Legislature(1993 - 1994)
02/10/1993 08:03 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
MINUTES
SENATE FINANCE COMMITTEE
February 10, 1993
TAPES
SFC-93, #16, Side 1 (561-001)
SFC-93, #18, Side 1 (001-561)
SFC-93, #18, Side 2 (561-001)
SFC-93, #20, Side 1 (001-450)
CALL TO ORDER
Senator Drue Pearce, Co-chair, convened the meeting at
approximately 8:03 a.m.
PRESENT
In addition to Co-chairs Frank and Pearce, Senators Kelly,
Kerttula, Rieger, and Sharp were present. Senator Jacko
arrived while the meeting was in progress.
ALSO ATTENDING:
Charlot Thickstun, Director, Division of Elections; Chip
Thoma, representing himself; Max Gifford, staff for Senator
Kelly; Juanita Hensley, Chief, and Jay N. Dulany, Director,
Department of Motor Vehicles, Division of Public Safety; Mr.
Robert S. Hatfield, Jr., President and CEO, ARRC; Mr. Loren
Lounsbury, Chairman of the Board, ARRC; Commissioners Paul
Fuhs, DOC&ED; Frank Turpin, DOT/PF, Mike Greany, Director,
and Karen Rehfeld, Fiscal Analyst, Legislative Finance
Division; and aides to committee members.
SUMMARY INFORMATION
Alaska Railroad and Railroad Board Overview
Co-chair Pearce and the committee invited members of
the ARRC Board to speak to unanswered questions raised
during an interview with Commissioner Turpin during a
budget overview of DOT/PF.
*CSHB 68(FIN) - An Act making a supplemental
appropriation for certain elections for
regional educational attendance area
school boards and coastal resource
service area boards; and providing for
an effective date.
Testimony was presented by Charlotte
Thicksten, Director, Division of
Elections. The appropriation bill
($90.0) was REPORTED OUT of committee
with a "do pass" recommendation.
SB 30 - An Act extending the termination date of
the Alaska Minerals Commission.
The bill was REPORTED OUT of committee
with a "do pass" recommendation and a
zero fiscal note from the Department of
Commerce and Economic Development.
SSSB 47 - An Act relating to equipment,
registration, and identification of
custom collector vehicles; and providing
for an effective date.
Testimony was presented by Max Gifford,
staff to Senator Kelly; Jay N. Dulany,
Director, DMV; and Juanita Hensley,
Chief, Department of Public Safety. The
bill was REPORTED OUT of committee with
a "do pass" recommendation and a $10.9
fiscal note from the Department of
Public Safety.
*First Senate hearing
CS FOR HOUSE BILL NO. 68(FIN):
An Act making a supplemental appropriation for certain
elections for regional educational attendance area
school boards and coastal resource service area boards;
and providing for an effective date.
CO-CHAIR DRUE PEARCE directed that CSHB 68(FIN) be brought
before the committee and that the committee had received a
like bill, SB 48. She invited Charlot Thickstun, Director,
Division of Elections, to testify on behalf of CSHB 68(FIN).
CHARLOT THICKSTUN directed attention to a memo (copy on
file) dated February 4, 1993, from the Division of Elections
explaining Regional Education Attendance Area (REAA) and
Coastal Resource Service Area (CRSA) elections. She said
the reapportionment and related litigation had caused
unexpected expense to the division. She said the division
needed $90.0 additional funds in order to pay for the cost
of REAA and CRSA elections.
CO-CHAIR STEVE FRANK confirmed that money had been
appropriated to the Division of Election's original budget
to cover the expenses of the REAA and CRSA elections but the
money was spent to cover other expenses. Ms. Thickstun
agreed that was the case. She said the there was enough
money in the budget to fund the division until February 15,
1993, and the division had been using the Governor's
contingency fund of $25.0. She said cutbacks had been done
wherever possible.
SENATOR JAY KERTTULA alleged that the Division of Elections
had misused appropriated funds allocated for the REAA and
CRSA elections, and now the state was asked to make up the
difference.
SENATOR STEVE RIEGER asked how advertising money had been
spent. Ms. Thickstun said in rural communities the division
advertised when and where the election was going to be held.
The division also advertises to let candidates know when to
file for seats. She explained this was required by law.
Senator Rieger asked if the $23.5 was for upcoming election
newspaper ads or were there unpaid invoices that needed to
be paid. Ms. Thickstun admitted there were existing unpaid
invoices.
