Legislature(2001 - 2002)
03/19/2002 09:10 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
March 19, 2002
9:10 AM
TAPES
SFC-02 # 35, Side A
SFC 02 # 35, Side B
SFC 02 # 36, Side A
CALL TO ORDER
Co-Chair Pete Kelly convened the meeting at approximately 9:10 AM.
PRESENT
Senator Dave Donley, Co-Chair
Senator Pete Kelly, Co-Chair
Senator Jerry Ward, Vice Chair
Senator Loren Leman
Senator Lyda Green
Senator Gary Wilken
Senator Lyman Hoffman
Senator Alan Austerman
Also Attending: MIKE MAHER, Director, Administrative Services
Division, Department of Revenue; NANCI A. JONES, Director,
Permanent Fund Dividend Division, Department of Revenue; DANIEL R.
FAUSKE, CEO/Executive Director, Alaska Housing Finance Corporation,
Department of Revenue; LES CAMPBELL, Budget Director, Alaska
Housing Finance Corporation, Department of Revenue; WES WEIR,
Director, Public Housing Division, Alaska Housing Finance
Corporation, Department of Revenue; ROBERT L. BREAN, Director,
Division of Research & Rural Development, Alaska Housing Finance
Corporation; JOHN BITNEY, Legislative Liaison, Alaska Housing
Finance Corporation, Department of Revenue; ROBERT STALNAKER,
Manager, Information Systems, Division of Administrative Services,
Department of Environmental Conservation; NANCY SLAGLE, Director,
Division of Administrative Services, Department of Transportation
and Public Facilities; KURT PARKAN, Deputy Commissioner, Office of
the Commissioner, Department of Transportation and Public
Facilities
Attending via Teleconference: From Anchorage: JOHN MALLONEE, Data
Processing Manager, Child Support Enforcement Division, Department
of Revenue; From Fairbanks: MARTIN OTT, Chief, Planning &
Administrative Services, Northern Region, Department of
Transportation and Public Facilities;
SUMMARY INFORMATION
SB 247-REAPPROPRIATIONS & CAPITAL APPROPRIATIONS
The Committee heard testimony from the Department of Revenue, the
Alaska Housing Finance Corporation, the Department of Environmental
Conservation, and the Department of Transportation and Public
Facilities. No action was taken, and the bill was held in
Committee.
SENATE BILL NO. 247
"An Act making capital appropriations and reappropriations,
and capitalizing funds; making appropriations under art. IX,
sec. 17(c), Constitution of the State of Alaska, from the
constitutional budget reserve fund; and providing for an
effective date."
This was the fifth hearing for this bill in the Senate Finance
Committee.
Department of Revenue
MIKE MAHER, Director, Administrative Services Division, Department
of Revenue, informed the Committee that he would be facilitating
the Department's presentations.
Permanent Fund Dividend Electronic Imaging Server Upgrade
$80,000 PFD Fund
Reference No.: 35813
Project Type: Equipment
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002-06/30/2003
The Dividend Application Imaging System will be upgraded to
facilitate higher productivity, lower "downtime" due to
hardware and software failures, and reduced storage costs.
One-time project
NANCI A. JONES, Director, Permanent Fund Dividend Division,
Department of Revenue, explained that the Division's image server,
which stores the Division's database system, is reaching "the end
of its useful life," and that the installation of a new Microsoft-
Intel system would lower maintenance expenses, provide for future
program expandability, and accommodate Division growth.
Child Support Enforcement Caseload Management System-Phase 2
$1,500,000
$990,000 Fed Crypts
$510,000 GF/Prgm
Reference No.: 35730
Project Type: Information Systems
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002-06/30/2007
This project will eliminate two critical problems within the
child support enforcement computer system (NSTAR). First, it
will remove outdated proprietary software used for
input/output calls. This software does not function correctly
with new upgrades to the mainframe operating software.
Secondly, the rewrite will concentrate on making batch
programs more efficient to allow the nightly batch process to
be completed in the required timeframe.
State Match Required
Phased Project
JOHN MALLONEE, Data Processing Manager, Child Support Enforcement
Division, Department of Revenue, testified via teleconference from
Anchorage to inform the Committee that this request would provide
the funds required to complete a two-year project to replace an
obsolete piece of proprietary software that manifests problems
whenever upgrades are conducted on the mainframe computer. He
explained that this software is responsible for "input and output
calls" to the computer, and that the current software, which the
manufacturer no longer supports, does not communicate properly with
new programs. He continued that, in addition to replacing the
software, the Division must improve the efficiency of the nightly
batch program that generates required monthly, quarterly, and
yearly reports.
Mr. Mallonee furthered that this single computer system stores the
Division's data information base, and when the system does not
function properly, none of the Division's programs are accessible.
He stated that when this occurs, the data inaccessibility creates
hardships for both the staff and the public.
Senator Austerman asked for further information about the final
phase of the project.
Mr. Mallonee explained that the necessary upgrades to the system
should be completed in FY 03, providing that the federal government
does not invoke any delays, as he continued, every phase of the
project requires federal approval.
Senator Hoffman asked whether this upgrade would reduce the
Department's current seven to ten-day response time that is causing
public concern.
Mr. Mallonee asked for further information to ascertain whether
computer processing or workload demands are the cause of the delay
in the response time. He noted that usually data is processed
within one day; therefore, a computer-generated backlog of seven to
ten days is not likely; however, he surmised that the reason for a
delay might be due to the increasing ratio of caseload to
caseworker. He expressed that each caseworker is responsible for
approximately 1,300 cases.
Senator Hoffman restated the concern by asking whether or not
completion of this project would shorten "the wait-time" for
account status inquiries.
Mr. Mallonee responded that this project would ensure that the
computer system would remain operational to provide pertinent data
to the caseworkers. He contended that the delay concern appears to
be a caseload rather than a computer problem.
Mr. Maher interjected that a separate request is being introduced
to increase, by five, the number of Division caseworkers in order
to more efficiently manage the growing number of cases. He informed
the Committee that caseworkers in the states of Washington and
Oregon manage approximately 600 or 700 cases, respectively per
caseworker.
Child Support Enforcement Computer Replacement Project-Phase 3
$195,000
$128,700 Fed Rcpts
$ 66,300 GF/Prgm
Reference No.: 35729
Project Type: Information Systems
Category: General Government
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002-06/30-2007
Intent is to continue the CSED computer replacement project
initiated in FY 00. The agency objective is the ultimate
replacement of 250 antiquated personal computers (pc's). More
than half of all pc's currently in use at CSED have exceeded
their useful lives.
