Legislature(2013 - 2014)BARNES 124

03/12/2013 01:00 PM TRANSPORTATION


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ HB 153 NAMING WALTER J. HICKEL EXPRESSWAY TELECONFERENCED
Moved CSHB 153(TRA) Out of Committee
+= HB 23 KNIK ARM BRIDGE AND TOLL AUTHORITY TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE TRANSPORTATION STANDING COMMITTEE                                                                           
                         March 12, 2013                                                                                         
                           1:04 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Peggy Wilson, Chair                                                                                              
Representative Doug Isaacson, Vice Chair                                                                                        
Representative Eric Feige                                                                                                       
Representative Lynn Gattis                                                                                                      
Representative Bob Lynn                                                                                                         
Representative Jonathan Kreiss-Tomkins                                                                                          
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Craig Johnson                                                                                                    
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
HOUSE BILL NO. 153                                                                                                              
"An Act designating Minnesota Drive and a portion of O'Malley                                                                   
Road in Anchorage the Walter J. Hickel Expressway."                                                                             
                                                                                                                                
     - MOVED CSHB 153(TRA) OUT OF COMMITTEE                                                                                     
                                                                                                                                
HOUSE BILL NO. 23                                                                                                               
"An  Act relating  to  bonds  of the  Knik  Arm  Bridge and  Toll                                                               
Authority; relating  to reserve funds of  the authority; relating                                                               
to  taxes and  assessments on  a  person that  is a  party to  an                                                               
agreement  with  the authority;  and  establishing  the Knik  Arm                                                               
Crossing fund."                                                                                                                 
                                                                                                                                
     - HEARD & HELD                                                                                                             
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
BILL: HB 153                                                                                                                  
SHORT TITLE: NAMING WALTER J. HICKEL EXPRESSWAY                                                                                 
SPONSOR(s): REPRESENTATIVE(s) LYNN                                                                                              
                                                                                                                                
03/04/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
03/04/13       (H)       TRA, FIN                                                                                               
03/12/13       (H)       TRA AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
BILL: HB 23                                                                                                                   
SHORT TITLE: KNIK ARM BRIDGE AND TOLL AUTHORITY                                                                                 
SPONSOR(s): REPRESENTATIVE(s) NEUMAN, HUGHES                                                                                    
                                                                                                                                
01/16/13       (H)       PREFILE RELEASED 1/7/13                                                                                
01/16/13       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/16/13       (H)       TRA, FIN                                                                                               
02/28/13       (H)       TRA AT 2:00 PM BARNES 124                                                                              
02/28/13       (H)       Heard & Held                                                                                           
02/28/13       (H)       MINUTE(TRA)                                                                                            
03/12/13       (H)       TRA AT 1:00 PM BARNES 124                                                                              
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
FORREST WOLFE, Staff                                                                                                            
Representative Bob Lynn                                                                                                         
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented HB 153 on behalf of the sponsor,                                                               
Representative Bob Lynn.                                                                                                        
                                                                                                                                
SCOTT THOMAS, Engineer                                                                                                          
Division of Statewide Design & Engineering Services                                                                             
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified and answered questions during the                                                              
discussion of HB 153.                                                                                                           
                                                                                                                                
REPRESENTATIVE MARK NEUMAN                                                                                                      
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified as sponsor during the discussion                                                               
of HB 23.                                                                                                                       
                                                                                                                                
MICHAEL FOSTER, Chair                                                                                                           
Knik Arm Bridge and Toll Authority (KABATA)                                                                                     
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified and answered questions during the                                                              
discussion of HB 23.                                                                                                            
                                                                                                                                
STEPHANIE KESSLER                                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 23.                                                                        
                                                                                                                                
LARRY DEVILBISS, Mayor                                                                                                          
Matanuska-Susitna Borough (MSB)                                                                                                 
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  Testified in support of HB 23.                                                                           
                                                                                                                                
AVES THOMPSON, Executive Director                                                                                               
Alaska Trucking Association (ATA)                                                                                               
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in support of HB 23.                                                                           
                                                                                                                                
VERNE RUPRIGHT, Mayor                                                                                                           
City of Wasilla                                                                                                                 
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  Testified in support of HB 23.                                                                           
                                                                                                                                
SUZANNE DI PIETRO, Attorney                                                                                                     
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 23.                                                                
                                                                                                                                
BOB FRENCH                                                                                                                      
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 23.                                                                
                                                                                                                                
LOIS EPSTEIN, Engineer                                                                                                          
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified in opposition to HB 23.                                                                        
                                                                                                                                
JAMIE KENWORTHY                                                                                                                 
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 23.                                                                
                                                                                                                                
BERNADETTE RUPRIGHT                                                                                                             
Wasilla, Alaska                                                                                                                 
POSITION STATEMENT:  Testified in support of HB 23.                                                                           
                                                                                                                                
JEFF STARK, Assistant Attorney General                                                                                          
Chief, Transportation                                                                                                           
Department of Law (DOL)                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Testified and answered questions during the                                                              
discussion of HB 23.                                                                                                            
                                                                                                                                
KEVIN HEMENWAY, Chief Executive Officer (CEO)                                                                                   
Knik Arm Bridge and Toll Authority (KABATA)                                                                                     
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Testified during the discussion of HB 23.                                                                
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
1:04:36 PM                                                                                                                    
                                                                                                                                
CHAIR  PEGGY  WILSON  called the  House  Transportation  Standing                                                             
Committee meeting to order at  1:04 p.m.  Representatives Gattis,                                                               
Lynn, Isaacson, and P. Wilson were  present at the call to order.                                                               
Representatives Feige  and Kreiss-Tomkins arrived as  the meeting                                                               
was in progress.                                                                                                                
                                                                                                                                
1:04:57 PM                                                                                                                    
                                                                                                                                
           HB 153-NAMING WALTER J. HICKEL EXPRESSWAY                                                                        
                                                                                                                                
1:05:15 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON announced that  the first order of business would                                                               
be HOUSE BILL NO. 153, "An  Act designating Minnesota Drive and a                                                               
portion  of  O'Malley Road  in  Anchorage  the Walter  J.  Hickel                                                               
Expressway."                                                                                                                    
                                                                                                                                
1:05:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  BOB LYNN,  speaking as  the bill  sponsor, stated                                                               
that HB 153 would name a  portion of Minnesota Drive in Anchorage                                                               
the Walter  J. Hickel Expressway.   He explained that  Mr. Hickel                                                               
was  the U.S.  Secretary of  Interior and  was twice  governor of                                                               
Alaska.  One of Mr. Hickel's  roles was to oversee the permitting                                                               
process and so  it is appropriate to name a  portion of Minnesota                                                               
Drive after Mr. Walter J. Hickel.                                                                                               
                                                                                                                                
1:06:59 PM                                                                                                                    
                                                                                                                                
FORREST  WOLFE,  Staff,  Representative Bob  Lynn,  Alaska  State                                                               
Legislature,  stated  that  it   is  fitting  that  this  heavily                                                               
trafficked area of roadway be named after Mr. Walter J. Hickel.                                                                 
                                                                                                                                
1:08:37 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ISAACSON   asked  whether  the   Municipality  of                                                               
Anchorage (MOA) has a view of this action.                                                                                      
                                                                                                                                
MR. WOLFE answered that in the past  the MOA has been in favor of                                                               
naming the roadway after Mr. Hickel.                                                                                            
                                                                                                                                
REPRESENTATIVE  ISAACSON  asked whether  he  was  referring to  a                                                               
similar  measure  last  year  that died  in  the  Senate  Finance                                                               
committee.                                                                                                                      
                                                                                                                                
MR. WOLFE  agreed, but was  unsure of  why the bill  didn't pass.                                                               
He deferred to MR. Wickersham.                                                                                                  
                                                                                                                                
1:09:29 PM                                                                                                                    
                                                                                                                                
SCOTT THOMAS,  Traffic Engineer,  Department of  Transportation &                                                               
Public  Facilities  (DOT&PF)  stated that  O'Malley  Road  curves                                                               
around  from the  Hillside and  becomes Minnesota  at Old  Seward                                                               
Highway and  then at  Tudor Road it  becomes a  six-lane highway.                                                               
Additionally, the  road is  partly an  expressway 15th  Avenue to                                                               
New Seward Highway.  He agreed it  is possible to put in signs as                                                               
per the fiscal note.                                                                                                            
                                                                                                                                
1:11:25 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON  asked whether there is any reason  not to rename                                                               
the entire roadway.                                                                                                             
                                                                                                                                
REPRESENTATIVE LYNN said  not too many personal  addresses are on                                                               
the  current  Minnesota  Drive  although  15th  Avenue  has  some                                                               
businesses and addresses.                                                                                                       
                                                                                                                                
1:12:31 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ISAACSON  referred  to   the  fiscal  note  which                                                               
requires  two  signs,  one  sign in  each  route  direction  will                                                               
introduce  the  expressway.   He  related  that the  fiscal  note                                                               
indicates the memorial  sign should be located  at an appropriate                                                               
location  in   each  route  direction  as   an  independent  sign                                                               
installation.   He interpreted  this to mean  the bill  would not                                                               
change the  roadway name but  would memorialize a section  of the                                                               
road.                                                                                                                           
                                                                                                                                
REPRESENTATIVE  LYNN recalled  a similar  situation in  which the                                                               
Eisenhower  Highway   or  bypass   was  named,   as  well.     He                                                               
acknowledged this would be a memorial  to Mr. Hickel, but he also                                                               
thought it would  also change the addresses  for those residences                                                               
and businesses on Minnesota Drive.                                                                                              
                                                                                                                                
1:13:39 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ISAACSON asked whether  the "A" street designation                                                               
is still known as "A" street and not as Eisenhower [Corridor].                                                                  
                                                                                                                                
