Legislature(2003 - 2004)
01/29/2004 09:03 AM Senate FIN
| Audio | Topic |
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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
January 29, 2004
9:03 AM
TAPES
SFC-04 # 3, Side A
SFC 04 # 3, Side B
CALL TO ORDER
Co-Chair Gary Wilken convened the meeting at approximately 9:03 AM.
PRESENT
Senator Gary Wilken, Co-Chair
Senator Lyda Green, Co-Chair
Senator Con Bunde, Vice-Chair
Senator Fred Dyson
Senator Ben Stevens
Senator Donny Olson
Senator Lyman Hoffman
Also Attending: SENATOR JOHN COWDERY; REPRESENTATIVE BILL STOLTZE;
DARWIN PETERSON, Staff to Senator Gary Wilken; WENDY LINDSKOOG,
Director of External Affairs, Alaska Railroad Corporation,
Department of Community and Economic Development
Attending via Teleconference: From Offnet Sites: BOB LOEFFLER,
Director, Division of Mining, Land and Water, Department of Natural
Resources; SANDY GILLESPIE, Visual Arts Program Director and
Coordinator, One Percent for Arts Program, Alaska State Council on
the Arts; From Anchorage: SHALA DOBSON, Retired Anchorage School
District Art Teacher and Artist; JOCELYN YOUNG, Coordinator, One
Percent for Art Program, Municipality of Anchorage; From Fairbanks:
BARBARA SHORT, Coordinator, One Percent for Art Program, Fairbanks
North Star Borough School District; JEANNETTE JAMES, Former State
Representative and Railroad Advisor to the Governor.
SUMMARY INFORMATION
HB 215 - ONE PERCENT FOR ART
The Committee heard from the bill's sponsor and took public
testimony. A committee substitute was proposed but the motion to
adopt was tabled. One amendment was discussed, but not offered for
adoption. The bill was held in Committee.
SB 31-RAILROAD UTILITY CORRIDOR TO & IN CANADA
The Committee heard from the bill's sponsor, the Alaska Railroad
Corporation, the Department of Natural Resources, and took public
testimony. The bill was held in Committee.
CS FOR HOUSE BILL NO. 215(STA) am
"An Act relating to art requirements for public buildings and
facilities; relating to identification, monitoring,
maintenance, and reporting of art in public buildings and
facilities; and relating to the art in public places fund."
This was the first hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken stated that this legislation would amend the One
Percent for Arts Program by limiting the one percent for art
requirement to the first $10 million of State funding of a building
and assessing any funds exceeding $10 million at a one half of one
percent level. He informed the Committee that a Senate committee
substitute for the bill, Version 23-LS0605\S, has been developed
for consideration.
REPRESENTATIVE BILL STOLTZE, sponsor of the bill, informed the
Committee that this legislation has been supported by the
Legislature for many years; however, he recounted, previous
legislation has been vetoed by former governors of the State. He
stated that his re-submittal of this legislation is based on
concern for the State's fiscal situation as opposed to being a
negative reflection on the arts. Furthermore, he noted that the
public is questioning the State's expenditure of money on this
program; particularly, he noted when other needs such funding for
school libraries or playground equipment, are going unmet.
Representative Stoltze stated that the original version of the bill
was more conservative in that it would have repealed the One
Percent for Art Program; however, he conveyed that, as the bill
progressed through the committee process, "it turned into a bill
reforming the Percent for Art Program; ratcheting down the amount
of money, but maintaining the program" as well as providing a
funding mechanism for maintenance of the art. He expressed that, in
addition to receiving wide support in the House of Representatives,
the legislation has received support from art councils and the arts
community.
Senator B. Stevens moved to adopt the Version "S" committee
substitute as the working document.
Co-Chair Green and Senator Dyson objected.
DARWIN PETERSON, staff to Co-Chair Wilken, explained that there are
four major changes in the Version "S" committee substitute. He
noted that the most important change is that the Senate committee
substitute increases the one-percent for art limit to $20 million
of the State's construction cost as opposed to the $10 million
limit designated in the House bill. He stated that the second
change is that the Senate committee substitute does not include a
residency requirement as specified in the House bill because the
State's legal counsel has advised that that language might "run
afoul of the privileges and immunity's clause in the United States
Constitution." He pointed out that the language being omitted in
the Senate committee substitute is located in Section 3 in the
House of Representatives' bill, Version 23-LS0605\I.A that reads as
follows.