State Match Required
Phased Project
Mr. Mallonee stated that this request would allow approximately 79
outdated computers to be replaced with new ones. He stated that
five nine-year-old laser printers and three communication switches
are also in need of replacement. He noted that, because of their
age, it is not economically feasible to repair these items.
Senator Austerman asked whether this is an on-going equipment
replacement request.
Mr. Mallonee responded that this request is larger than usual
because the Division did not present an equipment replacement
request in FY 02. He estimated that requests in the amount of
$100,000 on a two-year cycle might become standard, because
equipment purchased "at the same time, tends to fail at the same
time." He stated that the Department strives to properly maintain
its equipment is an economic manner; however, he noted that over
time, replacement is the only option. He explained that these
computers link to the mainframe which houses the Department's
report forms and that any required forms are downloaded and printed
on the laser printers. He noted that approximately 65 percent of
the Division's 300 computers have been replaced, and that the
remaining computers must be replaced within the next two years.
Senator Leman asked whether the State's purchasing policy allows
the Division to purchase equipment at a competitive price.
Mr. Mallonee responded that personal computers (pc's) are purchased
through the State contract process at a competitive price. He noted
that, at times, comparable computers could be purchased, on sale,
for approximately 15 percent less; however, he considers the price
the State pays a fair price.
Senator Hoffman commented that this request specifies that the cost
per computer is approximately $2,000, which, he opined, is a high
price.
Mr. Mallonee agreed that less expensive computers are available;
however, he qualified that these pc's are "heavy-duty machines"
with more powerful processors than required for normal home usage.
He stated that the price also includes the required software.
Senator Hoffman asked the type of software required.
Mr. Mallonee responded that the software includes the Windows 98
operating system; Microsoft Office that is used by the majority of
State agencies; and software that enables communication with the
mainframe computer as well as the networking card that enables the
computers to communicate with each other.
Senator Hoffman asserted that the price of the computers is not
driven by the Windows 98 operating system as that software system
is considered to be "fairly old now." He noted that newer operating
systems are available.
Mr. Mallonee concurred that newer operating systems are available;
however, he stated that the Windows 98 program is currently used
throughout the Division, and that the expense to upgrade 300
computer operating systems would exceed the cost of purchasing
these 79 computers.
Alaska Housing Finance Corporation
DANIEL R. FAUSKE, CEO/Executive Director, Alaska Housing Finance
Corporation, Department of Revenue, stated that all the projects
presented in the Alaska Housing Finance Corporation (AHFC) capital
budget are funded by federal US Department of Housing and Urban
Development (HUD) funds or, to a lesser degree, from the United
States Department of Energy, rather than by the State's general
fund. He noted that additional revenue is generated "by AHFC
corporate earnings that are made available as part of the asset
transfer plan" as arranged with the State.
Mr. Fauske explained that the transfer plan was established in 1995
and most recently updated in 1998 with language specifying that,
"the Legislature intends to insure the prudent management of the
Alaska Housing Finance Corporation to protect its excellent debt
rating by the nation's financial community and to preserve it as a
valuable asset of the State." He stated that "to accomplish this
goal, the sum of the withdrawals for the repayment of bonds for
transfer to the general fund and for expenditures on Corporate
funded capital projects should not exceed the Corporation's net
income for the preceding fiscal year. The Alaska Housing Finance
Corporation projects that $103 million will be made available in
each fiscal year." He continued that, "this agreement has been
reaffirmed in the past, and during each session, when the
Legislature has authorized AHFC to issue bonds, and debts for State
capital projects, which additionally includes the tobacco
securization bond, first issued two years ago."
Mr. Fauske expressed that "for FY 03, AHFC and its Board of
Directors have approved a transfer amount of $96.3 million which is
the audited net income figure from last year." He stated that this
is a refection that AHFC "had a good year in the State's housing
market."
Mr. Fauske explained that, "the transfer plan language calls for a
sum not to exceed AHFC net income, but a level of $103 million has
been provided annually as a cash payment to the general fund,
payments on bonds issued by AHFC for State capital projects, and
for other State expenditures."
Mr. Fauske qualified that AHFC's "switch to a net income figure was
based on recent concerns that were expressed in reports by the
Legislative Audit Division, national credit rating agencies," as
well as AHFC auditors and financial analysts.
Mr. Fauske continued that for FY 03, "$51 million of the transfer
plan is obligated as debt service payments on bonds that were
issued by AHFC on behalf of the State for $300 million in State
capital projects that have already been appropriated by the
Legislature." He noted that these projects include: "public school
construction, University of Alaska facilities, ports and harbors,
armories, and many other projects." He specified that the remaining
FY 03 balance of $45,300,000 would provide funding as follows:
$23,298,200 is designated for the AHFC projects being presented in
today's AHFC budget request testimony to the Committee; and
approximately $22 million is designated for other agency projects
including $21,400,000 for the Department of Environmental
Conservation's proposed water and sewer projects.
Mr. Fauske informed the Committee that when determining the "AHFC
project requests as part of the transfer bond amount based on net
income," the Corporation investigated options to minimize the
amount of money being requested for AHFC's FY 03 projects. He noted
that the funding levels for projects such as low-income
weatherization, supplemental housing, and senior housing projects
have been set at the levels authorized in the FY 02 budget;
however, he clarified that the funding levels requested for
homeless assistance grants have been increased from $250,000 to
$500,000 in the Mental Health budget.
Mr. Fauske stressed that the Corporation endeavored to mitigate the
impact of the reduction in the AHFC transfer payment amount, and he
asserted that the proposed AHFC bond project would allow AHFC to
complete its ten-year construction and renovation plan by securing
"both Corporate and federal dollars to provide $55 million in order
to completely finish the entire backlog of AHFC public housing
construction projects." He stated that the alternative would be to
present a list of construction and renovation projects requiring
eight to twelve million dollars of corporate funds. He elaborated
that this request entails combining $4,943,000 in corporate funds
with federal funds to provide the first year's debt service
payment. He contended that, "this would be the ultimate phasing
approach to spread dollars around more for the State while taking
advantage of the current interest rate environment."
LES CAMPBELL, Budget Director, Alaska Housing Finance Corporation,
Department of Revenue, noted that Committee members have been
provided with the Alaska Housing Finance Corporation Executive
Budget Summary "Results-Oriented," Proposed FY2003 Draft Capital
Budget booklet, dated December 15, 2001 [copy on file] which
details the AHFC projects being proposed.