REPRESENTATIVE LYNN  offered his belief  that it is known  as the                                                               
Eisenhower Corridor.   He explained that the  proposed roadway is                                                               
from  15th  Street,  which  turns  south  and  east  and  becomes                                                               
O'Malley Drive once it passes Seward Highway.                                                                                   
                                                                                                                                
REPRESENTATIVE ISAACSON  stated that  the Eisenhower  Corridor is                                                               
still referred to as "A" Street.   He asked whether this memorial                                                               
designation would be  known as the Walter  Hickel Expressway, but                                                               
it wouldn't change the name.                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN said  he thought it would change  the name of                                                               
the highway.                                                                                                                    
                                                                                                                                
1:15:04 PM                                                                                                                    
                                                                                                                                
CHAIR  P. WILSON  asked  whether  it would  be  easier to  rename                                                               
Minnesota  Drive to  the  Walter J.  Hickel  Expressway and  only                                                               
change the single designation rather than individual addresses.                                                                 
                                                                                                                                
REPRESENTATIVE LYNN  pointed out  that north  of 15th  Street the                                                               
roadway would remain as Minnesota Drive.                                                                                        
                                                                                                                                
CHAIR  P. WILSON  asked whether  it would  create any  problem to                                                               
change Minnesota Drive to the Walter J. Hickel Expressway.                                                                      
                                                                                                                                
REPRESENTATIVE LYNN responded  that if the committee  chose to do                                                               
so it  would be fine  with him.  He  just would like  to minimize                                                               
any cost.                                                                                                                       
                                                                                                                                
CHAIR P.  WILSON thought  it would be  easier and  less expensive                                                               
[to have the memorial roadway].                                                                                                 
                                                                                                                                
SCOTT   THOMAS,  Engineer,   Division  of   Statewide  Design   &                                                               
Engineering  Services,  Department  of  Transportation  &  Public                                                               
Facilities  (DOT&PF),   concurred  that   the  fiscal   note  was                                                               
calculated for two  signs to designate the highway  as a memorial                                                               
name, but not to change all of  the street sign names such as the                                                               
ones on top  of stop signs or  signal poles.  He  stated that the                                                               
cost would  be significantly  higher to  go through  the proposed                                                               
corridor and replace the name of Minnesota Drive on all signs.                                                                  
                                                                                                                                
CHAIR  P.   WILSON  remarked  that   Mr.  Thomas   is  confirming                                                               
Representative Isaacson's  view that  one sign  would be  at each                                                               
end to designate a memorial  name; however, the sponsor indicated                                                               
he wanted to change the entire drive.                                                                                           
                                                                                                                                
REPRESENTATIVE LYNN responded  that he is satisfied  with the two                                                               
signs as a memorial.                                                                                                            
                                                                                                                                
1:17:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS  recalled she  previously served on  a team                                                               
to address this.   She further recalled that the  team planned to                                                               
honor former  Governor Hickel in  a memorial fashion  rather than                                                               
to rename the road.  She did  not think it was ever the intention                                                               
to rename the road.                                                                                                             
                                                                                                                                
REPRESENTATIVE LYNN  deferred to  Mr. Wickersham as  the resident                                                               
expert on this.                                                                                                                 
                                                                                                                                
1:18:55 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON reiterated that  the bill sponsor, Representative                                                               
Lynn, is fine with the memorial limited to two signs.                                                                           
                                                                                                                                
REPRESENTATIVE LYNN answered yes.                                                                                               
                                                                                                                                
CHAIR P. WILSON said the fiscal note is correct.                                                                                
                                                                                                                                
1:19:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE   ISAACSON  understood   this  would   not  change                                                               
residential or business addresses.                                                                                              
                                                                                                                                
REPRESENTATIVE LYNN  interjected that he recalled  Mr. Wickersham                                                               
was  concerned  about  the  signage, too.    He  reiterated  that                                                               
keeping costs  down was important to  him such that it  would not                                                               
exceed $15,000.                                                                                                                 
                                                                                                                                
1:20:08 PM                                                                                                                    
                                                                                                                                
CHAIR  P.  WILSON reiterated  that  two  signs according  to  the                                                               
fiscal note will be fine as a memorial.                                                                                         
                                                                                                                                
MR.  THOMAS  understood the  signs  would  be the  typical  brown                                                               
[memorial]  signs.   He  compared this  to  Knik-Goose Bay  Road,                                                               
which  has  Joe  Redington,  Sr.   Memorial  Road  signs  at  the                                                               
beginning and end,  yet residence and business  addresses did not                                                               
change.  He brought  up a point of clarification.   He said it is                                                               
an honor  to put up  the signs to  each person, but  the specific                                                               
signage  phrasing   reads  expressway.    He   pointed  out  some                                                               
community  councils   have  been  concerned  about   speed.    He                                                               
explained   the  roadway   is   a   controlled  highway   through                                                               
Westchester Lagoon  with a median  and continues  through midtown                                                               
with driveways  and six-lane urban  arterials.  He was  unsure if                                                               
the title expressway  conveys the message of  limited speed until                                                               
the roadway changes south of Tudor  Road.  He asked for direction                                                               
on the signage wording.                                                                                                         
                                                                                                                                
1:21:42 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  LYNN,  as sponsor,  said  he  would be  happy  to                                                               
change it to highway rather than an expressway.                                                                                 
                                                                                                                                
MR. THOMAS said from the  department's perspective the sign could                                                               
read expressway, highway, or roadway.                                                                                           
                                                                                                                                
REPRESENTATIVE  GATTIS  asked  to  also  consider  calling  it  a                                                               
parkway.                                                                                                                        
                                                                                                                                
MR. THOMAS agreed  that parkway would also work in  terms of sign                                                               
spacing.    He  merely  thought  it might  be  best  if  it  were                                                               
different than expressway south of 15th.                                                                                        
                                                                                                                                
CHAIR P.  WILSON read,  "... Minnesota Drive  and the  portion of                                                               
O'Malley  Road  in Anchorage  from  Minnesota  Drive to  the  New                                                               
Seward Highway are  designated as the Walter J. Hickel  ..."  She                                                               
suggested the committee consider highway, roadway, and parkway.                                                                 
                                                                                                                                
MR. WOLFE suggested corridor should also be considered.                                                                         
                                                                                                                                
REPRESENTATIVE  LYNN  suggested  anything other  than  expressway                                                               
seemed appropriate.                                                                                                             
                                                                                                                                
1:23:33 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ISAACSON  asked  whether  the  department  has  a                                                               
differentiation between names.                                                                                                  
                                                                                                                                
MR.  SCOTT  said  that  parkway   or  corridor  would  work,  but                                                               
expressway  has  an obvious  meaning.    He referred  to  similar                                                               
roadways,  such as  the Eisenhower  Corridor or  "A" Street,  and                                                               
Lake Otis Parkway, which is a  five-lane arterial.  Thus the term                                                               
parkway  and  corridor  are  very  flexible  terms,  as  well  as                                                               
highway.   In  further response  to Chair  Wilson, he  reiterated                                                               
Lake Otis is a parkway.                                                                                                         
                                                                                                                                
REPRESENTATIVE LYNN  said he is comfortable  with either corridor                                                               
or parkway.                                                                                                                     
                                                                                                                                
1:24:53 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS moved  to adopt Amendment 1,  to change the                                                               
proposed name from  Walter J. Hickel Expressway to  the Walter J.                                                               
Hickel Parkway.                                                                                                                 
                                                                                                                                
CHAIR P. WILSON assumed Amendment 1  would change line 2, 5 and 7                                                               
of the bill.                                                                                                                    
                                                                                                                                
1:25:28 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS restated her motion.   She made a motion to                                                               
adopt Amendment  1, which would amend  the language of HB  153 on                                                               
lines 2,  5, and 7,  from "Walter  J. Hickel Expressway"  to read                                                               
"Walter J. Hickel Parkway."                                                                                                     
                                                                                                                                
REPRESENTATIVE FEIGE objected for the  purpose of discussion.  He                                                               
said naming a road  depends on the part of the  country as to the                                                               
name of  a roadway.   He suggested  that parkways  were typically                                                               
roads on  the East Coast and  were limited to cars.   Expressways                                                               
were limited-access highways,  without numerous streets, although                                                               
he did  not have a  preference.   He suggested if  expressway was                                                               
used it should be limited to  the portion of Minnesota Drive from                                                               
Tudor Road to Old Seward.                                                                                                       
                                                                                                                                
1:27:35 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE GATTIS understood  the distinction between highway                                                               
and expressway, but  she wanted to avoid the  connotation of high                                                               
speed.                                                                                                                          
                                                                                                                                
CHAIR P. WILSON offered her belief that corridor implies speed.                                                                 
                                                                                                                                
REPRESENTATIVE  FEIGE  removed his  objection.    There being  no                                                               
further objection, Conceptual Amendment 1 was adopted.                                                                          
                                                                                                                                
1:28:38 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ISAACSON moved  to report HB 153,  as amended, out                                                               
of   committee   with    individual   recommendations   and   the                                                               
accompanying  fiscal note.   There  being no  objection the  CSHB                                                               
153(TRA)  was reported  from  the  House Transportation  Standing                                                               
Committee.                                                                                                                      
The committee took an at-ease from 1:29 p.m. to 1:30 p.m.                                                                       
                                                                                                                                
            HB 23-KNIK ARM BRIDGE AND TOLL AUTHORITY                                                                        
                                                                                                                                
1:30:19 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON announced that  the final order of business would                                                               
be HOUSE BILL NO.  23, "An Act relating to bonds  of the Knik Arm                                                               
Bridge  and Toll  Authority;  relating to  reserve  funds of  the                                                               
authority; relating to taxes and  assessments on a person that is                                                               
a party to an agreement  with the authority; and establishing the                                                               
Knik Arm Crossing fund."                                                                                                        
                                                                                                                                