CHIP THOMA, representing himself, wanted to clarify that the
expense of the recall had not caused the overruns in the
Division of Elections. He said that 50,000 names and
signatures collected by the recall organization had been
checked before they were submitted to the Division of
Elections. A calculation showed that it took approximately
one minute to look up each name. This would amount to
approximately 800 hours, or less than $10,000 of expenses,
to check the recall signatures.
SENATOR TIM KELLY asked the status of the recall. Mr. Thoma
indicated approximately half of the 50,000 signatures needed
for the second stage of the recall had been collected.
Senator Kelly MOVED for passage of CSHB 68(FIN) with
individual recommendations. Co-chair Pearce called for a
show of hands on passage of the bill, and the bill was MOVED
on a vote of 5 to 1 (Senators Pearce, Frank, Kelly, Sharp
and Rieger were in favor, Senator Kerttula was opposed).
Co-chair Frank commented that he would like to have a better
understanding of authorizations to spend and supplemental
appropriations that came before the committee. Senator
Kerttula said a report was due from legislative audit
regarding this issue.
SENATE BILL NO. 30:
An Act extending the termination date of the Alaska
Minerals Commission.
Co-chair Pearce directed that SB 30 be brought on for
discussion. She informed the committee that a revised zero
fiscal note for the Department of Commerce & Economic
Development had been provided. She explained that the cost
had already been appropriated in the department's budget.
Co-Chair Frank MOVED and asked for unanimous consent that SB
30 pass from committee with individual recommendations and
the revised fiscal note. No objection being raised, SB 30
was REPORTED OUT of committee with a zero fiscal note for
the Dept. of Commerce and Economic Development. Co-chairs
Frank, Pearce, Senators Kelly, Rieger, and Sharp signed the
committee report with a "do pass" recommendation. Senator
Kerttula signed the committee report with a "no rec."
Senator Jacko was absent and did not sign.
SPONSOR SUBSTITUTE FOR SENATE BILL NO. 47:
An Act relating to equipment, registration, and
identification of custom collector vehicles; and
providing for an effective date.
Co-chair Pearce directed that SSSB 47 be brought on for
discussion.
Senator Kelly, sponsor for SSSB 47, commented that the bill
was not a significant bill but had to do with improving the
quality of life.
End SFC-93 #16, Side 2
Begin SFC-93 #18, Side 1
MAX GIFFORD, legislative assistant to Senator Kelly,
testified that SSSB 47 provided that owners of custom
collector vehicles must equip their vehicles with several
safety devices, and provided for an exemption for bumpers,
hoods and fenders. The owner may register with the
Department, pay a $50 fee, and if they qualify, obtain a
vehicle identification number and special license plate. He
estimated that there were approximately 200 to 250 custom
cars in Alaska. He directed attention to a letter from the
Midnight Sun Street Rod Association dated January 25, 1993
(copy on file), in support of SSSB 47. He explained the
fiscal note was in the amount of $10.9 for plate production
and estimated income from the $50 registration fee to be
$10.0.
Co-chair Pearce invited Juanita Hensley, Chief, and Jay N.
Dulany, Director, Division of Motor Vehicles, Department of
Public Safety, to testify regarding SSSB 47. JAY DULANY, in
answer to Senator Kerttula's question, replied that the bill
meant almost a break-even cost for the division. Discussion
followed between Senators Rieger and Kelly, Max Gifford, and
Mr. Dulany regarding safety regulations for older cars.
Senator Kelly MOVED and asked for unanimous consent that
SSSB 47 pass from committee with individual recommendations
and the attached fiscal note. No objection being raised,
SSSB 47 was REPORTED OUT of committee with a fiscal note in
the amount of $10.9 for the Dept. of Public Safety. Co-
chairs Pearce and Frank, Senators Kelly, Rieger, Kerttula
and Sharp signed the committee report with a "do pass"
recommendation. Senator Jacko was absent and did not sign.
Recess 8:25am
Reconvene 9:03am
Alaska Railroad and Railroad Board Overview
Co-chair Pearce invited members of the Alaska Railroad Corp.
(ARRC) Board, Mr. Robert S. Hatfield, Jr., President and
CEO, ARRC, Mr. Loren Lounsbury, Chairman of the Board, ARRC,
and Commissioners Paul Fuhs, DOC&ED and Frank Turpin,
DOT/PF, to join the members at the committee table. She
indicated that the board members had been invited to speak
in regard to unanswered questions previously raised,
regarding ARRC, during an overview for DOC&ED's budget. She
asked Mr. Hatfield to present an overview of ARRC, and then
asked members to present their questions.