Sec. 3. AS 35.27.020(g) is amended to read:
(g) The architect, superintendent, department, and the
Alaska State Council on the Arts shall encourage the use of
state cultural resources in these art works and shall to the
extent permitted by law, select [THE SELECTION OF ALASKA
RESIDENT] artists for the commission of these art works who
are residents of the state under AS 01.10.055.
New Text Underlined [DELETED TEXT BRACKETED]
Co-Chair Green understood therefore that the Senate committee
substitute would completely delete Section 3 of the House bill,
Version 23-LS0605\I.A.
Mr. Peterson concurred.
Co-Chair Wilken pointed out that the Legislative Research Services
analysis, Report Number 03.204, dated April 30, 2003 [copy on file]
contains the aforementioned legal opinion.
Mr. Peterson continued that the third change in the Senate
committee substitute is that the previous definition of buildings
and facilities would be expanded to include all buildings and
facilities in the State that would be constructed with State funds
and be "used for substantial public purpose."
Mr. Peterson stated that the fourth item changed is the reversal of
previous definition changes that expanded construction costs to
exclude such things as cost overruns. Furthermore, he noted that
the Senate committee substitute incorporates on line 28, page
three, Section 5, the word "revenue bond proceeds" as part of State
funding.
Co-Chair Wilken referenced the spreadsheet titled "HB 215 - 1% for
Art" [copy on file] that his office has provided and asked Mr.
Peterson to explain the Senate committee substitute's affect on the
amount of money that would be reserved for art.
HB 215 - 1% for Art
Existing Law
Portion of State Funding Reserved for Art Works in
Public Buildings and Facilities as per AS 35.27.020(c)
Total Construction Total Reserved
Cost per Building 1% for Arts
or Facility
$ 5 million $ 50,000 $ 50,000
$10 million $100,000 $100,000
$15 million $150,000 $150,000
$20 million $200,000 $200,000
$25 million $250,000 $250,000
$30 million $300,000 $300,000
$40 million $400,000 $400,000
$60 million $600,000 $600,000
$80 million $800,000 $800,000
House Version
Portion of State Funding Reserved for Art Works in
Public Buildings and Facilities as per CSHB 215(STA)am
Total Construction 1% .5% Total
Cost per Building (up to (over Reserved
or Facility $10 $10 for
million) million) Arts
$ 5 million $ 50,000 0 $ 50,000
$10 million $100,000 0 $100,000
$15 million $100,000 $25,000 $125,000
$20 million $100,000 $50,000 $150,000
$25 million $100,000 $75,000 $175,000
$30 million $100,000 $100,000 $200,000
$40 million $100,000 $150,000 $250,000
$60 million $100,000 $250,000 $350,000
$80 million $100,000 %350,000 $450,000
Senate Finance Committee Version
Portion of State Funding Reserved for Art Works in
Public Buildings and Facilities as per SCS CSHB 215(FIN)
Total Construction 1% .5% Total
Cost per Building (up to (over Reserved
or Facility $20 $20 for
million) million) Arts
$ 5 million $ 50,000 0 $ 50,000
$10 million $100,000 0 $100,000
$15 million $150,000 0 $150,000
$20 million $200,000 0 $200,000
$25 million $200,000 $25,000 $225,000
$30 million $200,000 $50,000 $250,000
$40 million $200,000 $100,000 $300,000
$60 million $200,000 $200,000 $400,000
$80 million $200,000 $300,000 $500,000
Mr. Peterson explained the three charts on the spreadsheet and
noted that, based on a $20 million State funded construction
project, both the existing law and the Senate committee substitute
would reserve $200,000 for arts as opposed to the House proposal
which would reserve $100,000 based on the one percent allocation
being limited to the first $10 million. However, he clarified that
the Senate committee substitute differs from existing law in that,
for anything exceeding $20 million, the reserve amount would be
factored at one half of one percent.
Co-Chair Wilken asked Co-Chair Green and Senator Dyson whether
their objections pertained to any of the four aforementioned
changes, and if so, he asked that they speak to that point.
Co-Chair Green responded with a request that each of the Senate
committee substitute changes be explained in terms of whether a
funding increase or decrease would result as compared to the House
version of the bill or to existing law.
