Legislature(2005 - 2006)BELTZ 211


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Heard & Held
Moved CSHB 121(2d RLS)) Out of Committee
Moved CSSB 188(CRA) Out of Committee
Bills Previously Heard/Scheduled
Heard & Held
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                         April 27, 2005                                                                                         
                            1:33 p.m.                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Gary Stevens, Chair                                                                                                     
Senator Bert Stedman                                                                                                            
Senator Thomas Wagoner                                                                                                          
Senator Johnny Ellis                                                                                                            
Senator Albert Kookesh                                                                                                          
MEMBERS ABSENT                                                                                                                
All members present                                                                                                             
COMMITTEE CALENDAR                                                                                                            
CS FOR HOUSE BILL NO. 121(2d RLS)                                                                                               
"An  Act relating  to consolidating  or abolishing  certain  road                                                               
service areas  in certain  second class  boroughs; and  providing                                                               
for an effective date."                                                                                                         
     MOVED CSHB 121(2d RLS) OUT OF COMMITTEE                                                                                    
CS FOR HOUSE BILL NO. 27(FIN)                                                                                                   
"An  Act  relating  to  an  optional  exemption  from   municipal                                                               
property  taxes   on  certain  residences   of  law   enforcement                                                               
     HEARD AND HELD                                                                                                             
SENATE BILL NO. 188                                                                                                             
"An Act  increasing the  maximum amount  of loans  from the  bulk                                                               
fuel revolving loan fund to one borrower."                                                                                      
     MOVED CSSB 188(CRA) OUT OF COMMITTEE                                                                                       
SENATE BILL NO. 179                                                                                                             
"An Act relating to the taxation of mining property;  relating to                                                               
contracts  approved by  municipalities for  payments in  lieu  of                                                               
taxes; and providing for an effective date."                                                                                    
     HEARD AND HELD                                                                                                             
PREVIOUS COMMITTEE ACTION                                                                                                     
BILL: HB 121                                                                                                                  
SHORT TITLE: ROAD SERVICE AREAS: SECOND CLASS BOROUGHS                                                                          
SPONSOR(s): COMMUNITY & REGIONAL AFFAIRS                                                                                        
02/02/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
02/02/05       (H)       CRA, STA                                                                                               
02/15/05       (H)       CRA AT 8:00 AM CAPITOL 124                                                                             
02/15/05       (H)       Heard & Held                                                                                           
02/15/05       (H)       MINUTE(CRA)                                                                                            
02/24/05       (H)       CRA RPT CS(CRA) NT 1DP 5NR                                                                             
02/24/05       (H)       DP: THOMAS;                                                                                            
02/24/05       (H)       NR: CISSNA, NEUMAN, SALMON, LEDOUX,                                                                    
02/24/05       (H)       CRA AT 8:00 AM CAPITOL 124                                                                             
02/24/05       (H)       Moved CSHB 121(CRA) Out of Committee                                                                   
02/24/05       (H)       MINUTE(CRA)                                                                                            
03/01/05       (H)       STA AT 8:00 AM CAPITOL 106                                                                             
03/01/05       (H)       Heard & Held                                                                                           
03/01/05       (H)       MINUTE(STA)                                                                                            
03/05/05       (H)       STA AT 9:30 AM CAPITOL 106                                                                             
03/05/05       (H)       Moved CSHB 121(CRA) Out of Committee                                                                   
03/05/05       (H)       MINUTE(STA)                                                                                            
03/07/05       (H)       STA RPT CS(CRA) NT 4DP 1NR                                                                             
03/07/05       (H)       DP: LYNN, RAMRAS, GRUENBERG, SEATON;                                                                   
03/07/05       (H)       NR: GATTO                                                                                              
03/16/05       (H)       RLS AT 9:00 AM BELTZ 211                                                                               
03/16/05       (H)       Moved CSHB 121(RLS) Out of Committee                                                                   
03/16/05       (H)       MINUTE(RLS)                                                                                            
03/17/05       (H)       RLS RPT CS(RLS) NT 4NR 2AM                                                                             
03/17/05       (H)       NR: HARRIS, KOHRING, COGHILL, ROKEBERG;                                                                
03/17/05       (H)       AM: KERTTULA, BERKOWITZ                                                                                
03/17/05       (H)       RETURNED TO RLS COMMITTEE                                                                              
04/04/05       (H)       RLS AT 9:30 AM FAHRENKAMP 203                                                                          
04/04/05       (H)       -- Meeting Canceled --                                                                                 
04/13/05       (H)       RLS AT 8:30 AM CAPITOL 106                                                                             
04/13/05       (H)       Heard & Held                                                                                           
04/13/05       (H)       MINUTE(RLS)                                                                                            
04/20/05       (H)       RLS AT 8:30 AM CAPITOL 106                                                                             
04/20/05       (H)       Moved CSHB 121(2d RLS) Out of Committee                                                                
04/20/05       (H)       MINUTE(RLS)                                                                                            
04/21/05       (H)       RLS RPT CS(2D RLS) NT 1DP 5NR                                                                          
04/21/05       (H)       DP: COGHILL;                                                                                           
04/21/05       (H)       NR:   KOHRING,    BERKOWITZ,    MCGUIRE,                                                               
                         KERTTULA, ROKEBERG                                                                                     
04/21/05       (H)       RETURNED TO RLS COMMITTEE                                                                              
04/22/05       (H)       TRANSMITTED TO (S)                                                                                     