ROBERT HATFIELD said that in 1992, ARRC achieved gross
revenues of $68M. He itemized the revenue as follows: $52M
from freight, $8.5M from passenger, $4M from real estate,
and the remainder from the sale of used materials. Last
year, $13M was spent on capital improvement projects
including $114.0 of new rail, $14.0 of right-of-way wooden
and steel cross ties, 65,000 cubic yards of ballast, and the
resurfacing of 164 miles of property. He stated the
railroad had improved its safety record by about 30 percent
and an approximate 90 percent "on time" had been achieved
for the freight trains. He explained that in June 1992,
ARRC entered a joint venture and opened the Comfort Inn in
Anchorage. It had also exercised a master lease for the
120-acre Ship Creek Redevelopment project. Overall, the
railroad showed a growth in passenger business.
Mr. Hatfield projected ARRC's emphasis for the next year to
be about the same. He pointed out that the railroad
business was in a very competitive situation. It hauled
about 500 million gallons of petroleum products annually
from the North Pole to Fairbanks. The possibility of the
construction of a pipeline would certainly impact the
railroad's revenue. In addition, the railroad hauls about
12,000 trailers a year, 4,000 from the lower 48, and is in
direct competition with barge lines and the highway between
Anchorage and Fairbanks. He said other areas of business
that were competitive were hauling logs and coal. He said
that ARRC was unable to move its tracks to another area to
take advantage of other markets. It must use the present
tools available to become an asset for the state.
Discussion followed between Senator Rieger and Mr. Hatfield
on how ARRC, Suneel Coal and Usibelli would share equally in
the projected revenue decreases and increases.
Co-chair Frank asked Mr. Hatfield if ARRC was planning to
open a hotel in Fairbanks and use the same scenario as the
Comfort Inn in Anchorage. He voiced his disagreement with
the railroad taking an equity ownership in a hotel or any
other non-transportation business. He felt ARRC was a
public corporation, owned by the state, and felt it was not
appropriate for it to be in competition with the private
sector.
Mr. Hatfield said that all decisions were made by the board
and the board had agreed not to enter into any business
unless it related directly to the railroad's core of
business. He felt increasing passenger business, and the
availability of hotel rooms were directly related. He said,
regarding a similar proposed hotel project in Fairbanks,
ARRC had asked for input from the public and private sector.
He did not know if the board would approve a hotel project
in Fairbanks, but said there was no formal hotel proposal
before the railroad at this time.
In Anchorage, Mr. Hatfield explained, the Hospitality
Associates had come to the railroad with a proposal making
the builder, operator, and land holder all partners. The
board felt by putting up the fair market value of the
railroad-owned land as equity for a loan, ARRC could receive
a far greater value as a partner than by leasing the land.
He agreed there was some risk involved but the projections
from two outside sources showed it to be a good business
decision. He pointed out that in Seward, the railroad had
scheduled a meeting for public input, and no one had
attended. The board than made its decision to join the
partnership. He observed it had been said that ARRC could
compete unfairly in the hotel marketplace. He stated that
the railroad paid property and bed taxes. Hospitality
Associates was a larger company than the Alaska Railroad
Corp. and could guarantee any shortfalls in revenue. ARRC
was responsible for 40 percent of losses or gains of the
project. He felt any other land owner in Alaska could have
accomplished the same partnership if they had chosen to do
so.
LOREN LOUNSBURY, Chairman of the Board, wanted to emphasize
that there had been unanimous instruction from the board to
the administration that ARRC would not enter any joint
venture unless everything was treated fairly with the
general public and no advantage was taken by tax
repositioning or by the ability to borrow money at less than
commercial rates.
Co-chair Frank observed that in a report by LBA (copy on
file) dated May 1, 1992, that ARRC was 100 percent liable
for the whole debt if a loss should occur, not just 40
percent. Mr. Hatfield and Mr. Lounsbury agreed but
reiterated that ARRC felt that the Comfort Inn project was a
good risk.
Co-chair Frank also said that the same report stated that a
$250.0 cash call by a partner was not received and was
renegotiated to zero. Mr. Hatfield said he did not have the
specific documents with him to address this question but
negotiations had taken place in a typical business
atmosphere. To charge fees to the partnership did not make
sense and that was why a development fee had not been paid
to the builder or operator. He said that the hotel was now
open, a loan had been obtained, and all cash calls had been
reimbursed.