Mr. Peterson responded that the Senate committee substitute's
establishment of a $20 million limit would result in increased
funding as compared to the House version of the bill. However, he
stated that because there is no "ceiling" in existing law; and in
that regard, a funding decrease would result.
Mr. Peterson commented that the Senate committee substitute's
second change, which addresses residency requirements, would not
affect funding.
Co-Chair Green noted that the Senate committee substitute deletes
Section 3 of the House bill, and she asked that the section be
explained.
Co-Chair Wilken interjected that this information is located on
page two, line 12 of the House bill, Version 23-LS0605\I.A.
Sec. 3. AS 35.27.020(g) is amended to read:
(g) The architect, superintendent, department, and the
Alaska State Council on the Arts shall encourage the use of
state cultural resources in these art works and shall to the
extent permitted by law, select [THE SELECTION OF ALASKA
RESIDENT] artists for the commission of these art works who
are residents of the state under AS 01.10.055.
New Text Underlined [DELETED TEXT BRACKETED]
Representative Stoltze identified the language in question as the
"who are residents of the state…" section.
Co-Chair Green acknowledged the legal opinion that this section is
unconstitutional.
Senator Bunde opined that because the language reads "to the extent
permitted by law," it does not "really matter" whether or not the
language is in the bill.
Senator Olson asked the original drafting intent of this language.
Representative Stoltze surmised that the original intent was to
support a preference for local Alaska hire.
Senator Olson agreed that local resident hire is preferred.
Co-Chair Wilken commented that in his experience of serving on two
one-percent for art committees in Fairbanks, local hire receives a
preference regardless of whether it is or is not in law.
Senator Bunde asked for cost examples of various public facilities
in order to better comprehend the affect of the legislation.
Mr. Peterson reiterated that this legislation is "specifically
tied" to the construction costs of a project. He informed that the
State's share of the total $80 million construction costs of the
M/V Kennicott was $15 million; the Food Safety Laboratory total
cost was approximately $10 million; and the total cost of the
Alaska Psychiatric Institute (API) is anticipated to be less than
$35 million.
Mr. Peterson clarified even though the residency requirement is
eliminated in the Senate committee substitute, the words "the
Council shall encourage Alaska resident artists" would remain in
existing law.
Mr. Peterson stated that the third change in the bill, which is
located in Sec. 4, page three, is that it expands the facility or
building definition. In answer to Co-Chair Green's question
regarding how the bill would affect the One Percent for Art
Program, he shared that this expansion would provide art funds to
State programs such as the University of Alaska, the Alaska
Aerospace Development Corporation, and the Alaska Railroad
Corporation, which were not previously included. However, he noted
that Alaska Aerospace Development Corporation facilities might be
excluded from forthcoming committee substitutes were it further
determined that their facilities are not constructed with State
funds nor are for public use.
Co-Chair Wilken affirmed that the Alaska Aerospace Development
Corporation receives very little State funding and its facilities
are not for public use. Voicing surprise and disagreement with the
fact that the University of Alaska had opted out of the program in
the past, he commented that he looked forward to hearing the
University's testimony in this regard. He noted that the Railroad's
terminals would benefit from inclusion in the program.
Senator Dyson inquired as to whether, aside from the mandated One
Percent for Art Program, any other building program might restrict
or prohibit monies dedicated for art.
Co-Chair Wilken responded that no other known restrictions apply.
Senator Bunde surmised that were there no One Percent for Art
Program, ten percent, for example, could be dedicated for art.
Co-Chair Wilken concurred, but clarified that this legislation
could also allow that to occur as its language specifies a minimum
of one percent.
Co-Chair Green asked why this legislation would apply to how the
University or the Alaska Railroad Corporation "spend their money"
as, she continued, there has been "a long observed" "hands off"
approach to these entities where other budgetary "arenas" are
concerned.
Co-Chair Wilken reminded that the University was included in the
One Percent for Art program in the 1990s; however, he continued,
its Board of Regents opted out of the program. He noted that
further discussion would occur in regard to Co-Chair Green's
question.
Senator Bunde asked "under what authority" the University could opt
out of the program and "circumvent State law."
Co-Chair Wilken responded that the University would be provided an
opportunity to address this concern.
Co-Chair Wilken noted that the fourth change contained in the
Senate committee substitute is technical in nature and would not
have any monetary affect.
