
from  a contractor."   He  added that  his company's  most recent                                                               
project under  a similar  format was a  $35 million  project that                                                               
finished early  without any cost  overruns.  "We're very  good at                                                               
this," he stated.                                                                                                               
                                                                                                                                
2:31:21 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  SALMON asked  if construction  will go  out to  a                                                               
normal bid.                                                                                                                     
                                                                                                                                
MR. PFEFFER  responded that  the general  contractor will  with a                                                               
negotiated contract  with (indisc.) construction, and  all of the                                                               
subcontracts will be bid.                                                                                                       
                                                                                                                                
CO-CHAIR GATTO  said he disagreed with  a comment he read  in his                                                               
packet that  the Ted Stevens Anchorage  International Airport had                                                               
the worst customer-friendly rental car facility in the country.                                                                 
                                                                                                                                
MR. PFEFFER  said that it  wasn't his  comment, but he  has heard                                                               
both neutral and negative comments from people recently.                                                                        
                                                                                                                                
CO-CHAIR GATTO asked if the facility will be entirely covered.                                                                  
                                                                                                                                
MR.  PFEFFER said  it  would be.   He  added  that currently  the                                                               
rental  car  companies  can't offer  their  "preferred  customer"                                                               
service, but with  the proposed facility they will be  able to do                                                               
so.                                                                                                                             
                                                                                                                                
CO-CHAIR GATTO asked what will happen to the existing facility.                                                                 
                                                                                                                                
MR.  PFEFFER said  there are  just car  rental counters,  and the                                                               
airport will put them to some other use.                                                                                        
                                                                                                                                
2:33:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  NEUMAN asked  what  it  costs to  rent  a car  in                                                               
Anchorage.                                                                                                                      
                                                                                                                                
MR. PFEFFER  said he  didn't know  but estimated  it at  $45 plus                                                               
fees per day for an economy model.                                                                                              
                                                                                                                                
CO-CHAIR GATTO  clarified that  the $4  CFC is  per day,  not per                                                               
transaction.                                                                                                                    
                                                                                                                                
REPRESENTATIVE ANDERSON  said he  rented a sport  utility vehicle                                                               
from the Ted Stevens Anchorage  International Airport, and with a                                                               
discount card he paid $45 per  day including fees.  He added that                                                               
if the airport  has this new facility, there will  be more public                                                               
parking.   In conclusion, he  said, the modernization will  be on                                                               
par with  some of the  largest airports in  the county.   He also                                                               
said "we're looking at job  creation, construction ...; there's a                                                               
partnership between government and  private sector, which I think                                                               
all of us  believe in."  Representative Anderson  said that there                                                               
is statewide potential, and that the benefits outweigh any                                                                      
negatives.                                                                                                                      
                                                                                                                                
2:37:20 PM                                                                                                                    
                                                                                                                                
CO-CHAIR GATTO closed public testimony.                                                                                         
                                                                                                                                
CO-CHAIR  ELKIN  moved to  report  HB  115,  as amended,  out  of                                                               
committee  with individual  recommendations and  the accompanying                                                               
fiscal notes.  There being  no objection, CSHB 115(TRA) was moved                                                               
out of the House Transportation Standing Committee.                                                                             
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
2:38:11 PM                                                                                                                    
                                                                                                                                
There being no further business before the committee, the House                                                                 
Transportation Standing Committee meeting was adjourned at 2:38                                                                 
p.m.                                                                                                                            

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