End SFC-93 18#, Side 1
Begin SFC-93 18#, Side 2
Co-chair Frank asked if one of the four husband and wife
teams that were partners in this project, was also the
builder. Mr. Lounsbury answered one of the partners was the
builder and no fees were paid to him for building the
project. In answer to Co-chair Frank's inquiry, Mr.
Hatfield agreed to find out the book value of the other
partners for the committee.
Mr. Lounsbury asked to respond to Co-chair Frank's negative
position regarding ARRC's partnership in the hotel business.
He pointed out that this was the only partnership, perceived
as a non-transportation business, that ARRC was involved in.
He said on behalf of the board, ARRC did not have any
intention of entering the grocery, hardware, or any business
unrelated to transportation. Because of the possible
diminishing freight business, the railroad was trying to
expand passenger service, especially in the area of tourism.
Because of cruise ships into Seward, passenger service was
expected to increase. The Ship Creek Redevelopment project
targeted tourism related activities and hoped to hold people
over in Anchorage longer. He added tourists staying even an
extra day could mean a big difference to the economy of the
community. He felt the railroad was looking into the sale
of passenger packages, such as cruise ships use, combining
hotel rooms, meals, etc. to enhance revenues. He felt the
board had never attempted to unfairly compete with anyone in
the private sector. He said that if it hadn't been for its
real estate holdings, not including the hotel in Anchorage,
the railroad would have been in the negative $2M.
Co-chair Frank said a problem did not exist when ARRC leased
its real estate to businesses. Mr. Lounsbury said, in the
case of the Comfort Inn project, the project had been
proposed to the railroad. Co-chair Frank felt his concerns
were two fold; the actual impact in the event of a loss, and
the philosophical problem of the state competing with the
private sector. He said these two concerns were related.
For example, if the hotel was losing money, room rates could
be reduced by ARRC to gain more business, and this would
directly impact the private sector. He also felt the state
should not take on the potential risk of this project.
Mr. Lounsbury agreed that the Comfort Inn could be perceived
as competition for the private sector but said the hotel was
unique in that it had no bar or food service which also
reduced operating costs substantially. He felt the partners
in this hotel had a great track record and all of their
other hotels were making money. He also felt the Comfort
Inn did not compete with such hotels as the Captain Cook
because of its location and lack of amenities. The board
felt the decision to go into this partnership was a good
investment decision for ARRC. He said the railroad would
continue to look at opportunities to help its bottom line.
Senator Sharp asked if one of the partners was the operator
of the hotel and were they paid a management fee. Mr.
Hatfield said operating expenses but no management fee was
paid. Senator Sharp asked if the board had examined the
cost of the hotel construction and was any profit made by
the contractor in constructing the building. Mr. Hatfield
and Mr. Lounsbury agreed that there had been no profit made
by the partner who built the hotel. In answer to Senator
Sharp's question, Mr. Hatfield said the total debt for the
150-room hotel was $4.4M, but was unable to name all the
partners in the project.
Senator Sharp felt that tourism was a consideration for
revenue in this hotel project. He wanted to know if the law
authorized the railroad to invest in logging or coal
businesses. Mr. Hatfield indicated those kind of
businesses, for example a sawmill, were traditional railroad
business. He felt one of the charges of the railroad was to
help create economic development in the state. Discussion
followed between Senator Sharp and Mr. Hatfield regarding
the lease of railroad land.
Senator Kelly asked if the railroad was able to create bed
space and was that one of the reasons the hotel would make
money. Mr. Hatfield agreed that the location of the hotel
near the railroad was one of the main reasons ARRC decided
it was a related business and that it would be profitable.
Senator Kelly said that ARRC was authorized to bond through
the legislature and asked if ARRC had done that. Mr.
Lounsbury said, to his knowledge, ARRC had never gone to the
legislature for any available exemptions. Senator Kelly
asked how much money had been spent on improvements since
the state acquired the railroad. Mr. Hatfield said he did
not know the exact amount but over $100M had been spent on
capital improvements since state ownership. Mr. Lounsbury
said the number was available but he knew the railroad had
spent $50M on road bed improvements alone.
Senator Kelly asked about ARRC's pension plan and its
safeguards. Mr. Hatfield said ARRC's plan was separate from
the state's and was over-funded at this time with year to
year growth at about 8 percent. It was managed by a
committee made up of members of management, leaders of the
labor organization, and a consultant. In answer to Senator
Kelly's question, Mr. Hatfield answered that the board did
not have access to the pension funds. COMMISSIONER TURPIN
said that ARRC's pension plan was less expensive than the
state's.