1:31:13 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  MARK  NEUMAN,  Alaska State  Legislature,  stated                                                               
that a project such  as this one has its share  of people on both                                                               
sides of  the issue.   He offered  his belief that  the decisions                                                               
need to  be based on  the most accurate and  credible information                                                               
available.   He offered to  review some  aspects of the  Knik Arm                                                               
Bridge  and   Toll  Authority  (KABATA's)  credentials   and  the                                                               
project's process  as it  moves forward.   He said  that KABATA's                                                               
main  financial   advisor  is  Citigroup,  one   of  the  largest                                                               
investment  banks  doing  billions  of  dollars  of  finance  and                                                               
underwriting annually.   The Nossaman LLP, which  is KABATA's law                                                               
firm has  represented the  public sector in  about 90  percent of                                                               
the transportation  public-private partnerships (P3) in  the U.S.                                                               
CDM  Smith  [formerly Wilbur  Smith  Associates],  a traffic  and                                                               
control consultant, has  about 80 percent of the  market share of                                                               
investment  grade  traffic  in   toll  revenue  studies  and  has                                                               
supported $80 billion in toll  road financing over the last fifty                                                               
years.   Standard and Poors  (S&P), a Wall Street  credit ratings                                                               
company is one of three  nationally recognized statistical rating                                                               
organizations by  the Securities  Exchange Commission  (SEC). The                                                               
S&P  has provided  an investment  grade rating  on this  project,                                                               
which is considered very favorable.                                                                                             
                                                                                                                                
1:33:05 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN  related the  short list  includes hundreds                                                               
of   companies,   which   was  reduced   to   three   world-class                                                               
construction  teams.   The short  list for  the private  partners                                                               
will each spend  over $10 million to  prepare proposals including                                                               
performing  independent  due  diligence  on this  project.    The                                                               
short-listed companies  will review  the traffic, the  tolls, and                                                               
the financing.   Thus,  this Knik Arm  Crossing (KAC)  project is                                                               
being reviewed by  numerous world class organizations  and if the                                                               
KAC  isn't  a  viable  project   it  won't  happen,  but  the  P3                                                               
expenditures demonstrates  a positive  aspect.   He characterized                                                               
the KAC  as a private  industry project.   He offered  his belief                                                               
that  Citigroup  is  one  of  the  largest  and  most  recognized                                                               
financial groups  in the world.   Further, Citigroup and  S&P are                                                               
both  supportive of  the project  and  want to  partner with  the                                                               
state,  he said.   The  three short-listed  firms are  willing to                                                               
spend  $10  million  developing proposals.  Citigroup  and  S&P's                                                               
ratings are good  indicators on the viability of  the project, he                                                               
said.   Granted,  some people  won't  like the  project in  their                                                               
neighborhood; however, sometimes decisions  have to be made based                                                               
on  the benefits  to the  majority of  the people.   Over  30,000                                                               
residents of the Matanuska-Susitna  valley travel to Anchorage on                                                               
the Glenn  Highway, which  is over-capacity now.   It  would cost                                                               
over  $4 billion  to bring  that  road up  to capacity.   The  P3                                                               
partnership  wants to  invest in  a project  that can  reduce the                                                               
need  for Glenn  Highway  expenditures considerably,  as well  as                                                               
reducing  frequency  of   rut-rehabilitation,  which  would  also                                                               
reduce  state funding.   He  listed  other benefits  to the  KAC,                                                               
including  that it  will  save  lives -  noting  he provided  the                                                               
committee  with information  on accident  rates and  road safety.                                                               
Further, this project can open  opportunities for investment at a                                                               
time   when  the   state  has   struggled   with  oil   revenues.                                                               
Additionally, the  Eagle River  bridge is  older bridges  and the                                                               
KAC could provide  safety if an earthquake were to  occur.  If it                                                               
became  necessary  to  fly  freight  to  the  Interior  it  would                                                               
increase  operating   expenditures.     He  concluded   that  the                                                               
aforementioned reasons  demonstrate how  the KAC can  help secure                                                               
Alaska's interests and why the project has statewide support.                                                                   
                                                                                                                                
1:37:15 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  ISAACSON  said he  supports  this  project for  a                                                               
number of reasons, including redundancy  and reduction in freight                                                               
costs  to Interior  Alaska; however,  the  legislature will  hear                                                               
testimony with respect to the  cost projections for the bridge in                                                               
the amount  of $2.6 billion.   He asked  how the project  will be                                                               
evaluated by  the Finance Committee and  if specific calculations                                                               
will be applied.                                                                                                                
                                                                                                                                
REPRESENTATIVE NEUMAN  answered that the House  Finance Committee                                                               
will review  the project  as a  whole, as  well as  the financial                                                               
aspects  carefully,  including  any  obligations  to  the  state.                                                               
Currently the  bill has a zero  fiscal note.  Any  evaluations on                                                               
HB 23 have been based on  the worst case scenario.  Additionally,                                                               
the private  sector is  also reviewing the  financials so  if the                                                               
KAC doesn't pass muster the project  will not happen.  He said he                                                               
has  viewed  this project  as  a  means  of finding  new  revenue                                                               
sources for  the state.   He mentioned  the state's  deficit, but                                                               
recognized  that  the state  will  need  to fund  transportation,                                                               
whether it is the ferry  system, the Dalton Highway, airports, or                                                               
railroads  and  this  project  [could  generate  revenue]  to  go                                                               
towards  a proposed  transportation  fund  without using  general                                                               
fund revenues.                                                                                                                  
                                                                                                                                
1:41:18 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE NEUMAN,  in response to  a question, said he  is a                                                               
member of  KABATA, but KABATA's  experts are available  to answer                                                               
any  questions.   He  spoke  to  the  credibility of  the  people                                                               
working on the project.                                                                                                         
                                                                                                                                
1:42:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE ISAACSON understood that  the KAC project contains                                                               
private  investment  oversight so  the  state  will not  incur  a                                                               
deficit and obligation.                                                                                                         
                                                                                                                                
REPRESENTATIVE  NEUMAN referred  to data  collection and  related                                                               
the bridge should begin to make  money and start repayment to the                                                               
reserve fund within 7-8 years.   This bill has a zero fiscal note                                                               
and  does  not  contain  any   obligation,  but  would  create  a                                                               
mechanism   to  move   forward  to   create  the   public-private                                                               
partnership, he said.                                                                                                           
                                                                                                                                
1:44:16 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON  understood Governor Parnell has put  in funds in                                                               
the  proposed FY  14 capital  budget and  asked for  the proposed                                                               
appropriation amount.                                                                                                           
                                                                                                                                
REPRESENTATIVE NEUMAN  responded the  governor's proposal  is for                                                               
$25 million, with an additional $35  million for each of the next                                                               
four years for a total of $150  for the reserve fund.  Again, the                                                               
reserve fund is a loan that will  be repaid to the state, will be                                                               
used to  make annuity  payments, and any  excess revenue  will be                                                               
used to repay the reserve fund.                                                                                                 
                                                                                                                                
CHAIR  P. WILSON  asked about  the guidelines  that the  U.S.-DOT                                                               
will use with respect to the TIFFIA loans.                                                                                      
                                                                                                                                
1:46:13 PM                                                                                                                    
                                                                                                                                
MICHAEL  FOSTER,  Chair,  Knik  Arm  Bridge  and  Toll  Authority                                                               
(KABATA),  Department  of   Transportation  &  Public  Facilities                                                               
(DOT&PF),  stated that  under Moving  Ahead for  Progress in  the                                                               
21st  Century  Act  (MAP-21), the  Transportation  Infrastructure                                                               
Finance  and  Innovation  Act  of  1998  (TIFIA)  program  has  a                                                               
capacity of $17  billion, which equates to $51.5  billion under a                                                               
33 percent eligibility model.   Currently, 29 projects are on the                                                               
list for proposed federal TIFIA funding.                                                                                        
                                                                                                                                
CHAIR P. WILSON asked for clarification.                                                                                        
                                                                                                                                
MR. FOSTER  answered that TIFIA  has both  mechanisms in it:   to                                                               
fund projects  at either 33  percent or  49 percent of  the total                                                               
funding.   He understood that  29 projects are interested  in the                                                               
$51.5 billion  in TIFIA funding, with  at least one likely  to be                                                               
funded  at 33  percent.    Initially, an  option  existed for  49                                                               
percent  funding and  subsequently KABATA  submitted a  letter of                                                               
interest  at 49  percent;  however the  KABATA's  model has  been                                                               
based on  33 percent overall  funding.  The KABATA  believes that                                                               
the  TIFIA  loans  will  likely   be  at  33  percent,  which  is                                                               
consistent with the prior TIFIA  model.  Thus, KABATA's letter of                                                               
interest was  to express interest  in approximately  $500 million                                                               
of TIFIA  credit-enhancement, but KABATA's  model is built  on 33                                                               
percent or $350  million, based on the  total anticipated capital                                                               
outlay for the project which totals $1 billion.                                                                                 
                                                                                                                                
1:48:37 PM                                                                                                                    
                                                                                                                                
CHAIR P. WILSON asked what would  happen if the TIFIA loan is not                                                               
approved.                                                                                                                       
                                                                                                                                