PHD Construction Program
$55,249,800 Bond Proceeds
Reference No.: 36602
Project Type: Renewal and Replacement
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002-06/30/2007
The Public Housing Division (PHD) Construction Program
utilizes federal funds and bond proceeds to complete the
Corporation's 10-year plan to renovate and modernize AHFC's
inventory of public housing units. This new program will
leverage federal funds to replace or renovate scheduled
projects.
Mr. Campbell stated that this bond proposal "bundles together the
remaining public housing construction projects" in the
Corporation's ten-year modernization plan. He noted that the
projects' descriptions and funding histories are included in the
booklet, and he detailed each of the ten projects included in this
bond bill as follow.
Senior & Statewide Renovation & Replacement
Reference #36607
$6,500,000
Mr. Campbell explained that this project would provide improved
building security and accessibility; modifications to accommodate
individuals who are physically challenged; provide for energy
efficiency and mechanical systems upgrades; and provide site and
general physical improvements.
Senator Wilken asked for further information about the
implementation of this $55 million bonding package.
Mr. Campbell explained that this $55 million bond package would
provide the total funding necessary to complete the upgrades and
renovation needs for the ten projects identified in the request.
Senator Wilken asked whether the funding needs of these ten
projects totals $55 million.
Mr. Campbell stated that is correct.
Senator Wilken specified that the sale of these bonds would provide
the funding required for the ten projects.
Mr. Campbell concurred, and he asserted that corporate receipts and
federal funds would fund the bond's debt service.
Senator Wilken asked whether the corporate receipts would be
comprised of the "general fund annual dividend."
Mr. Campbell affirmed that these funds would involve the annual
AHFC dividend.
Senator Austerman asked whether the identified administrative
expense that amounts to 21.7 percent of the total project cost is
within a normal range for this component.
Mr. Campbell responded that AHFC bases its administrative cost
estimates on such things as historical AHFC project management
expenses combined with inspection and transportation expenses.
Senator Austerman noted that additional administrative expenses
would be incurred by the inclusion of the contingency fund element
of $603,452, as specified on page 3-6 of the booklet. He stated
that this inclusion would increase the administrative percentage of
the total project to approximately 23 percent.
Mr. Campbell explained that the contingency element reflects as yet
unidentified projects that are likely, but were indeterminate when
the renovation plan was developed. He stated that the contingency
amount is based on prior projects' histories.
WES WEIR, Director, Public Housing Division, Alaska Housing Finance
Corporation, Department of Revenue, stated that while Senator
Austerman's question is valid, the cost determination method used
by AHFC is "substantially more economical" than methods used by
other State agencies as it allocates a higher percentage rate
toward construction. He furthered that the usual allocation
specified for construction expense is 70 cents of every dollar;
however, AHFC, with its overhead cost limit of 21 and 24 cents of
every dollar, provides 76 to 79 cents of every dollar for
construction.
Mr. Weir expressed that overhead is a "very flexible item" as the
administrative overhead percent of cost incurred by a $15,000
project is significantly higher than that of a million dollar
project. He noted that several small projects are included in this
bond request, and he furthered that the determination method
utilized by the Corporation allows the construction department to
"realize more significant savings" pertaining to the administrative
aspect of a project than other State agencies.
Chugach Manor Renovation
Reference #36608
$5,435,000
Mr. Campbell explained that this 120-unit senior housing facility
is located in Anchorage, and although this project is included in
the bond package funding, this is the third phase of a renovation
plan that includes upgrades to other facilities in the complex. He
stated that the renovation work includes such things as sidewalk
repair; kitchen and bathroom upgrades; carpet and vinyl
replacement; unit entry and interior doors upgrades; electrical
upgrades; ventilation and control upgrades; water heater
replacement; storm drain relocation; and interior painting.
Senator Austerman asked whether each of the ten projects included
in this bond package would have a 21 to 24 percent administrative
overhead cost.
Mr. Weir responded that "it is flexible based on the size of the
project; however, that would be a safe assumption."
Glacier View Renovation
Reference #36609
$1,860,000
Mr. Campbell stated that improvements to this 30-unit senior
housing complex in Seward would complete interior renovations;
improve building and apartment accessibility; improve resident
living environments; reduce long-term operating costs; renovate
bathrooms and kitchens; install new energy-saving lighting
fixtures, and upgrade emergency components to improve fire safety
protection.
Sea View Terrace Renovation
Reference No.: 36610
$3,508,000
Mr. Campbell stated that this 49-unit senior housing facility in
Ketchikan would receive improvements similar to those of the
Glacier View Renovation project. He stated that funding requests
for this project have previously been deferred; however, the
building, while still usable, would not reach its 30-year life
without these repairs.
Senator Hoffman asked the cost of replacing rather than renovating
the facility.
Mr. Weir responded that the site evaluation includes an analysis on
the cost of repair verses the cost of replacement based on a 30-
year timeframe. He stated that he would provide this information to
the Committee.
Senator Hoffman calculated the cost to renovate each of the units
to be $72,000. He suggested that the Committee consider whether it
might be "more economical to construct new" units.
Mr. Weir clarified that the replacement cost comparison pertaining
to this project is included in the report and is estimated to be
approximately $7 million. He explained that public construction in
areas such as Ketchikan averages $200 a square foot based on the
fact that the State "is required to use Davis-Bacon wages, which
could be significantly higher in other communities." He continued
that additionally, because AHFC is a landlord administering the HUD
program, AHFC is required to fund relocation costs for tenants as
well as provide them the opportunity to return to the facility upon
the completion of the renovation.
Senator Leman asked for confirmation that the $3.5 million estimate
for this project includes relocation costs.
Mr. Weir affirmed it does.
Senator Leman voiced that the approximate $70,000 per unit
renovation expense seems high even with the inclusion of the
relocation factor.
Mr. Weir affirmed that the tenant relocation costs are included in
the $70,000 per unit renovation costs.
Mr. Fauske clarified that the renovation verses replacement costs
comparison information is included on page 3-10 of the report.
Mr. Campbell informed the Committee that professional assessments
are conducted on each of the projects, and that the Corporation
could provide this information for Committee review.
Pacific Terrace Replacement
Reference No.: 36611
$11,426,000
Mr. Campbell stated that this project involves a 40-unit family-
housing complex in Kodiak of which 37 units would be demolished and
replaced and three existing single-family homes would be renovated.