Co-Chair Wilken again asked whether the objection to the committee
substitute is maintained.
Co-Chair Green and Senator Dyson maintained their objections.
Co-Chair Wilken stated that the motion to adopt the Senate
committee substitute would be TABLED for the time being.
SANDY GILLESPIE, Visual Arts Program Director and Coordinator, One
Percent for Arts Program, Alaska State Council on the Arts,
testified via teleconference from an offnet site in Anchorage and
stated that the Council supports the Senate committee substitute's
language that would base the one percent funding for art on $20
million as opposed to the House's $10 million maximum level.
Furthermore, she noted that while the Senate committee substitute
would eliminate the residency language section of the bill,
language "that encourages the Council to support local artists"
would remain in the bill. She noted that the Council does honor the
local hire request, and she noted that oftentimes, the level of
available funding is insufficient to provide for shipping and
travel expenses, and therefore encourages local hire.
Ms. Gillespie stated however, that both in-state and out-of-state
artists are solicited for large projects, and she opined that this
process serves "to raise the bar" regarding quality of work. In
addition, she noted that Alaskan artists benefit from being able to
respond to solicitations from other state's Percent for Art
Programs. Continuing, she noted that the Council would support the
Legislature's intend in this regard.
Ms. Gillespie acknowledged that while funding is required to help
maintain existing art, facilities owning the artwork should
dedicate funds to maintenance and repair.
Co-Chair Wilken noted that the funds for art maintenance language
is located on page two, lines 1-4 of Section 1 of the Senate
committee substitute, Version "S," that reads as follows.
…Of the total amount that is received for works of art
for a building or facility under this subsection, at least
five percent shall be deposited in the art in public places
fund established under AS 44.27.060 to meet future maintenance
needs of art works in public buildings and facilities.
Ms. Gillespie noted that oftentimes, the balance of money in the
art bank is low, and therefore, she asked that consideration be
given to expanding the use of the "five percent of the one percent"
funds and specifying that maintenance would be one of several
options.
Co-Chair Green asked for further clarification of the Council's
request regarding the maintenance funds.
Co-Chair Wilken surmised that the Council desires the definition of
maintenance to be further clarified.
Ms. Gillespie concurred.
SHALA DOBSON, Retired Anchorage School District Art Teacher and
Artist, testified via teleconference from Anchorage that, as an
artist who participates in a variety of art programs including the
One Percent for Art State program, she has yet to meet anyone who
is unappreciative of the art that is placed in public facilities
such as schools. In addition, she noted that the art provided by
the State program is, in some areas of the State, the only art that
people are exposed to, and as such, she stated, the program is
beneficial. She "commended" the art maintenance component in the
committee substitute; however, she questioned limiting the amount
of the project funding that would be subject to the One Percent for
Art multiplier. She argued that a project's level of art should be
"to scale" with the facility rather than being limited by "a cap."
She also voiced concern that correctional institutions, such as the
Mat-Su Youth Correctional facility, might be exempt from the
program, as she stated that an environment without art is not very
compelling and that art would be important to the people who work
or are confined there.
Co-Chair Green understood that the Mat-Su Youth Correctional
Facility is a component of the Department of Health and Social
Services and would therefore not be exempt.
JOCELYN YOUNG, Coordinator, One Percent for Art Program,
Municipality of Anchorage, testified via teleconference from
Anchorage and informed the Committee that the Municipality of
Anchorage's art program is based on State law. Furthermore, she
noted, it is important to recognize that the original law was
intended to be self-regulating in that it would provide money for
art as needed. Continuing, she expressed that rather than
decreasing the amount of funding dedicated for art, consideration
should be given to the fact that inflation and other factors have
increased the price of art. She exampled that art banners in the
Sullivan Arena that were purchased in the 1980s for approximately
$14,000, would cost in excess of $40,000 to replace today. She
stated that while supportive of most of the language in the Version
"S" committee substitute, she is opposed to limiting the amount of
money for art as it would negatively affect public use facilities.
Ms. Young informed the Committee that during a typical construction
project, approximately 15 percent of a project's total is allocated
to a contingency fund. She noted therefore, that specifying that
one percent be set aside for art or even reducing the amount to
less than one percent would have minimal impact on a project's
overall construction or operational budget.
Senator Hoffman understood that the legislation would reduce rather
than limit or "cap" the amount mandated for art.