MR.  FOSTER answered  that  the KAC's  funding  mechanism is  the                                                               
private  partner's responsibility  since the  private partner  is                                                               
responsible for  funding the  project.   The private  partner may                                                               
decide not to use TIFIA; however,  that is highly unlikely if the                                                               
funding is  available.   Other funding  options available  to the                                                               
private partner would  be private activity bonds  (PABs) - noting                                                               
$600 million  is the  capacity.  This  bill actually  would raise                                                               
the legislative  capacity from $500  million to $600  million, he                                                               
said.    Additionally, the  private  partner  would have  private                                                               
investment  options available,  including  private capital  funds                                                               
available elsewhere in  the world.  Certainly, TIFIA  is the most                                                               
attractive option due  to the lenient repayment  schedule and the                                                               
delay in the first payment.   However, there is not any guarantee                                                               
that the TIFIA  loan will be approved.  He  anticipated, based on                                                               
the letter in members' packets,  meetings with the U.S.-DOT Under                                                               
Secretary LaHood,  and the major  project team that  this project                                                               
is  ripe  and is  a  prime  project  for  this type  of  program.                                                               
However,  the  U.S.-DOT  wants  to  see  the  state's  commitment                                                               
demonstrated before  the public-private partnership  (P3) funding                                                               
will move forward.   To date, the KABATA has  not been invited to                                                               
submit an application  for the TIFIA loan.  In  fact, none of the                                                               
29  projects pending  in  17 states  are  in the  pre-application                                                               
process, but  all have submitted  letters of interest.   Further,                                                               
if TIFIA asked  the state to submit an application,  it would not                                                               
do so immediately since a  specific timeframe is involved and the                                                               
timing is important.  The KABATA  needs to have certain things in                                                               
place prior to submitting an  application to ensure everything is                                                               
in place.   However, the passage  of HB 23 would  allow KABATA to                                                               
move forward and  KABATA anticipates being invited  to apply once                                                               
the  request for  proposal (RFP)  is  completed.   Again, if  the                                                               
TIFIA  loan is  not approved,  $600 million  in private  activity                                                               
bonds (PAB)  would be another  option for the private  partner to                                                               
consider, he stated.                                                                                                            
                                                                                                                                
1:52:01 PM                                                                                                                    
                                                                                                                                
MR. FOSTER reiterated the state  would not be underwriting a loan                                                               
or  be obligated  for  the  underwriting of  the  loan or  bonds;                                                               
instead, the state would be a  conduit for both.  He reported the                                                               
TIFIA loan  with an approximate  3 percent interest rate  and the                                                               
PAB's interest rate  at 5 percent.  Obviously, the  TIFIA loan is                                                               
preferable,  although   the  PABs  are  still   attractive.    He                                                               
estimated the  difference between  the two  loans would  be about                                                               
$100  million..    He  anticipated KABATA  would  expect  to  see                                                               
reduced proposals if the TIFIA  funds are available, but if TIFIA                                                               
loans are not  approved at that point KABATA will  need to review                                                               
the  model  with   respect  to  the  affordability   curve.    He                                                               
emphasized  the importance  of avoiding  payments in  the initial                                                               
years that  the state cannot  afford until the traffic  ramps up.                                                               
He characterized  it as being  a curved financial  fee structure.                                                               
Again, the  PABs and other international  private financing could                                                               
be considered.   He reiterated that the financing  choices are up                                                               
to  the  private partner,  although  KABATA  will provide  credit                                                               
enhancement.    He recapped  the  financing  preference order  as                                                               
being TIFIA, PABs, and finally private financing.                                                                               
                                                                                                                                
1:53:48 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  KREISS-TOMKINS   understood  that   depending  on                                                               
whether KABATA  obtains TIFIA  financing the  financial liability                                                               
would  not rest  with the  state, but  the state  would act  as a                                                               
conduit for the financing.   He asked whether any increased costs                                                               
of financing would inflate the size of the state's contract.                                                                    
                                                                                                                                
MR. FOSTER  answered that the  state has financial  liability for                                                               
the availability payment,  but not the financing  of the project.                                                               
He reiterated  that the state  or KABATA will be  responsible for                                                               
making the availability payments.   The model KABATA presented in                                                               
its  overview and  discussed  at the  last  committee meeting  is                                                               
based on  a 33 percent  TIFIA allocation.   If PABs are  used the                                                               
estimate would add  an additional $100 million,  which would also                                                               
increase the availability payment.   He anticipated the impact to                                                               
the state would  be to increase the reserve  fund requirements in                                                               
the  range of  $150-$225  million.   However,  the  state has  an                                                               
option to make a milestone  payment in the beginning, which would                                                               
be to provide capital budget funding  to Title 23 to pay down the                                                               
interest difference  between the interest  on the TIFIA  loan and                                                               
the PABs.   The state would  have some options to  neutralize the                                                               
additional  cost  or  pass  it  on  and  pick  it  up  in  future                                                               
availability payments.                                                                                                          
                                                                                                                                
1:56:09 PM                                                                                                                    
                                                                                                                                
CHAIR  P.  WILSON  pointed  out  that  the  focus  of  the  House                                                               
Transportation  Committee is  on  the public  policy and  whether                                                               
this project  is good for the  state rather than to  focus on the                                                               
financing.   The finance committee  will thoroughly  consider the                                                               
financial  aspects   of  the  proposed  project.     Again,  this                                                               
committee  will consider  whether this  project is  good for  the                                                               
state, she said.                                                                                                                
                                                                                                                                
1:57:29 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS  said he loves  infrastructure, but                                                               
expressed  concerned about  financial obligations  of the  state.                                                               
He said  the financing is  an obligation of the  private partner,                                                               
but this financing is a back  door way of flipping the obligation                                                               
to the state.  In the  event that financing costs for the project                                                               
increase,  the costs  would be  reflected in  the form  of higher                                                               
availability payment for the state.                                                                                             
                                                                                                                                
CHAIR  P. WILSON  remarked  this aspect  is in  the  back of  our                                                               
minds.  She appreciated the comments.                                                                                           
                                                                                                                                
1:58:49 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE characterized the  availability payment as a                                                               
35-year mortgage.   He asked  if at some  point it would  be more                                                               
advantageous to take money out of  savings to pay the KAC off and                                                               
if  so,  whether  the  legislature   or  KABATA  would  make  the                                                               
decision.                                                                                                                       
                                                                                                                                
MR. FOSTER  responded that the  contract contains a  provision to                                                               
terminate  for convenience,  which allows  the state  to pay  the                                                               
contract off, similar to a home  mortgage.  He offered his belief                                                               
that the  KABATA board, the  administration, and  the legislature                                                               
would  weigh  in  on  any  decision since  the  KAC  is  a  state                                                               
infrastructure project.   The  actual passage  or rules  would be                                                               
through the  KABATA board, noting  the KABATA board  is comprised                                                               
of  the commissioners  from  the Department  of  Revenue and  the                                                               
DOT&PF, along with three individuals appointed by the governor.                                                                 
                                                                                                                                
2:00:43 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE  asked what would happen  if the legislature                                                               
wants to pay the KAC debt off but KABATA objects.                                                                               
                                                                                                                                
MR. FOSTER  answered that  if the legislature  wanted to  pay for                                                               
the bridge today  that KABATA would support it.   Further, he was                                                               
unsure of  any reason KABATA  or the administration  would object                                                               
to payment, noting the mechanism [to  pay the project in full] is                                                               
in place.                                                                                                                       
                                                                                                                                
2:01:15 PM                                                                                                                    
                                                                                                                                
STEPHANIE KESSLER asked members to vote  against HB 23.  She said                                                               
that the  revenue estimates are  based on  fallacious information                                                               
developed  by  Wilbur Smith  Associates  [now  CDM Smith].    She                                                               
understood  Representative  Neuman  commended  the  firm's  track                                                               
record,  but  offered her  belief  that  Wilbur Smith  Associates                                                               
(WSA) [now  CDM Smith] has  a nationally documented  track record                                                               
of overestimating  toll revenues  by 118 percent.   Specifically,                                                               
WSA's  estimates for  the Matanuska-Susitna  population in  2035,                                                               
which were used for the  Knik Arm Crossing (KAC) "financials" are                                                               
20 percent  higher than the  University of Alaska's  Institute of                                                               
Social and Economic  Research (ISER) and the  Department of Labor                                                               
(DLWD).  Further,  the WSA's traffic counts are  more than double                                                               
CH2M Hill's estimates.  She offered  her belief that CH2M Hill is                                                               
a  respected  engineering organization  and  the  firm also  used                                                               
ISER's numbers.   The WSA  also shows  a massive retail  space in                                                               
the  Point Mackenzie  area that  is  more than  two and  one-half                                                               
times  the size  of the  current  Anchorage Dimond  Center.   The                                                               
Matanuska-Susitna  Borough's  (MSB)  master plan  designates  the                                                               
Point MacKenzie area  as reserved for industrial use  by coal and                                                               
timber  loading.   Additionally, KABATA  estimates that  in 2035,                                                               
13,282 jobs  will be in the  Point MacKenzie area.   She wondered                                                               
how  this  compares  with  reality  since  currently  the  entire                                                               
Matanuska-Susitna area only has  14,000 jobs, the Kenai-Peninsula                                                               
Borough  (KPB)  has 13,000  jobs,  Juneau  has 10,000  jobs,  and                                                               
downtown Anchorage has  18,000 jobs.  Thus it seems  a stretch to                                                               
estimate  that  the Matanuska-Susitna  and  Knik  area will  have                                                               
13,282 jobs.   She concluded that the toll  revenue estimates are                                                               
based on inflated numbers and  without [sufficient] tolls it will                                                               
cost  the state  billions of  dollars, in  fact, $2.6  billion or                                                               
more.    She urged  members  to  vote  against  HB 23  since  the                                                               
financial underpinning is a house of cards.                                                                                     
                                                                                                                                
2:04:59 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE LYNN asked  whether Ms. Kessler is  opposed to the                                                               
bridge  just  based solely  on  the  supposed inaccuracy  of  the                                                               
traffic counts.   He  asked whether she  would offer  support for                                                               
the KAC  if she  thought the population  and traffic  counts were                                                               
accurate.                                                                                                                       
                                                                                                                                