04/22/05       (H)       VERSION: CSHB 121(2D RLS)                                                                              
04/25/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/25/05       (S)       CRA                                                                                                    
04/27/05       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
BILL: HB  27                                                                                                                  
SHORT TITLE: MUNI PROP TAX EXEMPTION FOR POLICE HOMES                                                                           
SPONSOR(s): REPRESENTATIVE(s) CHENAULT, GRUENBERG                                                                               
01/10/05       (H)       PREFILE RELEASED 12/30/04                                                                              
01/10/05       (H)       READ THE FIRST TIME - REFERRALS                                                                        
01/10/05       (H)       CRA, FIN                                                                                               
02/15/05       (H)       CRA AT 8:00 AM CAPITOL 124                                                                             
02/15/05       (H)       Heard & Held                                                                                           
02/15/05       (H)       MINUTE(CRA)                                                                                            
03/22/05       (H)       CRA RPT CS(CRA) 4DP 3NR                                                                                
03/22/05       (H)       DP: KOTT, CISSNA, THOMAS, OLSON;                                                                       
03/22/05       (H)       NR: SALMON, LEDOUX, NEUMAN                                                                             
03/22/05       (H)       CRA AT 8:00 AM CAPITOL 124                                                                             
03/22/05       (H)       Moved CSHB 27(CRA) Out of Committee                                                                    
03/22/05       (H)       MINUTE(CRA)                                                                                            
04/13/05       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
04/13/05       (H)       Scheduled But Not Heard                                                                                
04/14/05       (H)       FIN AT 1:30 PM HOUSE FINANCE 519                                                                       
04/14/05       (H)       Moved CSHB  27(FIN) Out of Committee                                                                   
04/14/05       (H)       MINUTE(FIN)                                                                                            
04/15/05       (H)       FIN RPT CS(FIN) 3DP 4NR                                                                                
04/15/05       (H)       DP: CROFT, FOSTER, CHENAULT;                                                                           
04/15/05       (H)       NR: HAWKER, STOLTZE, KELLY, MEYER                                                                      
04/18/05       (H)       TRANSMITTED TO (S)                                                                                     
04/18/05       (H)       VERSION: CSHB 27(FIN)                                                                                  
04/19/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/19/05       (S)       CRA, FIN                                                                                               
04/27/05       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
BILL: SB 188                                                                                                                  
SHORT TITLE: BULK FUEL REVOLVING LOAN FUND CAP                                                                                  
SPONSOR(s): SENATOR(s) OLSON                                                                                                    
04/22/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/22/05       (S)       CRA, FIN                                                                                               
04/27/05       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
BILL: SB 179                                                                                                                  
SHORT TITLE: MINERALS TAX/PAYMENTS TO MUNIS IN LIEU                                                                             
SPONSOR(s): SENATOR(s) THERRIAULT                                                                                               
04/18/05       (S)       READ THE FIRST TIME - REFERRALS                                                                        
04/18/05       (S)       CRA, FIN                                                                                               
04/18/05       (S)       CRA AT 2:00 PM BELTZ 211                                                                               
04/18/05       (S)       Heard & Held                                                                                           
04/18/05       (S)       MINUTE(CRA)                                                                                            
04/22/05       (S)       CRA AT 1:30 PM BELTZ 211                                                                               
04/22/05       (S)       Heard & Held                                                                                           
04/22/05       (S)       MINUTE(CRA)                                                                                            
WITNESS REGISTER                                                                                                              
Kaci Schroeder                                                                                                                  
Aide to Representative Bill Thomas, Jr.                                                                                         
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Introduced HB 121                                                                                        
Representative Max Gruenberg                                                                                                    
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Sponsor HB 27                                                                                            
Steve Van Sant, State Assessor                                                                                                  
Department of Commerce, Community & Economic Development                                                                        
PO Box 110800                                                                                                                   
Juneau, AK 99811-0800                                                                                                           
POSITION STATEMENT:  Available for questions on HB 27                                                                         
Chief Walt Monegan                                                                                                              
Municipality of Anchorage                                                                                                       
Anchorage Police Department                                                                                                     
P.O. Box 196650                                                                                                                 
Anchorage, AK 99519                                                                                                             
POSITION STATEMENT:  Supported HB 27                                                                                          
Sergeant Mike Couturier, Representative                                                                                         
Anchorage Police Department                                                                                                     
Employee Association (APDEA)                                                                                                    
POSITION STATEMENT:  Supported HB 27                                                                                          
Senator Donald Olson                                                                                                            
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Sponsor SB 188                                                                                           
Nels Anderson                                                                                                                   
Dillingham resident                                                                                                             
POSITION STATEMENT:  Spoke in support of CSSB 188                                                                             
Jim McMillan, Deputy Director, Credit & Business Development                                                                    
Alaska Industrial Development and                                                                                               
 Export Authority and Alaska Energy                                                                                             