Co-Chair Wilken expressed that changing the amount being allotted
from one percent to one half of one percent might be interpreted as
"a cap."
Senator Hoffman clarified therefore, that the legislation would not
limit the amount of art money but would rather reduce the amount.
Ms. Young agreed that she is referring to the reduction.
BARBARA SHORT, Coordinator, One Percent for Art Program, Fairbanks
North Star Borough School District, testified via teleconference
from Fairbanks and characterized the art program as being
beneficial to the educational system as well as to the economy. She
urged the Committee to increase the proposed maximum one-percent
for art level beyond $20 million in order to adequately supply
sufficient art to large public use facilities such as courthouses
and other places where the public might congregate. She noted that
while the proposed $20 million limitation would save the State some
money, "the impact on the building and on the users and on the art
community in Alaska would not make that amount of savings
worthwhile." She opined that while the money could be used to
purchase things such as computers, the benefits derived from those
alternatives would not equate to the benefits the public receives
from art. Continuing, she asked that consideration be given to
allocating the proposed five percent of one percent maintenance
funds to the entities buying the art rather than those monies being
allocated to the Alaska State Council on the Arts.
Senator Bunde calculated that a $10 to $15 million-construction
project would reserve $100,000 to $150,000 for art. In an attempt
to better understand the trickle down affect on the economy that
results from commissioning art from local artists, Senator Bunde
inquired as to an artist's typical profit margin.
Ms. Short responded that typically when soliciting art proposals, a
budget must be submitted by a bidding artist, and she stressed that
serious attention is provided to these proposals. She noted that
art materials and art fabrication are expensive. She pointed out
that even though the chosen artist might not be local, local people
benefit from assisting in such things as the installation process
or travel needs. She commented that it is difficult to determine
exact profit percentages, as multiple factors must be taken into
account. Finally, she noted that, "in many cases the artist is so
happy to be working and getting paid for their time, that they take
a fairly low dollar cost per hour fee."
Senator Bunde asked whether expenses might account for 50 percent
of the commission.
Ms. Short estimated that expenses amount to at least 75 percent of
the commission.
Amendment #1: This amendment inserts a new subsection into Section
5(1)(B) of CS HB 215(STA) on page 3, following line 25 as follows.
(iv) buildings for which the primary purpose is to display or
perform art, to train people for the creation or performance
of art.
Senator Dyson explained, but did not offer for adoption, Amendment
#1. He stated that his amendment would expand the facility
definition exemption to include art-related facilities such as "art
museums, places where art is displayed or performed, or for people
training." He asked that consideration be given to providing
adequate funding for these facilities.
Co-Chair Wilken commented that the amendment would be considered.
Representative Stoltze voiced that rather than being an anti-arts
person, he and his family have a history of art involvement and art
appreciation.
Co-Chair Wilken ordered the bill HELD in Committee.
CS FOR SENATE BILL NO. 31(RES)
"An Act relating to a transportation corridor for extension of
the Alaska Railroad to Canada and to extension of the Alaska
Railroad to connect with the North American railroad system."
This was the second hearing for this bill in the Senate Finance
Committee.
Co-Chair Wilken explained that this bill would authorize the Alaska
Railroad Corporation "to delineate a transportation utility
corridor from Eielson Air Force Base" in Fairbanks to the
Alaska/Canada border. He stated that the bill's sponsor, the Alaska
Railroad Corporation, and the Department of Natural Resources would
address issues and questions that were raised during the first
hearing on this bill on May 7, 2003. In addition, he asked the
bill's sponsor, Senator John Cowdery, to share with the Committee a
synopsis of the recent railway conference he had organized. He also
noted that interest in this legislation has "heightened" due to
recent industry interest in furthering a gas pipeline.
SENATOR JOHN COWDERY, sponsor of the bill, informed the Committee
that the recent railway conference was well attended by Alaskan and
Canadian representatives and that the consensus was that a railroad
corridor would be required in both Canada and Alaska. Furthermore,
he added, agreement was that, with the assistance of the
infrastructure provided by the railroad, the gas pipeline would
boost the economics of areas. He observed that building the Panama
Canal today rather than in 1914, would cost $90 billion as compared
to the gas pipeline's projected cost of $2.7 billion.