MS. KESSLER answered that she chose  to highlight only one of her                                                               
concerns  in today's  testimony;  however, there  are many,  many                                                               
flaws.   She suggested a long  conversation could be held  on the                                                               
funding  structure  of the  bridge.    She recalled  the  sponsor                                                               
mentioned that private industry  was investing $1 billion dollars                                                               
in the project; however, the fact  is the P3 will only invest $73                                                               
million  towards the  total  $1  billion in  bridge  costs.   The                                                               
remainder of the  funding would come from  government funding and                                                               
PABs, with  half of the  proposed funding  based on a  TIFIA loan                                                               
that has  been turned down  five times.   She concluded  that the                                                               
entire financial structure of this project is questionable.                                                                     
                                                                                                                                
2:06:18 PM                                                                                                                    
                                                                                                                                
LARRY DEVILBISS,  Mayor, stated  that all the  mayors in  the MSB                                                               
support  the  project.    The  Alaska  Municipal  League's  (AML)                                                               
Conference  of Mayors  voted to  support this  project since  the                                                               
organization views this project as  being significant to the rest                                                               
of the state.  He said,  "This isn't just about Anchorage and the                                                               
Matanuska-Susitna  area."     Additionally,  since  this  project                                                               
started  two town  sites have  subsequently been  laid out:   one                                                               
township located at the road  site has been surveyed and monument                                                               
and the other  townsite lie within ten minutes of  the end of the                                                               
right-of-way of  the project.  The  project's economic importance                                                               
to  the MSB  is  second only  to  the rail  extension.   The  KAC                                                               
project  will  serve the  remainder  of  the  MSB.   Further,  47                                                               
percent of the  Kenai Peninsula Borough (KPB) is  located on this                                                               
side  of Cook  Inlet and  the  KPB is  keen on  opening up  these                                                               
natural resources.  He also said, "So  I won't take your time - I                                                               
have looked into - we've heard  some of the wild allegations like                                                               
we just heard  about the TIFIA letter being  turned down numerous                                                               
times.  I  was alarmed when I  heard that and I  think Mr. Foster                                                               
can clarify  the record on  that - that's  simply not true."   He                                                               
appreciated the legislature's efforts  and anything that could be                                                               
done to remove the gridlock.                                                                                                    
                                                                                                                                
2:09:28 PM                                                                                                                    
                                                                                                                                
AVES  THOMPSON, Executive  Director, Alaska  Trucking Association                                                               
(ATA),  stated   that  the  ATA   is  a   statewide  organization                                                               
representing  the interests  of its  nearly 200  member companies                                                               
from Barrow  to Ketchikan.   The ATA would  like to go  on record                                                               
that  it  stands firmly  behind  the  KAC  project and  any  need                                                               
legislation to move  the project forward.  The  ATA believes that                                                               
the bridge will provide a vital  new link in the state's regional                                                               
transportation system.  First, would  provide an additional route                                                               
into and  out of  Port of  Anchorage.   Second, it  would provide                                                               
some congestion relief on the Glenn  Highway as well as the Parks                                                               
Highway.  Finally,  it will set up an  efficient freight corridor                                                               
to  serve Interior  Alaska and  northern Alaska.   He  reiterated                                                               
that the ATA is in support of this project.                                                                                     
                                                                                                                                
2:11:17 PM                                                                                                                    
                                                                                                                                
VERNE RUPRIGHT, Mayor,  City of Wasilla, stated that  the City of                                                               
Wasilla has been  involved with this issue for a  long time.  The                                                               
four  mayors in  the  Matanuska-Susitna city  and borough  concur                                                               
with Mayor DeVilbiss's assessment.   In 2009, the City of Wasilla                                                               
and  the  City  of  Houston  brought  injunctive  relief  against                                                               
Anchorage's  Metropolitan Area  Transportation Solutions  (AMATS)                                                               
to  prevent this  project from  being  stalled.   Since then  the                                                               
project  has  been  moving  forward.    He  pointed  out  that  a                                                               
significant number of  the commuters travel on  the Parks Highway                                                               
through  the  middle  of  the  city.   He  reported  that  it  is                                                               
approximately equidistant  from the  KAC to Wasilla  as it  is to                                                               
use the Glenn Highway.  Thus  having two accesses would make it a                                                               
lot  easier for  commuters to  and from  Anchorage to  access the                                                               
Matanuska-Susitna  area.    While he  understood  the  disruption                                                               
issues  for neighborhoods,  all  of  us have  had  to modify  and                                                               
accommodate changes in growth, just  as Wasilla had done over the                                                               
past couple decades.   He suggested this project  would allow for                                                               
greater  potential  for  growth  in the  MSB  area  and  Interior                                                               
Alaska.  He  related he has held numerous  discussions about this                                                               
project  at  AML  conferences.    This route,  [the  KAC],  is  a                                                               
strategic route for  the U.S. as well as Alaska.   He offered his                                                               
belief that another  route out of Anchorage is long  overdue.  He                                                               
stated  that  the mayors  are  mindful  of  the growth  and  must                                                               
accommodate.  In closing, he urged members to pass HB 23.                                                                       
                                                                                                                                
2:14:21 PM                                                                                                                    
                                                                                                                                
SUZANNE DI PIETRO,  Attorney, said she has  followed this project                                                               
especially with respect to the legal  issues.  She asked to speak                                                               
to a specific provision in HB  23.  She highlighted her focus has                                                               
been  the  reserve  account  established under  the  bill.    She                                                               
emphasized  that  the authority  established  in  the account  is                                                               
different   than   any  other   authority   in   Alaska.     More                                                               
specifically, the  reserve fund established  in Sections 4  and 5                                                               
create an account  KABATA will use to pay its  legal obligation -                                                               
the availability  payments -  to the private  partner.   She said                                                               
the open nature of the reserve fund is unprecedented.                                                                           
                                                                                                                                
MS. DI  PIETRO referred to  page 4,  lines 5-9 to  paragraph (l),                                                               
which read, "(l)The chair of  the board shall annually, not later                                                               
than  December 1,  certify in  writing  to the  governor and  the                                                               
legislature the  amount, if  any, required  to restore  a reserve                                                               
fund  established in  (h), of  this section  to the  reserve fund                                                               
requirement."   She emphasized the  importance of  this language.                                                               
She has  researched it and  found this language is  recognized by                                                               
markets and rating agencies as  creating something referred to as                                                               
"a  moral  obligation."    She  said a  moral  obligation  is  an                                                               
understanding  between state  government,  the  markets, and  the                                                               
rating  agencies, such  that  if  the revenues  in  the fund  are                                                               
insufficient to cover  whatever liability is being  paid from the                                                               
account, the  state government  will step  in and  appropriate to                                                               
the  reserve fund.    Thus  this language  is  understood by  the                                                               
markets to create  a contingent liability to the state  up to the                                                               
amount necessary  to cover the  reserve fund.  She  explained the                                                               
reserve fund in HB 23 is open  ended so each year KABATA will ask                                                               
the  state to  appropriate to  the fund.   Thus  the markets  and                                                               
rating  agencies  understand  the  legislature  in  passing  this                                                               
specific  language   has  pledged  to  appropriate   whatever  is                                                               
necessary.                                                                                                                      
                                                                                                                                
MS. DI  PIETRO offered  that KABATA could  create a  reserve fund                                                               
and put the $10 million in  the governor's budget in the fund, or                                                               
deposit $100  million.  However,  the danger and  difficulty with                                                               
the language in HB 23  is the specific open-ended language, which                                                               
is not  necessary to this  project.   She related that  the DOR's                                                               
Commissioner Butcher has  written a letter, which  she could make                                                               
available  if  it is  not  in  members'  packets, and  she  urged                                                               
members to read it.  In  response to a question by Representative                                                               
Feige, Ms. Di Pietro said she is an attorney.                                                                                   
                                                                                                                                
2:18:47 PM                                                                                                                    
                                                                                                                                
BOB  FRENCH  stated that  he  has  been analyzing  the  financial                                                               
assumptions of the  proposed Knik Arm Crossing  (KAC) since 2003.                                                               
He asked  to address some statements  made that were errors.   He                                                               
recalled  that  Representative  Neuman previously  discussed  the                                                               
reliability  of the  toll revenue  forecast; however,  he pointed                                                               
out the forecast is irrelevant if  the shortfalls will be made up                                                               
by the  state.  No matter  what toll revenues are  generated, the                                                               
availability  payment is  guaranteed,  he  said.   Representative                                                               
Neuman also  spoke about the  private partner's investment  of $1                                                               
billion for  the project.   Instead, under the bill,  the private                                                               
partner would receive a $1 billion  loan with state as a cosigner                                                               
on the  loan.  In  fact, KABATA's pro  formas say the  P3 partner                                                               
will put  in $72.7  million.   Representative Neuman  also talked                                                               
about investment  grade ratings;  however, the ratings  are based                                                               
entirely on the good credit  rating of Alaska.  Additionally, the                                                               
sponsor spoke about  the need to improve the  Eagle River bridges                                                               
and based  on the money already  spent on the project  by KABATA,                                                               
the state could  have upgraded the bridges  to current earthquake                                                               
standards and  also change  them to three  lanes each  way, which                                                               
could  reduce  the  critical bottleneck  on  the  Glenn  Highway.                                                               
Further,  Representative Neuman  and the  ATA discussed  reducing                                                               
the freight  cost to  Fairbanks, but according  to a  letter from                                                               
the  commissioner of  DOT&PF  in order  for the  bridge  to be  a                                                               
faster link to Fairbanks, the  legislature would need to spend at                                                               
least $95 million to build the  Burma Road and the South Big Lake                                                               
Road.                                                                                                                           
                                                                                                                                
MR.  FRENCH, with  respect  to  the zero  fiscal  note, said  the                                                               
caveat on  it reads,  "The Knik Arm  Bridge and  Toll Authority's                                                               
budget will not be affected by  the development of the project as                                                               
long  as projections  for  ridership on  the  bridge and  related                                                               
financial solvency  are fulfilled."   He emphasized, "as  long as                                                               
the projection are true."   He related Mayor DeVilbiss is correct                                                               
that the  project would have a  statewide effect.  In  fact, if a                                                               
$55  million to  $98 million  per  year deficit  occurs, it  will                                                               
affect transportation projects  statewide, he said.   He was glad                                                               
to hear Mr. Foster say the  reserve fund will need more than $250                                                               
million  if the  [private  partner]  needs to  go  to  PABs.   He                                                               
encouraged members not to pass  these bills until the independent                                                               
reviews from the Department of  Revenue (DOR) and the Legislative                                                               
[Audit  Division's] audit  are completed  since both  audits were                                                               
tasked to  see if KABATA's  assumptions were reasonable.   In the                                                               
current form  these bills would  add tremendously to the  risk of                                                               
the state and will cost billions  of dollars when the state finds                                                               
KABATA's assumptions are not true.                                                                                              
                                                                                                                                
2:22:16 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS  asked him  to identify  the audits                                                               
he just mentioned.                                                                                                              
                                                                                                                                
MR. FRENCH  responded that the  LB&A audit [requested] is  one of                                                               
two  audits requested.   He  offered  his belief  that the  draft                                                               
legislative audit  is completed, but  KABATA has been  given time                                                               
to review it.  He understood the  final audit might be out by the                                                               
end of  March.  Additionally, the  DOR's audit was put  out for a                                                               
bid  in December,  but  was recently  canceled by  the  DOR.   He                                                               
concluded that  the independent audit  may not be  available this                                                               
year.                                                                                                                           
                                                                                                                                
CHAIR P.  WILSON reported that  the LB&A Committee  indicated the                                                               
legislative audit will be out in  about 30 days.  She anticipated                                                               
the  LB&A's  audit  will  be available  for  the  legislature  to                                                               
consider.                                                                                                                       
                                                                                                                                
2:23:17 PM                                                                                                                    
                                                                                                                                
LOIS  EPSTEIN,  Engineer,  stated  she serves  on  the  Anchorage                                                               
Metropolitan  Area  Transportation  Solutions  (AMATS)  technical                                                               
advisory committee; however she is  speaking on behalf of herself                                                               
today.  She  said that the KAC is not  ready for construction nor                                                               
is it a financially sound investment.   The KABATA expects to get                                                               
a  low cost  federal  loan for  $500  million -  a  TIFIA loan  -                                                               
however,  KABATA  has  been  turned down  five  times,  which  is                                                               
accurate despite  Mayor DeVilBiss's comments, respectfully.   She                                                               
said  there would  be an  enormous  hole in  KABATA's budget,  as                                                               
mentioned  today  -  an  extra  $100  million,  at  least.    She                                                               
indicated the proposed  toll is among the highest  in the country                                                               
so many  people would likely take  the Glenn Highway to  and from                                                               
Anchorage.   Additionally,  KABATA's toll  revenue forecasts  are                                                               
based  on  the  consultant's  projections,  CDM  Smith,  formerly                                                               
Wilbur Smith  Associates, whose  projection of  population growth                                                               
in the  Matanuska-Susitna area is  far greater than the  DLWD and                                                               
UA ISER's  population projections.   To  make matters  worse, the                                                               
consultant's  projections put  almost  all future  growth on  the                                                               
western part  of the MSB and  not in the Wasilla  or Palmer area,                                                               
which    knowledgeable    experts   believe    is    unrealistic.                                                               
Unfortunately  the  state's  audit  of bridge  toll  revenue  was                                                               
cancelled,  as  just  mentioned.    According  to  the  paper  in                                                               
members'  packets  entitled,  "The  Real Cost  of  the  Knik  Arm                                                               
Bridge" substantial  costs to  the state  are unaccounted  for by                                                               
KABATA.  She urged legislators  to ascertain how much the project                                                               
will cost the  state on an annual basis prior  to approving these                                                               
bills.    She  cautioned   that  inadequate  traffic  projections                                                               
resulted in  more than $2 million  annually as a subsidy  for the                                                               
Whittier Tunnel,  which is a  much smaller toll project.   Please                                                               
do not  support HB 23,  which would  create a state  guarantee to                                                               
private investors  when inadequate  toll revenue to  cover bridge                                                               
costs arises.   She concluded that the KAC bridge  project is not                                                               
a fiscally conservative investment, which  would harm the rest of                                                               
Anchorage and Matanuska-Susitna  area.  She urged  members not to                                                               
pass HB 23 out of committee.                                                                                                    
                                                                                                                                
2:25:40 PM                                                                                                                    
                                                                                                                                
JAMIE KENWORTHY asked to comment  on KABATA's financial plan.  He                                                               
said  if HB  23  passes  it really  won't  matter  how much  toll                                                               
revenue  is collected  and whether  the  federal government  ever                                                               
funds the project.  This is  since the language, referring to the                                                               
Sections  [4  and  5]  [to  AS 19.75.221(h)  (1)]  of  the  bill,                                                               
contains a  "must" before  the language and  a "shall"  after it.                                                               
He  indicated  this  [language]  represents  more  than  a  moral                                                               
obligation  for   the  bond  since  this   bill  would  guarantee                                                               
administrative costs.   In  fact, the  key [obligation]  would be                                                               
the guarantee of the annual  availability payment.  He emphasized                                                               
the  legislature's focus  should be  on the  guarantee this  bill                                                               
will  give to  the availability  payments.   He said  that KABATA                                                               
estimates the availability  payments at $2.7 million  - this time                                                               
- without the $500 million  TIFIA loan.  The financial statements                                                               
prepared  by  Citigroup included  revenue  based  on a  four-lane                                                               
[bridge];  however, the  [financial statement]  is only  based on                                                               
the construction cost  of two lanes [of the bridge].   He offered                                                               
his  belief the  project would  cost a  minimum of  $2.6 billion,                                                               
which is $3,500 per Alaskan.                                                                                                    
                                                                                                                                
MR.  KENWORTHY questioned  the necessity  of  the complicated  P3                                                               
structure.  He  pointed out that the developer  is only investing                                                               
$72 million in  equity - per KABATA's sheet -  but will be taking                                                               
out $737  million in net  cash flow.   As an aside,  he suggested                                                               
that  KABATA has  overestimated this  amount, which  he estimated                                                               
would be  closer to ten  percent or  $150 million less,  which is                                                               
represented  in his  $2.6 billion  figure.   Under the  bill, the                                                               
[legislature]  would   guarantee  the   contract  so   when  toll                                                               
shortfalls  arise the  legislature must  annually choose  to fund                                                               
the  availability  payment  contract   or  adversely  affect  the                                                               
state's credit  rating.  He said  he has read the  proposed draft                                                               
agreement for  the proposed contractors.   He offered  his belief                                                               
that the  contract assures the contractor  - who will have  won a                                                               
$1  billion  bid to  build  the  bridge  -  has imbedded  in  its                                                               
availability contract a guarantee of  all the payments based on a                                                               
10-12 percent annual return on  investment.  This is without even                                                               
considering  the  impact  of litigation  for  damages  since  the                                                               
contractor will  expect construction  costs and  a call  on their                                                               
financing  profits when  a dispute  arises.   This  leads to  the                                                               
basic  question, which  is the  difference  between the  interest                                                               
rates on funds  the state can borrow and the  profits the private                                                               
partner  will  receive under  the  contractual  agreement.   More                                                               
specifically,  he predicted  the  state can  currently borrow  at                                                               
less than 4 percent interest  on long-term investments.  However,                                                               
per KABATA's estimate, which is  based on the Citigroup financial                                                               
statement,  the  contractor  will   earn  12  percent  compounded                                                               
annually  over  35  years.   He  concluded  that  the  difference                                                               
between  the  $72  million  of equity  investment  and  the  $737                                                               
million of net cash flow out  is $500 million.  He questioned the                                                               
reason  that the  project  has chosen  a  structure, which  would                                                               
allow  $500  million  of  state   funds  through  the  guaranteed                                                               
[availability payment]  to be  sent out of  state.   He concluded                                                               
that the  only answer [for  this structure]  is that the  form of                                                               
the P3  structure allows  KABATA to  say the  bridge is  free and                                                               
further   will  allow   the  project   to   bypass  the   capital                                                               
[improvement]  project process  that  allows  the legislature  an                                                               
opportunity to review  project costs, determine if  the state can                                                               
afford the project, and make choices [on whether to proceed.]                                                                   
                                                                                                                                
2:30:11 PM                                                                                                                    
                                                                                                                                
MR.  KENWORTHY  said he  has  a  cabinet  of KABATA's  pro  forma                                                               
financial statements.   The statements all arrive  at the minimum                                                               
bond cover  ratio, which is 1.25  to 1.4, depending on  the year.                                                               
This basically  indicates that  KABATA will  have about  $1.30 to                                                               
pay $1 worth  of costs, he said.  However,  he offered his belief                                                               
that  these statements  have  all been  reverse  engineered.   In                                                               
other words,  [KABATA] takes the  bond cover ratio, plugs  in the                                                               
proposed  TIFIA loan,  and subsequently  creates the  traffic and                                                               
tolls necessary to  arrive at the bond cover ratio.   He referred                                                               
to last  year's pro  forma financial  statement.   This statement                                                               
was  based on  a $300  million TIFIA  loan and  had $600  less in                                                               
cumulative  toll  revenue to  2051  than  this year's  pro  forma                                                               
financial statement, which is based  a $500 million [TIFIA] loan.                                                               
He cautioned  when the  toll estimates move  $600 million  in one                                                               
year  the [legislature]  should be  Leary, especially  since this                                                               
bill will  guarantee the  availability payment.   In  summary, he                                                               
offered  his belief  that this  [project]  is a  house of  cards.                                                               
It's a  house of cards since  the private sector doesn't  want to                                                               
take the risk  and the toll forecast firm isn't  taking the risk.                                                               
In  fact,  the  [toll   revenue  forecasting]  firm's  disclaimer                                                               
indicates the forecast  can't be used in  any financial offering.                                                               
This  [KAC project]  is only  held up  by the  guarantee in  this                                                               
bill.    He  asked  members to  carefully  examine  [proposed  AS                                                               
19.75.221 -  Section 4  of HB 23]  and whether  the [legislature]                                                               
wants to sign up for the full liability.                                                                                        
                                                                                                                                