  Authority (AIDEA) and Alaska Energy Authority (AEA)                                                                           
813 W Northern Lights Blvd.                                                                                                     
Anchorage, AK  99503                                                                                                            
POSITION STATEMENT:  Supported SB 188                                                                                         
James Fueg                                                                                                                      
Technical and Permitting Coordinator for Donlin Creek                                                                           
Placer Dome Mining Company                                                                                                      
POSITION STATEMENT:  Gave a presentation on Donlin Creek Project                                                              
ACTION NARRATIVE                                                                                                              
CHAIR  GARY STEVENS  called  the  Senate Community  and  Regional                                                             
Affairs  Standing  Committee meeting  to  order  at  1:33:35  PM.                                                             
Present  were Senators  Stedman, Ellis  and Chair  Gary  Stevens.                                                               
Senator Kookesh  arrived at 1:33:55  and Senator Wagoner  arrived                                                               
during the course of the meeting.                                                                                               
   CSHB 121(2d RLS)-ROAD SERVICE AREAS: SECOND CLASS BOROUGHS                                                               
CHAIR GARY STEVENS announced  HB 121 to be up for  consideration.                                                               
He advised  that it is the  companion bill to  SB 114, which  the                                                               
committee heard three times previously.                                                                                         
1:33:55 PM                                                                                                                    
KACI SCHROEDER, Legislative  Aide to Representative Bill  Thomas,                                                               
Jr., said she was aware that the committee was familiar with  the                                                               
bill, but she would highlight the changes made in the House.                                                                    
The  House  added  three  required  criteria  before  a   borough                                                               
assembly may  take  action to  abolish or  consolidate a  service                                                               
          · Taxes haven't been levied for 12 months and there is                                                                
       no balance in the account to pay for road services                                                                       
          · The road service area board has not met with a                                                                      
       quorum in the last 12 months                                                                                             
          · No road maintenance contracts are in existence or if                                                                
       they are, they fail to provide minimum road standards to                                                                 
       protect the borough from civil liabilities.                                                                              
1:35:35 PM                                                                                                                    
CHAIR  GARY  STEVENS  ascertained  there  were  no  questions  or                                                               
comments. He noted  the zero fiscal  note from the Department  of                                                               
Commerce, Community and  Economic Development (DCCED) then  asked                                                               
for a motion.                                                                                                                   
1:36:07 PM                                                                                                                    
SENATOR STEDMAN motioned to report CSHB 121(2d RLS) and  attached                                                               
fiscal  note  from  committee  with  individual  recommendations.                                                               
There being no objection, it was so ordered.                                                                                    
      CSHB  27(FIN)-MUNI PROP TAX EXEMPTION FOR POLICE HOMES                                                                
CHAIR  GARY STEVENS  announced HB  27  to be  the next  order  of                                                               
1:36:57 PM                                                                                                                    
REPRESENTATIVE GRUENBERG, Co-Sponsor, said  the purpose of HB  27                                                               
is to encourage law enforcement officers to purchase and live  in                                                               
homes in  certain areas  of a municipality  that are  in need  of                                                               
more police protection.                                                                                                         
The bill  gives municipalities the option  to enact an  ordinance                                                               
to  exempt up  to $150,000  of assessed  valuation on  a  primary                                                               
permanent residence of a law enforcement officer who lives in  an                                                               
area  the municipality  recognizes as  high crime.  He  clarified                                                               
that  municipalities may  not  enact such  an  ordinance  without                                                               
passing this type of legislation.                                                                                               
REPRESENTATIVE GRUENBERG  defined an eligible  area as "either  a                                                               
weed  and seed  program, a  renaissance or,  alternatively as  an                                                               
area that  has a higher occurrence  of crime than a  municipality                                                               
as a whole. Or it could meet both A and B."                                                                                     
He  said   co-sponsor,  Representative  Chenault  believes   this                                                               
legislation would be helpful in Nikiski and he believes it  would                                                               
be helpful in parts of Anchorage.                                                                                               
1:39:08 PM                                                                                                                    
CHAIR  GARY  STEVENS  asked if  it's  true  that  this  isn't  an                                                               
obligation; it's an opportunity for a municipality.                                                                             
REPRESENTATIVE GRUENBERG agreed.                                                                                                
SENATOR BERT STEDMAN  questioned why this couldn't be handled  at                                                               
a local level.                                                                                                                  
REPRESENTATIVE GRUENBERG replied  it can, but under AS  29.45.050                                                               
an enabling state law is required.                                                                                              
SENATOR STEDMAN  asked if  there  is a  reason that  firefighters                                                               
aren't included.                                                                                                                
REPRESENTATIVE  GRUENBERG replied  that  would be  a  good  idea.                                                               
Currently  volunteer  firefighters  and  EMS  personnel  have   a                                                               
$10,000 exemption under another provision.                                                                                      
SENATOR STEDMAN  said he  was referring to  fulltime paid  rather                                                               