Senator Cowdery opined that the need to build a gas pipeline is
compounded by the concern that the Panama Canal could be targeted
by terrorists, and, he continued, were that to occur, the
consequences on the transportation needs of the world could be
serious. He noted that there is strong support for the development
of this railroad corridor, and he urged the Committee to further
this bill.
Co-Chair Wilken noted that he had also attended the railroad
conference and that he was struck by the enthusiasm and energy of
those in attendance, particularly the Canadians.
Senator Cowdery concurred, and noted that interest has not waned in
the time since the conference.
SFC 04 # 3, Side B 09:50 AM
Senator Cowdery distributed a booklet compiled by his staff, titled
"Alaska-Canada Rail Connection, Information Profile on a Railroad
and Transportation and Utility Corridor to Connect Alaska with the
Rest of the North American Rail System" [copy on file]. He noted
that in addition to government attendees, private companies such as
the Canadian National (CN) Railroad are "very enthused" by the
prospect of a corridor, and he declared that "the time has come" to
develop the railroad corridor to the Canadian border.
WENDY LINDSKOOG, Director of External Affairs, Alaska Railroad
Corporations, Department of Community and Economic Development,
referred the Committee to the Alaska Railroad handout, dated
January 29, 2004 titled "Questions and Issues Explained, Subject:
SB 31 establishing a transportation corridor to Canada" [copy on
file] which, she noted, explains "in plain language" how the Senate
Resources Committee bill before the Committee addresses issues and
questions that have repeatedly surfaced over the years.
Ms. Lindskoog read the handout's Summary Statement as follows.
Summary statement: Under SB 31(RES), the Department of Natural
Resources (DNR) will not convey all rights. It will reserve
oil and gas mineral rights, the right to get people and
commerce across the railroad, and the right to authorize a gas
pipeline. DNR will have to consult with the Alaska Railroad
Corporation (ARRC) on access issues to ensure applicable
safety standards are met.
Ms. Lindskoog read the handout's first question and answer as
follows.
Gas Pipeline Application: If the Railroad and gas pipeline are
placed in the same corridor, which project is predominant? How
will tariffs and crossing issues be handled?
The gas pipeline project takes first priority. SB 31(RES)
would require ARRC to coordinate with potential gas line
developers to ensure optimal location for a pipeline. DNR will
reserve the right to authorize the gas pipeline. DNR will also
retain all tariffs and lease revenues related to the gas
pipeline. The decision to cross the railroad right-of-way
would be up to DNR but the crossing would have to comply with
federal and other applicable safety standards. The crossing
would have to maintain the integrity of the railroad and the
crossing cost would have to be borne by the pipeline
developers.
Senator Olson asked how a railroad accident in the corridor might
affect the pipeline.
Senator Cowdery clarified that the proposed gas pipeline would be
buried. He noted that safety measures would be implemented;
however, he stated that no 100-percent safety guarantee could be
assured.
Senator Olson asked whether the pipeline would be buried along the
entire route.
Senator Cowdery responded, yes.
Ms. Lindskoog read the second question and answer as follows.
Surface vs. subsurface rights: Would the Railroad receive
subsurface rights to resources under SB 31(RES)?
Under SB 31(RES) ARRC would not receive subsurface rights
other than sand and gravel. ARRC would receive these rights
only to a 200-foot right-of-way within the larger 500-foot
corridor. ARRC would also receive surface rights to additional
rail lands needed to accommodate such needs as maintenance,
yards, transfer facilities, crew housing, etc.
Ms. Lindskoog read the third question and answer as follows.
Easement vs. Fee Simple Title: Why does ARRC need fee simple
title to the land?
ARRC believes fee simple title to the lands it will receive is
necessary for the following reasons:
Safety/Control: Railroad exclusivity enhances safety to
the required federal limits. Control of the land gives
the Railroad the ability to properly establish crossings
to account for safety, to protect interstate commerce,
and to reduce risk. All these factors contribute to
increased transit time.
Revenue: Land revenue has been the key to the success of
the Alaska Railroad. The revenue from real estate allows
the Railroad to augment revenues from operations so the
ARRC can support its operation and maintenance bills
without having to seek state subsidies.
Ms. Lindskoog noted that a Fee Simple Title would allow ARRC to
generate revenue from, for instance, a fiber optic cable being
buried in the 200-foot right-of-way.