2:32:23 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE  asked whether he  was referring to  page 2,                                                               
Section 4, line 24.                                                                                                             
                                                                                                                                
MR. KENWORTHY  agreed to  the reference.  He clarified  that this                                                               
language refers to the reserve fund.   He pointed out that he has                                                               
conferred with  a bond  counselor.  In  fact, there  are probably                                                               
two reserve funds:   one for the bonds and  a second reserve fund                                                               
for the  de facto state  guarantee, which  covers administration,                                                               
overhead,  or working  capital.   He wondered  what limit  KABATA                                                               
would indicate  as the  amount of working  capital it  would need                                                               
since  [the  bill  requires]  the   KABATA  to  annually  certify                                                               
KABATA's cash needs and ask  the legislature for the reserve fund                                                               
to be replenished.   Specifically, he cautioned  that last year's                                                               
TIFIA application, which was also  rejected, had a footnote which                                                               
indicated  that  whenever  the   reserve  fund  drops  below  $50                                                               
million,  KABATA would  ask the  legislature  to refund  it.   Of                                                               
course, if you ask any bond  counselor, these are the magic words                                                               
of a moral obligation and there is not any limit to it, he said.                                                                
                                                                                                                                
2:34:00 PM                                                                                                                    
                                                                                                                                
BERNADETTE RUPRIGHT said she is  married to Mayor Verne Rupright,                                                               
City of Wasilla, but she has  previously worked as a surveyor and                                                               
has worked in the field of  transportation.  She spoke in support                                                               
of  HB 23,  due to  the  earlier testimony  that highlighted  the                                                               
safety issues,  access, and  growth aspects.   She  also recalled                                                               
earlier testimony given  in opposition to the bill  based on toll                                                               
and  population  projections.   She  commented  that studies  are                                                               
normally performed  on projects since these  projections are done                                                               
to  provide companies  with information  since companies  want to                                                               
move in areas in which they perceive growth.                                                                                    
                                                                                                                                
MS. RUPRIGHT  said she  would like the  growth in  the Matanuska-                                                               
Susitna area  to be  18,000 jobs.   Additionally, she  would like                                                               
Anchorage and  the Matanuska-Susitna  valley to grow,  too, since                                                               
this will be an indicator that  the state's economy is strong and                                                               
people are  living well.   She predicted this project  will bring                                                               
money to the economy on the front  end and in the long term.  She                                                               
urged members  to please  move HB  23 along  and let  the finance                                                               
committee consider the  bill.  She suggested  that everyone would                                                               
like to see the state invest a finite amount into the project.                                                                  
                                                                                                                                
2:36:21 PM                                                                                                                    
                                                                                                                                
MR.  FOSTER deferred  some  questions to  the  Department of  Law                                                               
(DOL) and  to KABATA's Chief  financial officer.  In  response to                                                               
recurring comments  that KABATA has  applied for and  been turned                                                               
down five times by TIFIA,  he responded that KABATA has submitted                                                               
letters  of  interest  to  indicate  an  interest  in  the  TIFIA                                                               
program.  At  the time these letters have  been submitted, KABATA                                                               
has  been fairly  certain that  it was  unlikely the  TIFIA loans                                                               
would be granted  or that KABATA would be asked  to apply for the                                                               
loan.    He clarified  that  the  process  is  that a  letter  of                                                               
interest is  submitted and  are asked  to submit  an application.                                                               
He explained  that KABATA  has been vetting  the process  for the                                                               
past five applications,  and has met with  the U.S.-Department of                                                               
Transportation  (U.S.-DOT) Secretary  LaHood  in Washington  D.C.                                                               
about  the project.   He  suggested by  submitting the  letter of                                                               
interest  to the  Federal Highway  Administration will  keep them                                                               
involved and engaged.  He recalled  that two weeks ago FHWA staff                                                               
attended a hearing,  which shows their interest  in this project.                                                               
Additionally,  he  met  with  in  June  he  met  with  the  Under                                                               
Secretary [LaHood]  and requested  a letter to  better understand                                                               
what  KABATA would  need to  be invited  [to submit  a letter  of                                                               
interest.]   At  that time  he responded  the project  is a  good                                                               
project and  is ready  and he sent  the aforementioned  letter in                                                               
response.  As far as the  timing, he offered his belief that this                                                               
is the  year for  TIFIA.   The project has  not been  turned down                                                               
five  times.    Instead,  the KABATA  has  submitted  letters  of                                                               
interest  and  have  not  been  asked  to  make  an  application;                                                               
however,  the KABATA  had not  expected to  be asked  to make  an                                                               
application.   This year, KABATA  submitted a letter  of interest                                                               
and KABATA hopes  to be asked to apply, which  would be the first                                                               
"true" effort  at the TIFIA  program.  He  asked to defer  to the                                                               
Department of Law to discuss the moral obligation aspect.                                                                       
                                                                                                                                
2:39:27 PM                                                                                                                    
                                                                                                                                
JEFF  STARK, Assistant  Attorney General,  Chief, Transportation,                                                               
Department  of  Law (DOL),  stated  that  the discussion  on  has                                                               
language, in  proposed Section  4, AS  19.75.221, that  creates a                                                               
reserve  fund and  requires KABATA  to request  replenishment for                                                               
the fund when it is depleted.   That language is intentionally in                                                               
the bill,  he said.   He explained  that basically  a legislature                                                               
cannot bind  future legislatures  by creating an  obligation that                                                               
future legislatures  must fund.    This creates issues  in credit                                                               
markets  since it's  difficult for  anyone do  business with  the                                                               
state without a guarantee of  payment.  Thus the moral obligation                                                               
is  an accommodation  that is  worked out  in financial  markets,                                                               
which  signals the  state  does intend  to  fund the  obligations                                                               
going forward.   By  sending this  signal, the  financial markets                                                               
can  rely upon  the fact  that funding  will be  available, which                                                               
therefore reduces the risks and the  costs.  In fact, this is the                                                               
reason  the provision  is in  the bill,  which is  to reduce  the                                                               
overall cost of the project.                                                                                                    
                                                                                                                                
2:41:28 PM                                                                                                                    
                                                                                                                                
MR. STARK said  prior to 2008, the [KABATA]  transaction could be                                                               
structured very  differently and the developer  would have gladly                                                               
taken  on the  revenue  or toll  risk.   However,  after the  big                                                               
financial  meltdown that  is simply  no  longer an  option for  a                                                               
project such  as this, without  a proven  record.  Thus  in order                                                               
for this [KAC] project to work, there  must be a back stop to the                                                               
toll revenues, which  is why the moral obligation  language is in                                                               
bill.  It  makes the project feasible and will  lower the overall                                                               
cost  to  the state;  however,  from  a legal  standpoint,  "Does                                                               
legislature have to fund it in the  future?"  He answered no.  He                                                               
acknowledged that  one could not  assume there won't be  any toll                                                               
revenues.  However, if toll  revenues don't meet the expectation,                                                               
some obligation exists to continue  to make the appropriations to                                                               
fund the  project, but  there is a  limit to  the appropriations,                                                               
which will  be in the request  for proposal (RFP).   He explained                                                               
that the  RFP will  have an affordability  curve that  will limit                                                               
the  amount of  those payments  and  if proposals  don't come  in                                                               
within the  affordability curve they  will be rejected.   If none                                                               
of the proposals  comes in within the  affordability curve, there                                                               
will be  no project, he  said.  He recalled  Representative Feige                                                               
asked whether the state could cut  off the project and the answer                                                               
is yes; that the  state could do so.  He  stated that KABATA will                                                               
always  have  the  power  to   terminate  for  convenience.    He                                                               
indicated that figure has been analyzed  and if it were to happen                                                               
at  the   absolute  worst  time,   the  cost  to   terminate  for                                                               
convenience would be $1.4 billion.                                                                                              
                                                                                                                                
2:44:19 PM                                                                                                                    
                                                                                                                                
CHAIR  P.  WILSON asked  if  the  state terminates  the  project,                                                               
whether  it  would   affect  the  state's  credit   rating.    He                                                               
acknowledged that  if the legislature  passes [HB  23 containing]                                                               
the  moral  obligation and  did  not  make the  appropriation  to                                                               
replenish  the  reverse  fund would  impact  the  state's  credit                                                               
rating.  He  deferred to the Department of Revenue  to more fully                                                               
answer; however,  he agreed  it would have  an adverse  effect on                                                               
the state.                                                                                                                      
                                                                                                                                
2:44:58 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE KREISS-TOMKINS  said it  seems a  little bit  of a                                                               
ruse to indicate the state could  choose to stop payment since it                                                               
seems  as though  the state  would either  have to  pay or  would                                                               
sacrifice its credit rating.                                                                                                    
                                                                                                                                
MR. STARK clarified  that the state could terminate  from a legal                                                               
standpoint.    He   maintained  that  the  point   of  the  moral                                                               
obligation is that the state would  decide that this is a project                                                               
it wants to undertake and it will fund going into the future.                                                                   
                                                                                                                                
MR. FOSTER interjected  that the asset will belong  to the state.                                                               
He said  the state needs  to ask the fundamental  question, which                                                               
is if  an investor or  private partner is investing  and building                                                               
whether  the state  owes it  to them  to make  the payments.   In                                                               
terms of determining the convenient  clause is to allow the state                                                               
an option  to buy  out the  contract.  He  pointed out  the worst                                                               
case point  would be after  the four-lane upgrade to  the bridge,                                                               
with  a 95  percent probability  of not  making the  base traffic                                                               
count, 33  percent TIFIA,  and if  that were  to happen  it would                                                               
cost $1.14 billion to exit the contract.                                                                                        
                                                                                                                                