than volunteer firefighters.                                                                                                    
REPRESENTATIVE GRUENBERG  said he  wasn't sure it  would help  as                                                               
much to have  a firefighter on the  block as a policeperson,  but                                                               
he  wouldn't have  a problem  with including  firefighters if  it                                                               
would help keep crime down.                                                                                                     
1:42:09 PM                                                                                                                    
SENATOR THOMAS WAGONER asked for an explanation of the  statement                                                               
that two  or more individuals  are eligible for  an exemption  on                                                               
the same property.                                                                                                              
REPRESENTATIVE GRUENBERG explained  that particular language  was                                                               
taken from  the subsection  dealing with volunteer  firefighters.                                                               
The idea  is that the  exempted valuation wouldn't  be more  than                                                               
$300,000  for  a single  property.  This  would  accommodate  the                                                               
instances in which  one law enforcement officer marries  another,                                                               
but wouldn't extend  to multiple family members  that are in  law                                                               
enforcement or groups of officers going together to buy a  single                                                               
CHAIR GARY  STEVENS asked if  this would apply  only to  actively                                                               
employed law enforcement officers.                                                                                              
REPRESENTATIVE GRUENBERG  said the  intent is to  cover just  the                                                               
actively employed, but the municipal ordinance would address  the                                                               
CHAIR GARY  STEVENS noted Mr. Van  Sant, the state assessor,  was                                                               
available for questions.                                                                                                        
CHIEF WALT MONEGAN,  Anchorage Police Department (APD), spoke  in                                                               
support  of HB  27.  Over  the years  several  different  housing                                                               
incentives  have been  offered  and  about 12  APD  members  have                                                               
participated.  That indicates  that the  proposal has  merit,  he                                                               
He   supports  the   bill  because   neighborhoods  feel   safer;                                                               
neighborhoods  get to  know the  resident officer;  officers  are                                                               
reminded  that they  are  citizens  in the  community;  and  they                                                               
provide positive  role models for  youth. Certainly, the  program                                                               
would aid in officer recruitment and retention. Finally, he  said                                                               
he supports including firefighters in the bill.                                                                                 
1:49:31 PM                                                                                                                    
SENATOR WAGONER questioned whether police officers were aware  of                                                               
the bill.                                                                                                                       
CHIEF  MONEGAN replied  some are  and the  union  representatives                                                               
keep members informed as well.                                                                                                  
SENATOR WAGONER asked if he'd gotten any feedback.                                                                              
CHIEF MONEGAN  replied officers  are waiting to  see whether  the                                                               
program becomes available.                                                                                                      
SENATOR JOHNNY  ELLIS stated  support for  the bill  and said  he                                                               
represented some of the low-income high-crime areas in  Anchorage                                                               
and he knows that if  cops make a decent salary and live in  more                                                               
affluent neighborhoods  it fosters bad  feelings. Hopefully  this                                                               
will encourage folks  that could afford to  live in better  areas                                                               
to  move into  less affluent  areas because  that would  help  to                                                               
improve those neighborhoods.                                                                                                    
CHIEF  MONEGAN  said  when  neighborhoods  benefit  there  is  an                                                               
operational benefit for the  department in that crime goes  down.                                                               
It's  a  plus to  see  neighborhoods change  complexion  for  the                                                               
better, he said.                                                                                                                
1:53:17 PM                                                                                                                    
SERGEANT   MIKE  COUTURIER,   Representative,  Anchorage   Police                                                               
Department  Employee   Association  (APDEA),   stated  that   the                                                               
association  supports HB  27. His  job includes  recruitment  and                                                               
retention  and  this  will  be  a  distinct  aid   in  attracting                                                               
applicants. More than likely, he said, the primary use will  come                                                               
from  officers  that  are  attracted  from  out  of  state.   The                                                               
association has the information on its web site and  members have                                                               
already shown interest in the idea.                                                                                             
CHAIR GARY STEVENS  recapped this would be  at the option of  the                                                               
local government and it could exempt city police  departments and                                                               
state  troopers.  He  asked  if  that  was  Sergeant  Couturier's                                                               
SERGEANT COUTURIER said yes.                                                                                                    
CHAIR GARY STEVENS observed that the comments had  been positive.                                                               
He was asked  to hold the bill  to review several issues, but  it                                                               
would be  dealt with quickly  at the  next hearing. CSHB  27(FIN)                                                               
was held in committee.                                                                                                          
            SB 188-BULK FUEL REVOLVING LOAN FUND CAP                                                                        
1:58:23 PM                                                                                                                    
SENATOR   DONALD   OLSON,  Sponsor,   paraphrased   the   sponsor                                                               
     I introduced  SB 188 at  the urging of  members of  the                                                                    
     Governor's Rural Energy  Action Council. The  council's                                                                    
     April 15 report has many recommendations to help  rural                                                                    
     communities  contend  with  rapidly  escalating  energy                                                                    
     SB  188  is  one  of  their  recommendations  that,  if                                                                    
     enacted this session, will allow communities to  offset                                                                    
     rising  fuel   costs  with  large  purchase   economies                                                                    
     achieved through  the bulk fuel  loan program. This  is                                                                    
     particularly of concern for those communities that  are                                                                    
     ice bound during the  winter and depend on just one  or                                                                    
     two large shipments to supply their fuel needs  for the                                                                    
     entire year.                                                                                                               
     Currently, the  bulk fuel  loan program  has a  maximum                                                                    
     loan of $300,000  that any one  borrower may take in  a                                                                    
     fiscal year.  The effect  of this cap  during times  of                                                                    
     high fuel  prices is  to reduce the  maximum amount  of                                                                    
     fuel that  may be purchased.  The bill will  counteract                                                                    
     this  effect by  increasing  the cap  to  $650,000  for                                                                    
     cooperative  organizations  that  are  purchasing  bulk                                                                    
      fuel for more than one community. The larger purchase                                                                     
      for multiple communities should result in a lower per                                                                     
     unit price for all users.                                                                                                  
        The enactment of SB 188 will directly affect this                                                                       
       fall's bulk fuel purchase for most of rural Alaska.                                                                      
     The bill is timely and needed.                                                                                             
2:01:39 PM                                                                                                                    
CHAIR GARY STEVENS asked for a motion to adopt the CS.                                                                          
SENATOR WAGONER  motioned to  adopt CSSB  188 \F  version as  the                                                               
working document. There being no objection, it was so ordered.                                                                  
SENATOR OLSON  explained there are  two significant changes  from                                                               
the original bill.                                                                                                              
  1. It includes electric utility cooperatives as a cooperative                                                                 
     corporation that may use the loan fund for multiple                                                                        
     community fuel purchases.                                                                                                  
  2. It provides a more flexible loan cap increase for multiple                                                                 
     community  fuel  purchases   -  "may  not  exceed   $300,000                                                               
     multiplied by the number of communities on whose behalf  the                                                               
     bulk fuel  is to be purchased,  or $1,000,000, whichever  is                                                               
2:03:49 PM                                                                                                                    
SENATOR  BERT   STEDMAN  asked  if  the   CS  is  applicable   to                                                               
communities with good credit.                                                                                                   
SENATOR OLSON  replied that's true;  communities that place  high                                                               
regard on  bill paying  and good  credit should  be rewarded  and                                                               
should be able to  get needed fuel. Without this cap  communities                                                               
will run short of fuel during the winter and it would need  to be                                                               
flown  in, which  would boost  fuel costs  dramatically. He  said                                                               
it's imperative to give  communities the benefit of the doubt  so                                                               
they won't run short during the winter.                                                                                         
NELS  ANDERSON,  Dillingham resident,  testified  that  the  bill                                                               
would  help cooperative  purchasing, which  is  a goal  REAC  has                                                               
established. Legislation  that helps  to bring down  the cost  of                                                               
fuel for small communities across the state is  good legislation.                                                               
He encouraged members to support CSSB 188.                                                                                      
2:07:18 PM                                                                                                                    
JIM MCMILLAN, Deputy  Director of Credit & Business  Development,                                                               
Alaska  Industrial Development and  Export  Authority and  Alaska                                                               
Energy  (AIDEA)  and  Alaska  Energy  Association  (AEA),  stated                                                               
support for  SB  188. Forming  cooperatives may  help reduce  the                                                               
cost of  bulk fuel  purchases for rural  communities. The  change                                                               
will  allow a  borrower that  is a  cooperative formed  under  AS                                                               
10.15  or an  electric cooperative  organized under  AS 10.25  to                                                               
borrow more than  the current $300,000 limit.  This is a step  in                                                               
the right direction, he said.                                                                                                   
CHAIR  GARY STEVENS  noted there  were  no questions  or  further                                                               
testimony. He asked for a motion.                                                                                               
SENATOR WAGONER  motioned to  report CSSB  188(CRA), \F  version,                                                               
and  attached  fiscal   notes  from  committee  with   individual                                                               
recommendations. There being no objection, it was so ordered.                                                                   
          SB 179-MINERALS TAX/PAYMENTS TO MUNIS IN LIEU                                                                     
CHAIR GARY  STEVENS announced the committee  would hear a  Donlin                                                               
Creek Project update that relates to SB 179.                                                                                    
JAMES FUEG, Technical  and Permitting Coordinator for the  Donlin                                                               
Creek joint  venture, gave  a review  of the  Placer Dome  mining                                                               
company and an  overview of the project.  He said he would  touch                                                               
on the highlights of a larger presentation.                                                                                     
2:10:54 PM                                                                                                                    
     Page 2                                                                                                                     
     Project Location                                                                                                           
The Donlin Creek project  is located about 12 miles north of  the                                                               
village of  Crooked Creek and  180 miles up  the Kuskoquim  River                                                               
from  Bethel.  The  location is  remote  and  all  materials  are                                                               
supplied by  air transportation.  If the mine  goes forward,  all                                                               
supplies for  construction would be  barged up river  to a  point                                                               
about five  miles from the  mine. The  company would construct  a                                                               
road to transport goods the final five miles to the mine site.                                                                  
Page 3                                                                                                                          
Donlin Creek Joint Venture                                                                                                      
  · Placer Dome Managing Joint Venture Partner                                                                                  
  · Nova Gold Resources Joint Venture Partner                                                                                   
  · Calista Regional Corporation is the subsurface estate owner                                                                 
  · The    Kuskokwim   Corporation   -   the   regional   village                                                               
     corporation - owns the surface estate                                                                                      
Placer Dome has been in  the area for ten years and has a  strong                                                               
local hire history. Currently  50-70 people are on site, but  the                                                               
number  varies depending  on  what's going  on.  Typically  65-80                                                               
percent of the people in the camp are from the local area.  A lot                                                               
of  professional staff  comes from  Alaska  and a  local  charter                                                               
company transports personnel to and from the site.                                                                              
2:12:51 PM                                                                                                                    
Page 10                                                                                                                         
Current Resource Estimate:                                                                                                      
Work began in 1995  and expenditures to date are on the order  of                                                               
$58 million.  Of that, Placer  Dome has spent  about $45  million                                                               
and Nova Gold Resources  has spent about $10 million. The  budget                                                               
for  2005  is  about  $11.5  million.  The  payroll  directed  to                                                               
shareholders  in the  area  for  the  Month of  March  was  about                                                               
In  spite of  the amount  of  time and  money already  spent  the                                                               
company  is still  several years  and  millions of  dollars  from                                                               
making a final determination  on whether or not to go ahead  with                                                               
the project.                                                                                                                    
As it stands now  the total resource amounts to about 25  million                                                               
ounces  of  gold of  which  11  million ounces  is  measured  and                                                               
indicated  and  14  million  ounces  is  inferred.  Measured  and                                                               
indicated is a  reflection of the  measure of confidence that  is                                                               
needed to be able  to do a pre-feasibility study. Not all of  the                                                               
25  million ounces  will necessarily  be mined.  The decision  is                                                               
driven by economics that  will evolve as the studies advance  and                                                               
as the mine advances - if indeed it does goes forward.                                                                          
2:14:43 PM                                                                                                                    
Page 12                                                                                                                         
Primary Issues:                                                                                                                 
There are three major issues upon which the project rests and                                                                   
they are power, lime and logistics.                                                                                             
     ·      Power: About 80 megawatts will be produced on site with                                                             
  diesel generation plants with an anticipated 40 percent wind power                                                            
     ·      Lime: A low-grade lime resource has been identified in                                                              
  the region of the deposit and is being drilled out to determine                                                               
  whether it will meet the requirements.                                                                                        
     ·      Logistics: Up to 250,000 tons of consumables per year                                                               
  would be required for operation. It would be barged up the                                                                    
  Kuskoquim River to a port location then over to Donlin Creek.                                                                 
Page 13                                                                                                                         
Power - Potential Solution                                                                                                      
  · Current Plans require 80 MW Peak Load, 70 MW Average Load                                                                   
     (30k tons per day mill)                                                                                                    
  · Evaluated more than 10 options                                                                                              
  · On site generation using diesel is current focus                                                                            
  · Potential to supplement with wind generation                                                                                
       · Wind    option   requires   data   collection   for                                                                    
       · Objective - offset ~40% of fuel requirement                                                                            
Page 15                                                                                                                         
Logistics and Infrastructure                                                                                                    
  · Annual consumables (30,000 tons per day mill)                                                                               
       · General Consumables            50,000 tons                                                                             
       · Fuel (no wind generation)      140,000 tons                                                                            
       · Lime (assumes on site CCE)     20,000 tons                                                                             
  · Barge materials up the Kuskokwim River                                                                                      
  · Port location at Jungjuk Creek                                                                                              
  · All weather road to Donlin Creek                                                                                            
  · Construct a new 6,000 foot airstrip near Donlin Creek                                                                       
Page 16                                                                                                                         
Preliminary Process Outline                                                                                                     
  · Conventional open pit                                                                                                       
       · 2 pits (ACMA, Lewis)                                                                                                   
  · Track and shovel mining                                                                                                     
  · Evaluating 30,000 and 40,000 tons per day scenarios                                                                         
       · Logistical Supports                                                                                                    
       · Grade control/dilution issues                                                                                          
  · Three stage crushing and primary ball milling                                                                               
  · Floatation/Pressure oxidation mill - This process cooks the                                                                 
     refracted ore out of the sulfide in giant pressure cookers,                                                                
     which is why so much power is needed for the operation.                                                                    
  · Conventional tailings                                                                                                       
2:16:54 PM                                                                                                                    
Page 17                                                                                                                         
If the project moves ahead, approximately 25 miles of road  would                                                               
be constructed  from the river  to the site.  A port and  laydown                                                               
area would  be constructed at  Jungjuk Creek as  well as a  6,000                                                               
foot surfaced runway to  fly personnel and equipment in and  out.                                                               
The  company will  build  all  facilities associated  with  power                                                               
generation, including fuel storage and transmission lines,  which                                                               
amounts to a significant part of the project.                                                                                   
2:17:34 PM                                                                                                                    
Page 18                                                                                                                         
Environmental studies have been ongoing including more than  just                                                               
the  project area  itself.  The  entire access  corridor  up  the                                                               
Kuskoquim River down to  the shores of the Kuskoquim Bay must  be                                                               
considered and evaluated to  ensure that the project can be  done                                                               
in an environmentally sound manner.                                                                                             
2:17:59 PM                                                                                                                    
Page 20                                                                                                                         
Project Description                                                                                                             
  · 30,000 to 40,000 ton per day mill operation                                                                                 
  ·  Waste rock and initial tailings deposited in American                                                                      
     Valley where the deposit is located. Later tailings may be                                                                 
     deposited in Anaconda Valley if the first is filled.                                                                       
  · Supplies barged up Kuskokwim River to port at Jungjuk Creek                                                                 
  · Power provided by onsite diesel supplemented by wind                                                                        
Based on current estimates,  the direct costs of the project  are                                                               
in  the  neighborhood  of  $1  billion.  That  is  the  cost   of                                                               
purchasing    equipment,   constructing    buildings,    building                                                               
infrastructure. It doesn't  include construction overhead so  the                                                               
total cost will be significantly more than $1 billion.                                                                          
This is a large  project with large scope and he speculated  that                                                               
if  the project  goes  ahead, it  would  be the  biggest  private                                                               
industry project  in Alaska  after the  pipeline. This  is in  an                                                               
area that would stand to benefit tremendously from the project.                                                                 
Because of  the remote location and  the difficult nature of  the                                                               
entire process, the  capital investment would be huge.  Therefore                                                               
a  sound  understanding  of  the  process,  and  a  well  defined                                                               
economic  model is  necessary  so  the  board can  make  a  final                                                               
determination and get financing for the project.                                                                                
Currently, one of the  biggest unknowns in the economic model  is                                                               
the  element  of  local taxation.  This  is  why  SB  179  is  so                                                               
important  to  Donlin Creek  and  any  similar  projects  in  the                                                               
MR. FUEG concluded:                                                                                                             
     It's not  an issue of  us wanting  to bypass the  local                                                                    
     community.  We recognize  the concerns  about  imposing                                                                    
     agreements  on  local  communities  and  we   certainly                                                                    
     respect and share your concern about all  these issues.                                                                    
     What we  are doing, is asking  for some mechanism  that                                                                    
     we can  use to  negotiate and develop  a tax  certainty                                                                    
     that we're going to need to move this project forward.                                                                   
CHAIR GARY STEVENS asked how many personnel are required now  and                                                               
during full operation.                                                                                                          
MR.  FUEG replied  during the  summer between  40 and  60  people                                                               
would  be employed  on any  given  day. During  construction  the                                                               
estimate is for about  600 people for about two years.  Depending                                                               
on  final size,  between 350  and 400  people would  be  employed                                                               
during operation.                                                                                                               
CHAIR GARY STEVENS asked  what happens to the ore when it  leaves                                                               
the site.                                                                                                                       
MR. FUEG clarified this is strictly a gold mine. Gold bars  would                                                               
be molded on-site and the finished product would be flown out.                                                                  
2:22:12 PM                                                                                                                    
SENATOR STEDMAN asked where the crew would come from.                                                                           
MR. FUEG  replied the company  would hire locally  to the  extent                                                               
possible and  transportation would be similar  to what's done  at                                                               
the Red Dog. Flights  would go to and from Anchorage and  smaller                                                               
charter aircraft  would provide  transportation to  and from  the                                                               
various local  villages. The rotation would  likely be two  weeks                                                               
on and two weeks off. The mine would run 24 hours a day 365  days                                                               
a year.                                                                                                                         
SENATOR STEDMAN asked about reclamation.                                                                                        
MR. FUEG  said a reclamation plan  is in progress. Although  they                                                               
can't leave  things the way they  were before mining began,  they                                                               
don't intend to leave issues behind once the mine has moved on.                                                                 
SENATOR STEDMAN  asked for  the  estimated lifespan of  the  mine                                                               
once it's operational.                                                                                                          
MR. FUEG replied it  depends on the mill size that is settled  on                                                               
and the  percentage of the reserves  that can actually be  mined.                                                               
The number they are  using currently is 15 years, but it's  worth                                                               
noting  that  mines  typically  run  longer  than  the   original                                                               
estimated life.                                                                                                                 
SENATOR WAGONER  noted the  concern associated  with capping  the                                                               
millage rate and whether 6 mills would be sufficient if the  area                                                               
were to incorporate.                                                                                                            
MR. FUEG  said he could only  speak to Donlin  Creek as a  Placer                                                               
Dome  representative.  That being  said,  $1  billion  in  direct                                                               
capital cost translates to  $1 million per mill. That would  give                                                               
the newly  organized, rural,  government a  $2 million  operating                                                               
budget.  Assuming the  area  goes  with the  model  borough,  the                                                               
Kuspuk School District has  about 1,500 people. Looking at  other                                                               
rural boroughs  in the state,  that amount is  more than in  line                                                               
with the typical budgets.                                                                                                       
SENATOR WAGONER remarked  corporate and other taxes would  amount                                                               
to another 9 or 10 percent.                                                                                                     
MR. FUEG said in  addition to corporate and mining license  taxes                                                               
there  is   a  royalty  component  that   would  go  to   Calista                                                               
CHAIR GARY STEVENS  asked for some background information on  the                                                               
MR. FUEG  explained that Placer Dome  is an international  mining                                                               
company  headquartered  in   Vancouver,  Canada.  Currently   the                                                               
company employs  18,000 people in mines  that are scattered  from                                                               
Africa, Indonesia, and Australia to North and South  America. The                                                               
company operates  several mines  in  Nevada and  one in  Montana.                                                               
Donlin Creek would be the only mine in Alaska.                                                                                  
Placer Dome has a history of building mines in  undeveloped areas                                                               
such as Donlin Creek. The mine in Indonesia and the Mussel  White                                                               
Mine in northern Canada  are probably the most similar to  Donlin                                                               
Creek and are located in completely undeveloped areas.                                                                          
Placer Dome  has a  history of working  successfully with  Native                                                               
people in  remote mine areas and  a philosophical cornerstone  of                                                               
doing business is their sustainability policy. They look at  what                                                               
would be left behind and what the long-term benefits would be  to                                                               
the  community. They  recognize  that mining  isn't  a  renewable                                                               
resource so it's  a corporate policy requirement to leave  behind                                                               
something  positive. Typically  that takes  the  form of  a  more                                                               
skilled and more highly educated workforce.                                                                                     
Placer Dome produces about  4 million ounces of gold a year  plus                                                               
several  hundred thousand  tons of  copper. Currently  they  have                                                               
three large projects at a similar stage of development as  Donlin                                                               
Creek. One is in Chili, one is in the Dominican Republic and  the                                                               
third is Donlin Creek.                                                                                                          
2:30:37 PM                                                                                                                    
CHAIR  GARY STEVENS  questioned how  far the  mine site  is  from                                                               
MR FUEG replied it's about 180 miles away. The  closest community                                                               
of  any size  is Aniak  and the  closest town  is Crooked  Creek,                                                               
which is 12 miles south.                                                                                                        
2:31:10 PM                                                                                                                    
SENATOR WAGONER asked if he thought the mill rate is excessive.                                                                 
MR.  FUEG said  the company  was hoping  for something  a  little                                                               
lower and they are  still evaluating the effect. Certainly it  is                                                               
a burden to the project, but they  recognize their responsibility                                                               
to the  local community.  As a  company they've  taken a  neutral                                                               
position on  borough formation  in the  area. They  want to  meet                                                               
their commitment  in terms of  education and if  a borough  forms                                                               
they would like to  contribute their fair share to the  operating                                                               
costs of  the borough while recognizing that  they would draw  no                                                               
SB 179.was held in committee.                                                                                                   
2:32:34 PM                                                                                                                    
There being  no further  business to come  before the  committee,                                                               
Chair Gary Stevens adjourned the meeting at 2:32:44 PM.                                                                       

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