Senator Dyson commented that the ARRC has historically received
more revenue from the leasing of its lands than from the revenue
generated from transiting goods. Therefore, he asked whether ARRC
is anticipating utilizing potential revenue from the leasing of
portions of the right-of-way to fund its operations.
Ms. Lindskoog agreed that the Railroad has successfully raised
revenue through the leasing of its lands. Furthermore, she noted
that this operational model has allowed the Railroad to be self-
sufficient as attested by the fact that it has not required State
subsidies. Therefore, she stated that the Railroad would argue that
it should be provided more land than specified in this legislation.
However, she noted that the Railroad has agreed to compromise on
this issue provided that it receive Fee Simple Title to the 200-
foot right-of-way and sufficient land to address operational and
safety issues. She noted however, for the record, that, "the
Railroad would love to see a larger land package go with the bill"
so that the Railroad could generate lease revenues "to help offset
the cost of operating and maintaining the Railroad." She
communicated that $35,000 is required to maintain one mile of rail
per year.
Senator Bunde commented, in regard to the safety and control issue,
that residents in the South Central region of the state are often
ticketed for trespassing on the railroad right-of-way when trying
to access backcountry areas of the State and that, in addition,
numerous moose are killed on the railroad. Continuing, he stated
that the proposed railroad corridor would transit prime bison
hunting land and he asked how this issue would be addressed.
Ms. Lindskoog responded that, while she is unsure of the answer to
the bison question, protecting access for Alaskans is addressed in
the handout.
Senator Bunde reiterated that allowing access to hunting areas
should be considered.
Co-Chair Wilken affirmed.
BOB LOEFFLER, Director, Division of Mining, Land and Water,
Department of Natural Resources, testified via teleconference from
an offnet site to comment that the Fee Simple Title would be
granted to the Railroad once the railroad is built. However, he
assured that issues of economic importance to the State such as the
ability to get across the railroad and the ability to authorize a
gas pipeline would be reserved by the State.
Co-Chair Green asked whether title to this land would be granted to
another entity for free or whether other lease or sale options were
explored with the Railroad. She also asked whether the
Legislature's involvement in the creation of this issue entitles
the Railroad to receive the land for free.
Mr. Loeffler responded that the reason the land is being provided
free to the Railroad is because the expense of constructing "a
railroad like this is going to need all the financial help it gets
in order to be built." He stated that to charge for the land would,
in effect, "put a brake on its eventual construction."
Co-Chair Green echoed sentiments voiced by Senator Bunde that
perhaps the State should consider a Railroad Dividend or some other
form of future benefit from that corridor.
Senator B. Stevens asked whether the construction or gas pipeline
operators would be required to purchase from the Railroad the sand
and gravel that would be included in the subsurface sand and gravel
rights provided to the Railroad.
Mr. Loeffler responded that the Department of Natural Resources
would be able to sell those corridor materials until the time that
the Railroad was built. After that time, he continued, the title
and the rights to sell that sand and gravel would be conveyed to
the Railroad.
Senator B. Stevens commented that the Railroad would have the right
to choose the path of the corridor and would, due to the need to
lay track on sand and gravel, choose the appropriate land.
Mr. Loeffler replied that while the Railroad has the right to
choose the corridor, the Department of Natural Resources must
concur with the route with the best interests of the State and the
"eventual construction" of a gas pipeline in mind. However, he
"fundamentally" agreed with Senator B. Stevens's comment.
Senator Cowdery declared, "that there is not a lot of gravel" in a
200-foot corridor. He determined, therefore, that the source of
gravel for the railroad or other corridor needs would be from
"another source near the right-of-way."
Co-Chair Wilken noted that the Railroad's handout contains other
issues that are self-explanatory.
JEANNETTE JAMES, Former State Representative and Railroad Advisor
to the Governor, testified via teleconference from Fairbanks and
stated that she supports the Administration position on the
Railroad. She additionally noted that Alaska must meet the Canadian
railroad at the border in order to make this issue viable. She also
suggested that public/private partnerships might be the funding
answer to accomplishing this goal. She stated that quick action on
this legislation could take advantage of opportunities that are
currently available.
Senator Olson asked whether the trucking industry has provided
their perspective on this issue.
Co-Chair Wilken replied in the negative.
Co-Chair Wilken ordered the bill HELD in Committee.
ADJOURNMENT
Co-Chair Gary Wilken adjourned the meeting at 10:11 AM
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