In addition, he continued, a multipurpose building which would
include an office and a maintenance area would be constructed.
Senator Austerman affirmed that these facilities are old and are in
need of replacement. He expressed surprise that extensive exterior
work has been conducted on such things as sidewalks, fuel tanks,
and parking lots during the previous two years as this work could
be damaged during the project demolition and reconstruction.
Mr. Weir responded that during the previous four years,
approximately $1.1 million has been spent at this complex to remove
leaking underground storage tanks and perform remedial site work.
He stated that AHFC determined this expense to be necessary
regardless of whether replacement or renovation monies became
available because of environmental and safety issues, and to keep
the facilities operational until replacement funds became
available.
Senator Hoffman asked the funding required to replace the 37-family
units.
Mr. Weir responded that the work would be broken into two phases,
each totaling approximately $5.7 million, and that the multi-
purpose building would cost approximately $500,000.
Senator Hoffman calculated that each family unit would cost
approximately $250,000 based on approximately $11 million being
designated for the housing units reconstruction.
Mr. Weir voiced that Senator Hoffman's estimate of cost is correct.
He explained that this "very high number" is the result of the
asbestos removal abatement effort that would be conducted during
the demolition and the need to address the complex's significant
drainage problem caused by the complex being built on bedrock. He
furthered that the drainage additionally must be redirected away
from other housing in the area.
Mr. Fauske informed the Committee that the AHFC Board of Directors
discussed the high cost of replacing these units during the project
review. He stated that alternate building options were
investigated; however, federal HUD restrictions limited the
options.
Mr. Weir explained that, although AHFC technically owns the
complex, federal HUD requirements associated with this site require
specific disposal permission from HUD. In addition, he noted that
HUD rental assistance is specific to this particular site.
Co-Chair Kelly asked the cost projected for the asbestos abatement.
Mr. Weir commented that the cost of the asbestos abatement is
currently unknown as the severity of the situation could not be
determined until the work begins. He furthered that no
determination has been made as to whether the asbestos could be
disposed of at the Kodiak landfill or must be shipped to Seattle
for disposal, as the quantity of the asbestos is the determining
factor.
Co-Chair Kelly asked whether the asbestos abatement is required
because the asbestos contained in this complex is "pliable" and
presents a health hazard or whether the nature of the project
mandates it.
Mr. Weir replied that the asbestos in the "units is non-pliable"
which means that it is contained within tiling, joint compounds,
and the ceiling and does not currently present a health hazard to
the occupants; however, he continued, when the buildings are
"disassembled," the asbestos has the potential to become pliable
and must be properly handled. He continued that if simple repairs
or renovations were involved, then covering the floor with vinyl
would suffice; however, since this is a major construction project,
the State is obligated to remove the material.
Co-Chair Kelly asked whether the issue of asbestos abatement is
being re-addressed at the federal level, as he understands that the
danger invoked by asbestos has been over-exaggerated. He continued
that, while certain kinds of asbestos are known to be health
hazards, most of the asbestos materials used in the United States
do not pose a hazard; yet, he asserted, millions of dollars are
being spent to contain the material. He stated that a multitude of
housing projects in the Unites States are required to spend money
to contain asbestos that is not a health hazard.
Mr. Fauske replied that, as a member of the federal Millennium
Housing Commission, he has traveled extensively throughout the
country conducting seminars on such things as asbestos and lead-
based paint, which are recognized as health hazards. He continued
that the Commission is currently compiling a report to present
recommendations to the federal government on these issues. He
confirmed that current regulations regarding these issues incur
additional expenses to the cost of renovation, especially when
preserving existing affordable housing. He stated that this is a
nationwide concern as it is very difficult to provide affordable
housing when this expense is incurred. He noted that members of
Congress are also concerned about the high costs of housing
construction, and the question is how to provide affordable housing
when it is so expensive to construct or renovate. He stated that
the Commission would recommend that better solutions be "arrived at
to help with this problem across the country." He assured the
Committee that this would be addressed at the federal level.
SFC 02 # 35, Side B 09:58 AM
Co-Chair Kelly, noting the time, asked Committee members to refrain
from asking questions about the projects being presented until the
end of the Corporation's testimony. He stated that further
questions about administrative costs could be addressed directly to
AHFC after the meeting.
Capital Fund Program (CFP)
Reference No.: 36612
$14,251,800
Mr. Campbell stated that this program provides federal funds to
renovate and modernize public housing, and that this funding
specially addresses housing units in Sitka and Juneau. He stated
that this project utilizes federal money and exemplifies how
federal receipts would be used toward the debt service of this bond
package.
Ptarmigan Park Renovation
Reference No.: 36613
$1,784,000
Mr. Campbell stated that the purpose of this project is to renovate
17 family units in Anchorage and extend their useful life for an
additional 30 years. He stated that the renovation includes
electrical and mechanical upgrades, life safety upgrades, and
general site improvements including Americans with Disabilities Act
(ADA) requirements.
Sunset View Renovation
Reference No.: 36614
$1,935,000
Mr. Campbell stated that the purpose of this program is to renovate
30 senior units and extend their useful life for another 30 years.
He stated that the renovations include such things as upgrading
exterior lighting, boiler replacement, ADA compliancy, life/safety
upgrades, and increased energy efficiency.
Alpine Terrace Renovation
Reference No.: 36615
$6,450,000
Mr. Campbell stated that the purpose of this program is to renovate
48 family units in Anchorage, and extend their useful life for
another 30 years. He stated that the renovations include replacing
siding and windows, interior upgrades, electrical, plumbing, and
mechanical upgrades, and general site improvements.
Anchorage Family Investment Center Renovation
Reference No.: 36616
$2,100,000
Mr. Campbell stated that the purpose of this Anchorage office
project is to correct code deficiencies, replace worn out
components and extend the useful life of the building. He stated
that these funds would bring the building "up to code and extend
its useful life."
Mr. Campbell stated that this is the last project included in the
bond package proposal.
Co-Chair Kelly asked the ratio of federal funds to AHFC funds being
leveraged for the bond.
Mr. Campbell responded that this information is detailed in the
"Six Year Plan" chart located on page 3-51 of the booklet. He
stated that line 22 identifies the federal and Corporate debt
service over the life of the bond.
Mr. Campbell elaborated that during in FY 03, Corporate and federal
receipts would be $4.9 million and $3 million, respectfully. He
continued that from FY 04 through FY 08, Corporate receipts and
federal receipts would be approximately $8,784,000 and $2.4
million, respectfully.
Senator Austerman asked the assessed value and the use of the
Anchorage Family Investment Center, Reference No. 36616.
Mr. Campbell stated that this building was purchased in 1988 with
HUD program receipts, and its assessed value in 1992 was $1.4
million.
Mr. Fauske furthered that this commercial building, which is
located at the corner of Arctic and International Airport Roads,
currently houses AHFC office, warehousing, and maintenance staff.
He stated that the offices of the Family Investment Center are also
located in the building.
Senator Hoffman commented on the worthiness of the AHFC projects.
He asked whether the Corporation has information "on the un-met
housing needs" of the State, and whether these renovation projects
are prioritized to address those needs.
Mr. Fauske stated that the most recent housing needs' study was
conducted in 1992, and it reflected a needs assessment amounting to
between $3.5 and $5 billion, primarily in rural areas rather than
urban areas, across the State. He stated that the projects in the
proposed bond package specifically address properties owned by the
State. He informed the Committee that the fastest growing segment
of Alaska's population is senior citizens, and he contended that
AHFC aggressively attempts to "stay ahead" of this statewide trend
by supplying senior housing, from Barrow to Ketchikan; however, he
stated, AHFC has estimates rather than exact population numbers.
Senator Hoffman asked whether the AHFC Board determines this
bonding proposition to be the best use of $55 million.
Mr. Fauske replied that Corporation staff presented these projects
to the AHFC Board based on the position that these State-owned
facilities require maintenance funding. He stressed that due to
"the friendliest interest rate environment" in years, staff
proposed that the Board leverage federal dollars combined with
corporate receipts to sell bonds and complete the ten-year plan "at
a cost that would be significantly less" than if the projects "were
staged" over time. He stated that this is considered to be the best
use of funds.
Mr. Fauske informed the Committee that the Corporation's annual
debt service requests historically range between $10 to $14
million, and he declared, the annual debt service payments for this
ten-project bond package would be less than the historical debt
service expenditures. He encouraged the Committee to consider the
positive impact this single bond package would have on the
Corporation's annual debt service payment, and he explained that
extending the duration of the bonds through FY 08 allows the annual
debt service amount to be reduced; thereby allowing AHFC to provide
funds to the State for needed water and sewer projects. He
reiterated that this bond proposal is considered to be an effective
use of funds.
Senator Austerman asked for further information regarding
administrative costs, specifically whether existing staff could
administer the program or whether an expanded staff would be
required. He restated the opinion that administrative costs ranging
from 20 to 24 percent of project's total cost are high.
Mr. Weir responded that approval of this bond request would allow
the Corporation to develop long-term staffing needs as opposed to
making staffing decisions on a short-term annual basis. He
clarified that hiring additional staff is not anticipated, as the
current fifteen project administrators in the construction
division, assisted by maintenance employees, would be able to
manage the projects. He asserted that management and project design
requirements account for a significant percentage of a budget.
Senator Hoffman asked the expected completion date of these
projects.
Mr. Weir stated that the completion date for the ten projects is
anticipated to be 2007 as, he qualified, projects would be phased
over time in order to not overburden existing staff or remove a
substantial amount of public housing offline at the same time.
Mr. Campbell stressed that by 2007, all the upgrades and
renovations required for State housing facilities would be
completed, and only on-going maintenance needs would be required at
that time.
Supplemental Housing Development Program
$4,500,000 Corporate Receipts
Reference No.: 6323
Project Type: Construction
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002-06/30/2007
The purpose of the program is to supplement federal housing
funds provided to Regional Housing Authorities to ensure safe,
decent, affordable housing throughout Alaska.
Mr. Campbell noted that this project would provide for the
construction of 400 affordable homes in twenty different urban and
rural communities. He stated that on-site water and sewer
facilities, road access, energy efficient design features, and
electrical distribution systems would be included. He stated that
these funds would be provided to the Regional Housing Authority to
supplement up to 20-percent of development costs. He commented that
this funding would not be applied to project administrative costs.
Mr. Fauske informed the Committee that AHFC has recently developed
a relationship with the USDA Rural Development Council and the
Denali Commission to better coordinate projects involving State,
federal, and local agencies in an attempt to leverage the maximum
level of funding available through each entity. He continued that
this effort involves the coordination of such things as timing a
project to economize efforts. He stated that a joint presentation
from these entities would be forthcoming.
Mr. Campbell stated that this funding request is at the same level
as the FY 02 authorization; however, he shared with the Committee
that the participating Regional Housing Authorities have supplied
AHFC with a list of needs exceeding $11 million.
Low-Income Weatherization Program
$5,800,000
$1,800,000 Federal Receipts
$4,000.000 Corporate Receipts
Reference No.: 6332
Project Type: Renovation and Remodeling
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002-06/30/2007
The purpose of the program is to provide cost effective energy
improvements to homes of low-income families.
Mr. Campbell stated that this funding would provide for
improvements in resident health and safety as well as improving
durability and longevity of housing by replacing such things as 500
unsafe heating systems and installing carbon monoxide and smoke
detectors.
Mr. Campbell stated that this request is an increase of $1 million
over the FY 02 authorization.
Senator Austerman asked whether AHFC is able to track the
effectiveness of the energy efficiency improvements.
ROBERT L. BREAN, Director, Division of Research & Rural
Development, Alaska Housing Finance Corporation, responded that the
Division, which oversees the low-income weatherization program
monitors some energy saving programs; however, he noted, that each
house is different and it is difficult to apply a single standard.
He continued that the best gauge of success is to compare the
amount of fuel purchased from one year to the next. He stated that
in most cases, the weatherization improvement investment does not
usually exceed $1,000; therefore the savings "payback on this small
investment is fairly considerable" in terms of the following year's
fuel bill savings.
Senator Wilken asked whether the federal money identified for this
request requires a State match.
Mr. Brean answered that no match is required, but rather, the
federal money is part of an annual weatherization improvement
allocation that does specify a maximum monetary limit per unit. He
continued that because of the federal limit, Corporation money is
frequently required to complete a unit's weatherization needs.
Senator Wilken stated that over a six-year time period, this
request would equal approximately $35 million; however, the program
description specifies the need for $5.4 million. He asked the
Division to revisit the numbers in the description.
Senior Citizen's Housing Development Fund (SCHDF)
$1,975,000 Corporate Receipts
Reference No.: 6334
Project Type: Transitional
Category: Housing/Social Service
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
The purpose of the program is to provide funds for the
development of senior citizen housing.
Mr. Campbell commented that the projected outcome of this program
would include such things as the purchase of building sites and
building materials, site preparation, and rehabilitation and/or
construction of housing.
Mr. Fauske interjected that the housing needs assessment study,
which was referred to in earlier testimony, is located on page 3-21
of the report. He stated that the 1996 study specified the need for
an additional 1,000 units of senior housing with a forecast of the
need for an additional 3,300 units by the year 2010.
Senior and Statewide Deferred Maintenance and Renovation
$500,000 Federal Receipts
Reference No.: 6339
Project Type: Deferred Maintenance
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2001 - 06/30/2007
The purpose of this project is to reduce deferred maintenance
and address small renovation projects, in accordance with
AHFC's 10-year plan, at several facilities utilized by senior
citizens and low-income families.
Mr. Campbell stated that this funding request differs from the
projects presented in the bond package because it is entirely
funded by federal receipts. He stated that this project would
provide funds for building security, accessibility modifications,
energy efficiency upgrades, mechanical system upgrades, site
improvements, and general physical upgrades that would supplement
the ten-year plan projects.
RECESS 10:25 AM / 4:14 PM
HUD Federal HOME Grant Program
$3,909,000
$3,159,000 Federal Receipts
$ 750,000 Corporate Receipts
Reference No.: 6347
Project Type: Housing/Social Services
Category: Renewal and Replacement
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/02/2002 - 06/30/2007
The purpose of the program is to expand the supply of
affordable, low- and moderate-income housing and to strengthen
the ability of the State to design and implement strategies to
achieve an adequate supply of safe, energy-efficient, and
affordable housing.
Mr. Campbell read from the summary report that the projected
outcomes of the project include: developing "affordable rental
housing by funding the development gap; preserving low-income homes
through moderate rehabilitation; and achieving home ownership for
lower-income families by providing down payments and closing cost
assistance."
Mr. Campbell stated that this statewide program is overseen by
AHFC, and he noted that the Municipality of Anchorage's home
program is not included in this project.
Pacific Terrace - Phase I
$500,000 Federal Receipts
Reference No.: 35784
Project Type: Construction
Category: Housing/Social Services
Location: Kodiak
Election District: Kodiak
Estimated Project Dates: 07/01/2002 - 06/30/2007
The purpose of the program is to provide funds for the
replacement of 40 units of family housing in Kodiak.
Mr. Campbell remarked that this two-year federal receipt project to
similar to projects included in the bond package; however, he noted
that the funding consists exclusively of federal funds resulting
from the sale of other units.
HUD Capital Fund Program (formerly CGP)
$500,000 Federal Receipts
Reference No.: 6342
Project Type: Renewal and Replacement
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
The purpose of this program is to renovate and modernize
public housing units.
Mr. Campbell stated that these funds would support projects similar
to those in the bond package; however, these funds consist of
specific federal funds.
Federal and Other Competitive Grants
$4,250,000
$1,250,000 Corporate Receipts
$3,000,000 Federal Receipts
Reference No.: 6348
Project Type: Health and Safety
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
The purpose of this program is to allow AHFC to apply for HUD,
other federal agency, and private foundation grants that
target the housing needs, and supportive services, of low-
income and special needs groups; such as senior citizens, the
mentally, physically, or developmentally disabled or the
homeless. AHFC will also apply for energy related grants as
they relate to housing. When required, AHFC will provide the
needed matching funds. Some of the funds received will be
passed through to local non-profit sub-grantee organizations
that deliver housing and/or services.
Mr. Campbell stated that this project would provide funds for HUD
supportive housing as well as Housing Opportunities for Persons
with AIDS, USDA Housing Preservation Grant Programs, and the grant
match program. He noted that this funding level is consistent with
the previous year's funding.
Competitive Grants for Public Housing
$1,000,000
$250,000 Corporate Receipts
$750,000 Federal Receipts
Reference No.: 6350
Project Type: Health and Safety
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
The purpose of this program is to allow AHFC to apply for HUD,
other federal agency, and private foundation grants that
target the housing needs of low-income and special needs
groups: such as senior citizens, the mentally ill, disabled,
or the homeless who are eligible for public and/or assisted
housing. AHFC will also apply for grants to prevent crime and
substance abuse in public housing and assist public housing
families attain economic self-sufficiency. When required, AHFC
will provide the needed match.
Mr. Campbell stated that this project would provide funds for
public housing needs such as a senior services coordinator and a
drug elimination program. He stated that the level of this request
matches the FY 02 authorization.
Energy Efficiency Monitoring Research
$300,000 Corporate Receipts
Reference No.: 6351
Project Type: Health and Safety
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/02/2002 - 06/30/2007
The purpose of this project is to conduct research, analysis,
information dissemination and interchange among members of the
industry, as well as, between the industry and the public.
Mr. Campbell stated that this funding, requested at the FY 02
authorization level, would provide for such things as energy
efficient designs for homes throughout a diverse geographic area to
provide for occupant health, comfort and dwelling durability.
State Energy Program (SEP) Special Projects
$180,000
$ 30,000 Corporate Receipts
$150,000 Federal Receipts
Reference No.: 32526
Project Type: Health and Safety
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/02/2002 - 06/30/2007
The purpose of this program is to allow the State to
participate in special project grants offered by the Federal
Department of Energy to promote energy related technologies
and research.
Mr. Campbell read that the projected outcome of this project
includes providing advancements in building technology as well as
codes and standards, wind and power technology, renewable energy
for remote areas, and/or transportation technology. He stated this
request is at the same level as the FY 02 authorization.
Central Terrace/Fairmount Renovation
$750,000 Federal Receipts
Reference No.: 6345
Project Type: Renovation and Remodeling
Category: Housing/Social Services
Location: Anchorage
Election District: Anchorage Areawide
Estimated Project Dates: 07/01/2002 - 06/30/2007
The purpose of this program is to renovate 19 single-family
houses and sell them to low-income homebuyers.
Mr. Campbell started that this funding is the result of sales
proceeds and would be used to renovate the remaining units in the
complex. He stated that completion of the project would result in
improved building accessibility, improved energy efficiency,
improved living environment for residents, upgrades to flooring,
appliances, and bathrooms, and a reduction in long term operating
costs.
Housing Loan Program
$4,000,000 Corporate Receipts
Reference No.: 35838
Project Type: Transitional
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2003
The purpose of this program is to increase home ownership for
low-income borrowers by subsidizing interest rates based on
family income and family size.
Mr. Campbell stated that this project would increase the
affordability of housing purchases for low- to moderate-income
families, and would provide funds to "lower the interest rates on
AHFC mortgage programs to attract loan volume and generate net
income."
Mr. Fauske informed the Committee that this new program is the
result of reductions of subsidized interest rate programs in FY 02
due to the use of corporate arbitrage. He furthered that "in the
last four years, AHFC has generated approximately $177 million in
arbitrage throughout the Alaskan economy rather than needing to
rebate those monies back to the federal government." He stated that
in order to maintain and further the opportunity to sustain subsidy
programs for individuals such as senior citizens or the disabled
who would not normally be able to qualify for a normal program,
these programs must be supplanted with some of the arbitrage
monies. He stated that it is the goal of AHFC "to continue to
generate arbitrage whenever possible; however, it is becoming a
limited commodity." He informed the Committee that, "repealing the
restrictions placed on arbitrage is another recommendation that the
federal Millennium Housing Commission would be presenting to
Congress. He noted that the intent of this program is to try and
replace, as well as to try to maintain, interest-rate subsidy
programs to provide for affordability of home ownership, and
completion of projects where subsidies are required because there
is not a conventional market program available to support them.
Senator Wilken asked what financial returns are projected from this
$4 million investment.
JOHN BITNEY, Legislative Liaison, Alaska Housing Finance
Corporation, Department of Revenue stated that this program is
projected "to raise, in the loans captured, about $400 million a
year in additional net income over a 30-year life of the loan."
Senator Wilken asked what annual return on investment this would
generate.
Mr. Bitney responded that it would generate $400,000 annually, or a
ten percent rate of return.
Homeless Assistance Program
$1,000,000
$500,000 Corporate Receipts
$500,000 Mental Health Trust Fund Receipts
Reference No.: 6359
Project Type: Transitional
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
The purpose of this program is to support programs that
prevent homelessness by providing assistance to families in
imminent danger of becoming homeless, or those who are
currently homeless.
Mr. Campbell stated that this request is an increase over prior
year authorizations as the Mental Health Trust Fund has doubled the
amount that would be available for this program and has requested
AHFC "to do the same."
Senator Wilken asked whether this is "a required or suggested
match."
Mr. Campbell replied that it is a suggested match. He referred the
Committee to the list of applicants, listed on page 3-44 of the
report, who have requested and would be receiving the funds.
Vice-Chair Ward asked for confirmation that the funding would be
distributed in the prioritization order presented in the report.
Mr. Campbell concurred.
Beneficiary and Special Needs Housing
$800,000 Corporate Receipts
Reference No.: 6360
Project Type: Health and Safety
Category: Housing/Social Services
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
The purpose of this program is to provide funds for Alaskan
non-profit service providers and housing developers to
increase housing opportunities to Alaska Mental Health Trust
beneficiaries and other special needs populations throughout
Alaska.
Mr. Campbell stated that this funding would result in congregate
and supportive housing for people with such things as mental
illness and physical and/or developmental disabilities, as well as
transitional housing for recovering alcoholics and addicts. He
stated that this funding level has historically been $1.5 million;
however, although the needs are similar, the FY 03 request has been
reduced as a means to stay within the FY 03 AHFC Senate Majority
budget allocation of $96.3 million.
Mr. Campbell stated that this concludes the Corporation's capital
project funding requests. He expressed that two additional projects
are identified in the report, but which would be presented by the
Department of Health and Social Services.
Senator Austerman, referring to the Housing Loan Program request,
Reference No. 35838, asked whether the $400,000 annual income
projected from the program is included in the total AHFC funding
transfers identified on page 3-53 in the Department's FY 03 Budget
Draft.
Mr. Campbell clarified that these funds must be added to the total
"Transfers" amount.
Senator Austerman asked whether any other projects should be added
to the budget totals.
Mr. Campbell replied that other "total" component considerations,
in addition to the transfers and the capital projects, "would be
the debt service for the capital projects" as well as monies for
the Department of Environmental Conservation programs.
Mr. Fauske clarified that while the projects being presented total
an aggregate amount of $55 million; he explained that this is not
the actual dollar amount to be spent on the FY 03 projects. He
referred the Committee to the debt service schedule on page 3-51.
Senator Austerman asked for further information regarding the $14
million in AHFC dividends to be expended on projects.
Mr. Campbell clarified that this amount is the total for all non-
construction projects.
Senator Austerman asked the actual total amount of AHFC dividends
proposed to be expended in FY 03.
Mr. Campbell responded that the total dividend to be expended is
$55.2 million with a debt service on that amount of $4.9 million,
plus $3 million of federal receipts.
Senator Austerman asked for further clarification, as the
understanding is that bonds would be sold to generate the $55
million.
Mr. Campbell concurred.
Senator Austerman asked, excluding the bond package, the total
amount of AHFC dividends that would be required to fund the
proposed projects.
Mr. Campbell stated that with the inclusion of the $4 million
identified for the Housing Loan Program and the Mental Health Bill
components, the total AHFC dividends required for projects would
total $18,955,000, as identified on page 3-51.
Mr. Bitney furthered that the bond's debt service of $4,943,000
must be added to this amount; therefore, the total AHFC dividend
funding being required in FY 03 would be approximately $23 million.
Department of Environmental Conservation
ROBERT STALNAKER, Manager, Information Systems, Division of
Administrative Services, Department of Environmental Conservation,
stated that the Department's mission is to protect human health and
the environment and, he continued, the projects are prioritized
accordingly.
Village Safe Water Feasibility Studies
$3,319,100
$ 830,300 AHFC Div
$2,488,800 Fed Rcpts
Reference No.: 33821
Project Type: Planning
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
Grants to communities for preparing engineering feasibility
studies. The studies identify designs and operating costs for
sanitation facilities that are appropriate for the community.
On-going project
State Match Required
Village Safe Water Project Administration
$2,007,300
$ 501,800 AHFC Div
$1,505,500 Fed Rcpts
Reference No.: 33820
Project Type: Planning
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
Village Safe Water project administration is the operating
cost of delivering Village Safe Water services to communities.
These funds pay for Village Safe Water engineers and other
program staff, as well as associated travel, contracts,
supplies, and equipment.
On-going project
State Match Required
Village Safe Water Projects
$64,811,700
$16,203,800 AHFC Div
$48,607,900 Fed Rcpts
Reference No.: 33822
Project Type: Construction
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
Grants to communities for designing and constructing water,
sewer, and solid waste facilities
On-going project
State Match Required
Mr. Stalnaker explained that these three projects would jointly
administer a program to provide grants to communities for design
and construction of water, wastewater, and solid waste facilities
in addition to providing for program administration costs.
SFC 02 # 36, Side A 04:36 PM
Mr. Stalnaker continued that the federal funding component in each
of these projects requires a State match. He stated that
$17,535,900 of the total $70,138,100 request amount is the State
matching portion consisting of Alaska Housing Finance Corporation
funds.
Mr. Stalnaker explained that Project Reference No. 33824 addresses
the feasibility studies' portion of the program; Project Reference
No. 33822 addresses the construction portion of the program; and
Project Reference No. 33820 addresses the administrative costs of
the program.
Municipal Water, Sewer and Solid Waste Matching Grant Projects
$23,921,900
$3,865,900 AHFC Div
$8,517,800 Fed Rcpts
$2,839,700 G/F Match
$8,698,500 Gen Fund
Reference No.: 33824
Project Type: Construction
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
Grants to larger communities for municipal water, sewer, and
solid waste planning, design, and construction projects.
Grants require a local match of 15% - 50% of project costs.
On-Going Project
State Match Required
Mr. Stalnaker stated that this is an on-going program through which
the State provides financial assistance to large incorporated
communities to address water, sewer, and solid waste needs.
Statewide Municipal Solid Waste Regionalization Plan
$150,000 General Fund
Reference No.: 35800
Project Type: Planning
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
This contractual effort would build upon the 1999 study by the
Alaska chapter of the Solid Waste Association of North America
to look specifically at areas where regional municipal solid
waste landfills could be constructed, or an existing landfill
expanded to serve multiple communities. Regional landfills
would have the economy of scale to support required
maintenance and operation cost.
One-Time Project
Mr. Stalnaker stated that this new request would "provide for an
analysis and development of a plan to identify potential areas for
regional municipal solid waste landfill facilities." He informed
the Committee that, currently, 174 of the existing 243 municipal
landfill facilities serve small communities, and of that number,
only 21 percent are permitted. He stated that the remaining
facilities are "dump sites." He continued that this study would
provide information to locate and develop suitable locations to
serve as regional landfill sites, whose operations "could be better
controlled and permitted."
Statewide Contaminated Sites Cleanup
$5,000,000 Oil/Haz Fd
Reference No.: 33826
Project Type: Health and Safety
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
This project provides funding for assessment and cleanup of
contamination at State-owned facilities and at other sites
where the responsible party is unknown or has refused to take
appropriate action. The work will include site assessment,
development of corrective action plans, monitoring of cleanup,
and closure of sites which are most threatening to public
health and the environment. Cleanup work will be conducted by
private specialists under contract to the department and all
recoverable costs will be sought from non-state agency
responsible parties, as required by statute.
On-Going Project
Mr. Stalnaker stated that Response Fund funds support this on-going
project that focuses on the identification and cleanup of statewide
contaminated oil and hazardous substance sites.
Spill Prevention - Best Available Technology Analysis
$250,000 Oil/Haz Fd
Reference No.: 35723
Project Type: Health and Safety
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2004
This project provides funding for a review and appraisal by
the department of oil spill prevention and response
technologies applied worldwide to ensure that proven new
technologies are considered for use by regulated operators in
Alaska. The department's review and appraisal of emerging
technologies, such as well control and enhanced fast-water
containment boom, will include appropriate studies, surveys
and analyses, and the sponsorship of a technology conference
to provide the opportunity for interested parties to present
data on these technologies. The department will issue its
findings and allow interested parties to submit comments prior
to adopting new technologies under 18 AAC 75.447.
One-Time Project
Mr. Stalnaker noted that this project would assist industries by
determining "the best available oil spill prevention and response
technology, suited for Alaska, and to prepare a report of the
findings."
Corrosion Monitoring and Control - Best Management Practices
$200,000 Oil/Haz Fd
Reference No.: 35822
Project Type: Health and Safety
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
The project provides funding for a technical review of
corrosion monitoring and control technologies specific to
Alaska's industrial operations, and will result in the
development of a manual on the subject for use by the
regulated community and other interested stakeholders. Due to
the aging of the oil industry infrastructure in Alaska,
corrosion-related failures are becoming a more common cause of
spills. The best opportunity to mitigate the effects of oil
spills on public health and the environment is through an
aggressive oil spill prevention program. Corrosion monitoring,
corrosion control, and leak-detection technologies are
critical parts of such a program.
One-Time Project
Mr. Stalnaker stated that this project would supply a technical
review of corrosion-control monitoring for the oil industry and
create a manual for spill control response methods.
Petroleum Storage Tank Spill Prevention Standards Review
$50,000 Oil/Haz Fd
Reference No.: 35821
Project Type: Health and Safety
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 -06/30/2007
This project provides funding for a technical review and
determination of the applicability of the American Petroleum
Institute (API) standards for oil storage tank inspection and
new tank construction to Alaska conditions. Other
jurisdictions have determined that some aspects of these
industry standards, such as the use of cathodic protection and
linings, require modifications or are not applicable to local
conditions. A review of the API literature is necessary to
ensure that Alaska regulations reference the correct industry
standards, enhancing the prevention of oil storage tank
spills.
One-Time Project
Mr. Stalnaker commented that this project would provide for a
technical review of the most recent industry standards regarding
petroleum storage tank construction, inspection, and spill
prevention. He noted that this review would be helpful to the
industry by up-dating standards that are applicable to the industry
and to the weather conditions in Alaska.
Fine Particulate Monitoring
$375,000 Fed Rcpts
Reference No.: 33827
Project Type: Health and Safety
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2004
Fine particulate matter is a by product of combustion and has
been linked to respiratory ailments and various cancers. This
federally mandated project provides installation and operation
of fine particulate monitoring equipment throughout the state
to evaluate the risk to public health in Alaska.
On-Going Project
Mr. Stalnaker stated that this federally mandated program would
provide for the receipt and expenditure of federal funds for the
installation and operation of fine particulate monitoring equipment
throughout the State. He stated that this project works in
conjunction with other federal agencies to determine whether the
level of fine particulates in monitored areas correlates with
health issues specific to the area.
Senator Leman asked whether any results of this on-going monitoring
effort have been published.
Mr. