Legislature(1999 - 2000)
05/03/2000 04:45 PM Senate 248
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* first hearing in first committee of referral
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+ teleconferenced
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CONFERENCE COMMITTEE ON SB 248
May 3, 2000
4:45 p.m.
MEMBERS PRESENT
Senator Rick Halford, Chair
Representative Gail Phillips, Vice Chair
Representative Ramona Barnes
Senator Al Adams
Representative Reggie Joule
MEMBERS ABSENT
Senator Gary Wilken
COMMITTEE CALENDAR
SENATE BILL NO. 248
"An Act relating to the financing authority, payment in lieu of tax
agreements, and tax exemption for assets and projects of the Alaska
Industrial Development and Export Authority; relating to renaming
and contingently repealing the rural development initiative fund
within the Department of Community and Economic Development, and
establishing the rural development initiative fund within the
Alaska Industrial Development and Export Authority; and providing
for an effective date."
-MOVED CCSB 248 OUT OF COMMITTEE
PREVIOUS ACTION
Jrn-Date Jrn-Page Action
2/08/00 2216 (S) READ THE FIRST TIME - REFERRALS
2/08/00 2217 (S) CRA, L&C, FIN
2/08/00 2217 (S) ZERO FISCAL NOTE (DCED)
2/08/00 2217 (S) GOVERNOR'S TRANSMITTAL LETTER
3/06/00 Text (S) CRA AT 1:30 PM FAHRENKAMP 203
3/06/00 Text (S) Moved Out of Committee
3/06/00 Text (S) MINUTE(CRA)
3/07/00 2546 (S) CRA RPT 2DP 1NR
3/07/00 2546 (S) DP: MACKIE, HOFFMAN; NR: PHILLIPS
3/07/00 2546 (S) PREVIOUS ZERO FN (DCED)
3/23/00 Text (S) L&C AT 1:30 PM BELTZ 211
3/23/00 Text (S) -- Rescheduled to 3/28/00 --
3/28/00 Text (S) L&C AT 1:30 PM BELTZ 211
3/28/00 Text (S) Moved Out of Committee
3/28/00 Text (S) MINUTE(L&C)
3/29/00 2775 (S) L&C RPT 3DP 1NR
3/29/00 2775 (S) DP: MACKIE, LEMAN, HOFFMAN;
3/29/00 2775 (S) NR: TIM KELLY
3/29/00 2775 (S) PREVIOUS ZERO FN (DCED)
4/12/00 Text (S) FIN AT 6:00 PM SENATE FINANCE 532
4/12/00 Text (S) Heard & Held
4/13/00 3052 (S) FIN RPT CS 3DP 4NR 1AM SAME TITLE
4/13/00 3052 (S) DP: TORGERSON, PARNELL, LEMAN;
4/13/00 3052 (S) NR: PHILLIPS, PETE KELLY, WILKEN,
4/13/00 3052 (S) DONLEY; AM: ADAMS
4/13/00 3052 (S) PREVIOUS ZERO FISCAL NOTE (DCED)
4/14/00 Text (S) RLS AT 1:00 PM FAHRENKAMP 203
4/14/00 Text (S) MINUTE(RLS)
4/14/00 3110 (S) RLS TO 1ST SUP CALENDAR 04/14/00
4/14/00 3111 (S) READ THE SECOND TIME
4/14/00 3111 (S) FIN CS ADOPTED UNAN CONSENT
4/14/00 3111 (S) MOVED TO BOTTOM OF CALENDAR
4/14/00 3113 (S) AM NO 1 ADOPTED UNAN CONSENT
4/14/00 3113 (S) ADVANCED TO 3RD READING UNAN CONSENT
4/14/00 3113 (S) READ THE THIRD TIME CSSB 248(FIN) AM
4/14/00 3114 (S) PASSED Y19 N1
4/14/00 3114 (S) EFFECTIVE DATE(S) SAME AS PASSAGE
4/14/00 3116 (S) TRANSMITTED TO (H)
4/15/00 3161 (H) READ THE FIRST TIME - REFERRALS
4/15/00 3161 (H) FIN
4/18/00 Text (H) FIN AT 1:30 PM HOUSE FINANCE 519
4/18/00 Text (H) Moved HCSSB 248(FIN) Out of Committee
4/19/00 3294 (H) FIN RPT HCS(FIN) 10DP
4/19/00 3294 (H) DP: THERRIAULT, BUNDE, AUSTERMAN,
4/19/00 3294 (H) DAVIES, GRUSSENDORF, MOSES, DAVIS,
4/19/00 3294 (H) WILLIAMS, PHILLIPS, FOSTER
4/19/00 3294 (H) SENATE ZERO FISCAL NOTE (DCED) 2/8/00
4/19/00 3321 (H) RLS TO 1ST SUPP CALENDAR 4/19/00
4/19/00 3321 (H) READ THE SECOND TIME
4/19/00 3322 (H) FIN HCS ADOPTED UNAN CONSENT
4/19/00 3322 (H) ADVANCED TO 3RD READING UNAN CONSENT
4/19/00 3322 (H) READ THE 3RD TIME HCS CSSB 248(FIN)
4/19/00 3322 (H) PASSED Y33 N1 A6
4/19/00 3323 (H) EFFECTIVE DATE(S) SAME AS PASSAGE
4/19/00 3335 (H) TRANSMITTED TO (S) AS AMENDED
4/20/00 3341 (S) FAILED CONCUR (H) AM Y6 N13 A1
4/20/00 3342 (S) CONFERENCE COMMITTEE APPOINTED
4/20/00 3342 (S) *HALFORD, WILKEN, ADAMS
4/20/00 3360 (H) FAILED RECEDE (H) AM N32 A8
4/20/00 3361 (H) CONFERENCE COMMITTEE APPOINTED
4/20/00 3361 (H) *PHILLIPS, BARNES, JOULE
4/26/00 Text (H) 248 AT 1:00 PM LOCATION TBA
4/26/00 Text (H) **Ignore time and location -- TBA**
4/26/00 Text (S) 248 AT 1:00 PM BUTROVICH 205
4/26/00 Text (S) -- Meeting Canceled --
5/01/00 3654 (S) (S)LTD POWER FREE CONFERENCE GRANTED
5/01/00 3708 (H) (H)LTD POWER FREE CONFERENCE GRANTED
5/03/00 Text (S) 248 AT 4:30 PM BUTROVICH 205
WITNESS REGISTER
Keith Laufer
Alaska Industrial Development and Export Authority
480 West Tudor Road
Anchorage, AK 99503-6690
POSITION STATEMENT: Described changes made to CCSSB 248.
ACTION NARRATIVE
Tape 00-02
SB 248-AIDEA: BONDS & RURAL DEVELOPMENT
CHAIRMAN HALFORD called the Conference Committee on SB 248 to order
at 4:45 p.m. Present were Representatives Phillips, Barnes, and
Joule and Senators Adams and Halford. Chairman Halford asked Mr.
Laufer to explain the proposed Conference Committee Substitute for
SB 248 to members.
MR. KEITH LAUFER, Financial and Legal Affairs Manager for the
Alaska Industrial Development and Export Authority (AIDEA), gave
the following explanation of CCS SB 248 (Version K).
Version K contains several changes, all affecting a tax exemption
for the Red Dog project. Section 2 provides a tax exemption for
the property at Red Dog, with the exception of the lodging
facilities at the port. Section 3 repeals the new language that
granted the exemption. The bill contains an effective date for
that provision of July 1, 2004. By creating an exemption and
providing for the repeal of it later, the court could interpret
that to mean it is the legislature's intent that the property
become taxable. That is not the intent, according to Chairman
Halford. The intent is that upon the repeal, the question could be
opened as to whether this property is properly taxable or not. The
intent section (in Subsection A) reflects the fact that when the
new language is repealed in 2004, it is not intended to express the
legislature's intent that all of the property at Red Dog be taxable
if it would not otherwise be taxable under the law. Although
Subsection (B) contains a reference to an existing court case
dealing with tax exemptions for utility corridors that has some
relation to the issues at Red Dog, it also clarifies that this
legislation is not intended to resolve any issues related to that
case.
REPRESENTATIVE BARNES moved to adopt Version K as the working
version before the committee. There being no objection, Version K
was adopted as the proposed Conference Committee substitute.
CHAIRMAN HALFORD stated, "Of course the questions are the sunset
and the outstanding cases. That is the most complicated way, I
guess, to draft it but it was the only way we could stay out of the
Fairbanks case that is already in the Supreme Court. There have
been -- I think as far as Cominco is concerned, they don't
necessarily have a problem. I think the Borough is concerned about
selling bonds. One of the things that gets triggered back and
forth on this is the state's share of reimbursement - whether the
30 percent local share or whether it is a 10 percent local share.
It is our intent, of course, to stay out of that argument until it
is again made. This repealer in 2004 is, because it's based on the
prior year, is actually a five-year provision. It is the '99
assessment of what's operating for this year. The 2004 assessment
will operate in 2005 so it gives five years to get back to the
question. It's as far as I felt that I could go in trying to come
up with a solution to the problem and it tries to stay out of the
final determination. Apparently the assessors of Juneau,
Fairbanks, and the state assessor have all gotten together and are
assessing based on a different definition of what ownership
interests are and that is all of the way at the state Supreme Court
with considerable investment by people and I hate to get in the
middle of that case and I don't know what the real answer to that
case would be."
SENATOR ADAMS stated that he and Representative Joule have mixed
feelings about Version K because Cominco agrees with the sunset
provision but the school district disagrees with it. Although he
is leaving the legislature, this legislation provides five years
for future legislators to look at this provision. He noted that he
would rather have a bill reported out of this conference committee
than no bill at all.
Number 450
CHAIRMAN HALFORD remarked that the committee has gone as far as it
can go and has solved the problem for a pretty good term.
REPRESENTATIVE PHILLIPS expressed concern about a comment made by
Mr. LAUFER, and that is that the court could interpret this bill to
mean that the legislature intended for the tax to be applied after
this time.
CHAIRMAN HALFORD explained that is why the bill specifically places
an intent section in law that says it is not the legislature's
intent to prejudge the final determination of the way properties
should be taxed depending on ownership interests. That
determination would be applied in five years. Regardless of what
happens in the interim, this property is not taxable.
REPRESENTATIVE BARNES asked if any of the property will be taxable
during the interim.
REPRESENTATIVE PHILLIPS clarified that the lodging is taxable.
CHAIRMAN HALFORD added that the lodging represents $10 million of
about $154 million. It is taxable because the lodging was not
constructed with tax exempt bonds and its use is pretty exclusive.
He noted the attorneys representing Cominco do not have a problem
with that provision.
REPRESENTATIVE PHILLIPS remarked that her second concern is whether
the time length of the sunset date will provide enough time to sell
the bonds. She would support a sunset date later than 2004.
Number 535
CHAIRMAN HALFORD thought the House would also support a later
sunset date. He remarked that he began with a two-year sunset date
and wishes that he could extend it, but the Senate's perspective on
the approach to this bill is not that positive.
REPRESENTATIVE JOULE said he appreciates the Chairman's willingness
to be patient with all of the information that has been coming
back.
CHAIRMAN HALFORD noted it is a much more complicated issue than he
expected.
REPRESENTATIVE JOULE agreed and repeated that it is an issue that
future legislatures can revisit. He thought the intent section
provides for that opportunity and an opportunity to extend the
sunset date in 2004 if new information warrants an extension.
CHAIRMAN HALFORD agreed that is the intent.
REPRESENTATIVE BARNES said her understanding is that no part of the
project that is determined to be public will be taxed - the port,
the road, and the harbor, and she asked if that is true.
CHAIRMAN HALFORD said that is correct and added it is a strange
fact in relation to the federal laws. He tried to follow what the
bonds were issued under until he found that the road did not
qualify for tax exempt bonds at the federal level. If the
legislature had used that standard, the road and the camp would
have dropped out which would have had a much bigger impact on the
total dollar effect of this. He said the road provision did not
make sense to him.
REPRESENTATIVE BARNES said, "Whoever heard of taxing a road, Mr.
Chairman?"
CHAIRMAN HALFORD replied particularly when the road is for public
use and there are provisions in the original legislation that make
the road public by law, not just by an agreement.
REPRESENTATIVE JOULE commented that hopefully, by the year 2004,
with the resource development activity that may occur between the
two boroughs and the development of transportation systems, some of
those resources may be marketed. He thought this legislation
provides some of the time needed for that development and he thinks
this is truly one of those positions where nobody goes away totally
happy but it is something everyone can live with.
REPRESENTATIVE PHILLIPS asked if this will have any effect on
lowering the payment in lieu of taxes.
CHAIRMAN HALFORD said it should not.
Number 765
MR. LAUFER added that he is not certain, but he does not believe it
will.
CHAIRMAN HALFORD pointed out the other interpretation would have
eventually increased the payment in lieu of taxes because the
bottom line is that Cominco is the taxpayer for the Borough. This
does not change that but it takes the pressure off.
REPRESENTATIVE BARNES moved to report CCSSB 248 (Version K) from
committee. There being no objection, the motion carried.
There being no further business to come before the Conference
Committee on SB 248, CHAIRMAN HALFORD adjourned the meeting at 5:00
p.m.
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