2:46:45 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FEIGE  said  the  bridge  is  one  thing  and  he                                                               
understood the desire to finance the  project.  If the state were                                                               
to take money from savings and  write a check to build the bridge                                                               
it would cost  significantly less, but the state  would also take                                                               
on the  risk of construction.   However,  the bridge is  only one                                                               
part of  the transportation system.   While Representative Neuman                                                               
outlined  benefits   and  time  savings  of   getting  trucks  to                                                               
Fairbanks, it presupposes that one  can drive directly to Willow.                                                               
Currently, a road to Willow to  connect to the KAB doesn't exist.                                                               
Although a rail  line exists and it is possible  to build a road,                                                               
perhaps along  the rail line, the  costs to build a  road and the                                                               
supporting infrastructure to get vehicles  to the west end of the                                                               
KAC is not known.                                                                                                               
                                                                                                                                
MR.  FOSTER  responded that  under  KABATA,  the financial  model                                                               
includes the  14,000 crossing, the A/C  Coupler improvements, the                                                               
Ingra-Gambell connection,  which is  basically 18 miles  of road.                                                               
He reported  the DOT&PF has two  studies in progress; one  is for                                                               
the  north access  and a  right-of-way assessment  to connect  to                                                               
Beluga  roads.   The second  study will  consider the  northbound                                                               
from Parks Highway  to Big Lake.   He related that on  a scale of                                                               
comparisons,  the growth  in the  Matanuska-Susitna Borough  - no                                                               
matter whether it is KABATA's  model, ISER's model, or the DLWD's                                                               
model, the  KABATA model differs by  only a few percent  once the                                                               
2010 Census correction  is made.  In fact, the  MSB is growing so                                                               
the infrastructure and amount of  STIP is already occurring.  The                                                               
state  is building  expansion for  growth.   He  didn't think  it                                                               
mattered whether  the growth  is at  Point MacKenzie  upgrades to                                                               
Knik-Goose Bay road  or from the Big Lake  connection north since                                                               
the state  is already paying  for that infrastructure.   In fact,                                                               
this bridge  would defer the  Glenn and Parks  Highway expansion,                                                               
which in  2008 was estimated at  $3 billion.  He  reiterated that                                                               
KABATA has not  looked at area outside the scope  of the project,                                                               
but the DOT&PF has been conducting some planning studies.                                                                       
                                                                                                                                
2:49:56 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE asked how much the expansions will cost.                                                                   
                                                                                                                                
MR. FOSTER  answered that  he did not  have the  information with                                                               
him, but offered to follow up  with Mr. Ottesen and present it to                                                               
the committee.                                                                                                                  
                                                                                                                                
2:50:17 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE  FEIGE  expressed  his concern  about  the  Wilbur                                                               
Smith  reported  population figures.    He  said the  projections                                                               
ranged  from 135,000-200,000,  which  leads him  to question  the                                                               
ability to  predict the  future population  growth.   He remarked                                                               
that  he has  not  seen anything  in the  past  three years  with                                                               
respect to the Wilbur Smith  report that would identify where the                                                               
population growth will occur.  He  asked for a copy of the entire                                                               
report to make his own determination from the raw data.                                                                         
                                                                                                                                
MR. FOSTER offered to provide this to the committee.                                                                            
                                                                                                                                
The committee took an at-ease from 2:51 p.m. to 2:53 p.m.                                                                       
                                                                                                                                
2:53:00 PM                                                                                                                    
                                                                                                                                
CHAIR  P.  WILSON  referred  to   an  earlier  concern  that  the                                                               
projected costs were  based on traffic for four  lanes of bridge,                                                               
but the  costs only considered  the cost to construct  two lanes.                                                               
She asked for an explanation.                                                                                                   
                                                                                                                                
2:54:16 PM                                                                                                                    
                                                                                                                                
KEVIN HEMENWAY,  Chief Executive  Officer (CEO), Knik  Arm Bridge                                                               
and  Toll  Authority  (KABATA)  Department  of  Transportation  &                                                               
Public  Facilities  (DOT&PF),  pointed  out that  the  base  case                                                               
financial models  is based on  33 percent TIFIA and  building the                                                               
capacity  improvements and  project extensions  when the  traffic                                                               
and  revenue consultants  believe they  will need  to be  done to                                                               
maintain a  level of service  of C or  better.  Depending  on the                                                               
type  of  road,  such  as  bridge  with  no  on-off  ramps,  wide                                                               
shoulders, 70 mile  per hour geometry can carry a  lot of through                                                               
traffic versus  a road  with on  and off  ramps or  even at-grade                                                               
intersections.      Thus  all   of   these   things  affect   the                                                               
calculations.    He  said  he   is  not  a  traffic  and  revenue                                                               
consultant, which is why the experts  are hired.  However, in the                                                               
financial  models,   the  points   in  time  indicate   when  the                                                               
construction needs  to occur to maintain  a C or higher  level of                                                               
service, which he  characterized as a high level of  service.  He                                                               
said that means traffic flows freely.   Further, in the base case                                                               
model  upgrades  to the  Point  MacKenzie  Road section  and  the                                                               
project extensions  to bring a second  connection to Ingra-Gamble                                                               
are planned for 2025.                                                                                                           
                                                                                                                                
MR.  HEMENWAY said  the sections  on roadway  behind the  Port of                                                               
Anchorage will be  built to a four-lane foundation  up front, but                                                               
the lanes would be added in 2030  to meet the level of service of                                                               
C  in  the  base-case  financial  model.    However,  if  traffic                                                               
develops faster,  these improvements  would be built  sooner, but                                                               
if traffic develops  slower the projects could  be deferred since                                                               
these  are not  contractually  committed to  upfront.   Thus  the                                                               
project has  maintained considerable  flexibility in the  way the                                                               
transaction is structured; however,  the financial models do take                                                               
those into  account as well  as considering a range  of potential                                                               
traffic  and revenue  outcomes  outlined  analyzed through  Monte                                                               
Carlo  simulations  that KABATA  will  discuss  with the  finance                                                               
committee.  In response to Chair  Wilson, Mr. Hemenway said it is                                                               
KABATA's responsibility  as agents  of the state  to look  at the                                                               
total   life-cycle  cost   of  owning   this  project,   but  the                                                               
contractual commitment up front is  just for the facility for the                                                               
two-lanes with methods  to add in the additional  lanes later, at                                                               
KABATA's option, but it is not contractually committed.                                                                         
                                                                                                                                
CHAIR  P. WILSON  reiterated  she  wanted to  be  sure the  House                                                               
Finance Committee is  aware of the amount requested  for the next                                                               
ten years; however down the line this is the potential return.                                                                  
                                                                                                                                
MR. FOSTER  related that information  from last  year's testimony                                                               
Jeff  Ottesen Department  of Transportation  & Public  Facilities                                                               
(DOT&PF)  reported that  Anchorage would  need about  $69 million                                                               
for upgrades in Anchorage related  to the KAC; and the Matanuska-                                                               
Susitna Borough  would need approximately $20  million until 2035                                                               
for the  road improvements.   These figures  do not  consider the                                                               
FHWA funding as  part of the project, that it  would be the state                                                               
match.                                                                                                                          
                                                                                                                                
2:59:01 PM                                                                                                                    
                                                                                                                                
REPRESENTATIVE FEIGE  asked what category  of road this  would be                                                               
for the state.                                                                                                                  
                                                                                                                                
MR.  FOSTER answered  that he  only reported  the dollar  amounts                                                               
that DOT&PF reported in terms of  the highway funding, but he was                                                               
unsure which connectors  would be funded that connect  to the KAB                                                               
project boundaries.                                                                                                             
                                                                                                                                
[HB 23 was held over.]                                                                                                          
                                                                                                                                
3:00:15 PM                                                                                                                    
                                                                                                                                
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no  further business before the  committee, the House                                                               
Transportation Standing  Committee meeting was adjourned  at 3:00                                                               
p.m.                                                                                                                            

Document Name Date/Time Subjects
HB0153A.pdf HTRA 3/12/2013 1:00:00 PM
HB 153
HB153 Sponsor Statement.pdf HTRA 3/12/2013 1:00:00 PM
HB 153
HB153-DOT-CRHA-3-8-13.pdf HTRA 3/12/2013 1:00:00 PM
HB 153
HB153 Hickel Citation.pdf HTRA 3/12/2013 1:00:00 PM
HB 153
HB 23-KABATA-FlowChart Fin Kentworthy.pdf HTRA 3/12/2013 1:00:00 PM
HB 23
HB 23-KABATA-FlowChart Kentworthy.pdf HTRA 3/12/2013 1:00:00 PM
HB 23
HB 23 2012 KABATA Sen Thomas letters-Annotated.pdf HTRA 3/12/2013 1:00:00 PM
HB 23
HB 23 avaialbility pmts 2-25-13 Kentworthy.pdf HTRA 3/12/2013 1:00:00 PM
HB 23
HB 23 KABATA 2013 COST Analysis Kentworthy.pdf HTRA 3/12/2013 1:00:00 PM
HB 23
HB153 Support Documents - Wickersham Letter.pdf HTRA 3/12/2013 1:00:00 PM
HB 153
HB 23 Letter Package 01.pdf HTRA 3/12/2013 1:00:00 PM
HB 23
HB 23 Alaska Business - ALL 3 ARTICLES.pdf HTRA 3/12/2013 1:00:00 PM
HB 23
HB 23 Alaska Business - Bridge Builders.pdf HTRA 3/12/2013 1:00:00 PM
HB 23
HB 23 Alaska Business - Build the Bridge Already.pdf HTRA 3/12/2013 1:00:00 PM
HB 23
HB 23 Alaska Business - Knik Arm Crossing.pdf HTRA 3/12/2013 1:00:00 PM
HB 23