Senator Rieger asked how much lease obligation the railroad
had on the books at present. Mr. Hatfield said the railroad
had over one thousand pieces of land leased but a list or
their worth was not available. Senator Rieger said he was
inquiring as to any railroad indebtedness to leases that the
railroad held. Mr. Hatfield said the railroad leased one
building in Anchorage, and also leased-to-own some
equipment. He said the long term debt level of ARRC was
constant at about $20M which did not include long term
equipment leases. Mr. Hatfield said that information was
available in their annual report.
Discussion followed between Senator Rieger, Mr. Hatfield,
Commissioner Fuhs regarding Senator Rieger's suggestion of
converting ARRC to a stock company owned 100 percent by the
state.
Co-chair Pearce asked if ARRC could provide a written
mission for the railroad. Mr. Hatfield said the railroad
mission statement said that the ARRC would provide high
quality freight, passenger and real estate services for its
customers. Those he felt were the railroad's core
businesses.
Co-Chair Pearce asked Mr. Hatfield if any of the other board
members had seen his letter dated July 1, 1992 (copy on
file), in response to Mr. Welker, Legislative Auditor, on
the Ship Creek redevelopment, before it was sent. Mr.
Hatfield answered negatively.
Co-chair Pearce asked Mr. Hatfield to provide a list of all
lawsuits that the railroad was involved in and their status.
Mr. Hatfield said he would provide the list but strategy
regarding the lawsuits was confidential. Co-chair Pearce
emphasized that she was requesting status only, and if the
committee needed further information, it could be handled in
an executive session.
Co-chair Pearce said that in past years, passenger service
on the railroad had always been subsidized. She asked if
proposed packages for tourists would include subsidized
passenger service, or would the railroad not subsidize the
passenger service in the packages so they might be fair in
their competition with private entities. Mr. Hatfield said
at the present the railroad was not receiving any subsidy to
cover passenger service. Co-chair Pearce said she
understood that but internally the passenger service
historically did not pay for itself. Mr. Hatfield said that
passenger service was about $.5M short of meeting costs. He
said that the railroad was negotiating with a cruise line,
and in those type of packages, the passenger costs would be
fully covered.
End SFC-93 18#, Side 2
Begin SFC-93 20#, Side 1
Commissioner Turpin pointed out that when the state
purchased the railroad, the federal government was being
paid by the state $.75M per year in passenger subsidy. The
legislature had expected to pay $2M a year to the railroad.
He said, instead the railroad introduced new routes and
services to improve the operation of the passenger service.
Co-chair Frank asked whose idea it was to build the hotel,
the railroad or the partners in the hotel. Mr. Hatfield and
other board members agreed it was the partners that came to
the railroad with the hotel proposal. In answer to Co-chair
Frank's question regarding the financial statements of
partners not being available to the auditor, Mr. Hatfield
said that it was not up to the railroad to release personal
financial information of the partners. Mr. Hatfield said
that partnership financial statements were available but not
the partners' personal financial statements.
Discussion followed between Co-chair Frank and Mr. Hatfield
regarding the philosophy of public and private businesses
and how they are run.
Senator Kelly asked how the Whittier road would affect the
railroad financially. Mr. Hatfield said at the present time
the railroad handled 175,000 passengers in and out of
Whittier each year, some being duplicates. He said the road
into Whittier would cause a decrease in this passenger
traffic. He said because the overall operation was losing
money, it would mean a net benefit to the railroad. The
Whittier shuttle does generate cash in the summer because
passengers pay in advance and freight customers do not.
COMMISSIONER FUHS said the hydrotrain runs out of Whittier
and that was a profitable operation. He explained that the
hydrotrain is an operation that enables the transfer of
railroad cars from the barge to the train. He said that the
railroad would rethink the whole operation in light of the
new road to Whittier.
Senator Kelly confirmed that the railroad lost money each
year on freight and passenger service but was subsidized by
its real estate holdings. Mr. Hatfield affirmed that the
loss each year was approximately $2M and any net profit was
received from its real estate operation. Mr. Hatfield
pointed out that 70 percent of the railroad business was
with Usibelli and Mapco. If a pipeline was installed
between the refinery and Anchorage, the railroad would lose
a significant amount of revenue. He said, in addition, the
export coal business may not exist in the next few years.
The gas pipeline that may go through Fairbanks would also
have a negative effect on the railroad's revenue. Mr.
Hatfield reiterated that passenger and tourist business was
an important aspect in developing new revenue.
Discussion followed between Senator Kelly, Mr. Hatfield and
Commissioner Turpin regarding the sale of the Alaska
railroad. The point was made that railroad real estate
holdings were the only reason any individual or company
would be interested in buying the railroad. Commissioner
Fuhs felt that if the railroad was privately owned, the
public would lose a lot of services.
Co-chair Pearce directed attention to a letter dated
February 1, 1993 (copy on file), from the City of Nenana.
She said that Representative Jeannette James could not
attend the meeting but asked the board for comments
regarding the proposed ARRC's landfill that could compete
with the City of Nenana's proposed landfill.
Commissioner Fuhs said that in the past few years, the board
had discussed the potential of building a waste disposal
site in a remote area along the railroad. He said the board
discussed the high cost of toxic and hazardous waste
disposal, and how hauling and disposal of it could provide a
source of revenue for the railroad. The construction and
licensing of these disposal sites would be under the
auspices of different governmental agencies. He said there
had been discussions with Fairbanks and with Nenana
regarding their disposal problems. He said a potential site
had been chosen, and management had met with DEC to discuss
the ramifications of such a facility.
Mr. Hatfield directed attention to a newspaper article dated
October 29, 1991 (copy on file), titled "Waste becomes
opportunity." He agreed discussions had been going on for
some time regarding a proposed disposal site. He said that
the railroad had discussed with the City of Nenana their
proposed operation. He felt the letter from Nenana made an
allegation that the railroad had obtained competitive
information from Nenana. He stated the railroad had been
looking at building such a disposal site since February
1991. He said the City of Nenana's project would take a lot
of money to get started but the railroad did not intend to
stand in the way of their proposal. He said the railroad
could handle hazardous waste from Nenana since their
proposed site would only handle solid waste.
Co-chair Pearce asked that the committee receive a copy of
the railroad's response to the City of Nenana. Mr.
Lounsbury said that the administration was planning on
meeting with Nenana and Fairbanks to discuss the waste
disposal situation in February 1993. Senator Kelly asked if
it was Nenana's plan to draw solid waste from Anchorage and
Fairbanks. Mr. Lounsbury said he did not know but suspected
from Fairbanks. Mr. Hatfield added that Nenana may have
proposed to handle waste barged down the river from the bush
communities as well as other contracts. He said bridges
that needed to be built and other expenses, if not funded,
would stand in the way of Nenana's project.
Co-chair Frank asked if greater earnings would be projected
if the railroad owned the disposal site themselves, and
what, if any, was the difference of owning a disposal site
compared to a hotel. Mr Hatfield said a decision had not
been made about ownership. He felt that a company would be
contracted to operate the disposal site who had expertise in
that area. Mr. Lounsbury said the railroad had been looking
at toxic hazardous waste disposal, not solid waste. The
railroad planned to have a licensed and highly trained
contractor or train employees to handle such waste. He said
the railroad had not come close to making those kinds of
decisions or conclusions. He said the toxic waste business
was costly to get into, complex, but could produce income
and provide a service to the state.
Co-chair Frank cited Sec. 42.40.280 of the Alaska Statutes
that said, "The board shall provide a state oversight report
to the governor and the legislature before undertaking (1)
expansion, reduction, or diversification of services..."
Mr. Lounsbury said that ARRC would certainly comply with any
section of the law that was required. Co-chair Frank asked
if ARRC went into a partnership with the hazardous waste
project on railroad land, would it be approved by the
legislature. Mr. Lounsbury said that he did not think ARRC
would be required to come before the legislature for that
particular project but reminded the committee that ARRC
provided the legislature with a annual report and a 5-year
projected plan. Discussion followed between Co-chair Frank
and Mr. Lounsbury regarding the meaning of the words in the
statute "expansion of services." Senator Kelly asked that
the board have Phyllis Johnson, legal counsel to ARRC,
review Sec. 42.40.280.
Senator Kelly asked who else was on the board of ARRC. Mr.
Hatfield answered that Frank Chapados of Fairbanks, Dale
Lindsey of Seward, and Michael Olson representing labor,
were the other board members. Co-chair Frank noted that in
a recent conversation, Mr. Chapados had agreed that the
railroad should lease the land and not get into the
operation of a business. Commissioner Fuhs felt that Mr.
Chapados was in agreement with the hotel project.
Discussion followed between Commissioner Turpin and Fuhs,
Co-chair Frank, and Mr. Hatfield regarding different
variations on lease and business investments by ARRC.
ADJOURNMENT
The meeting was adjourned at approximately 11:00 a.m.
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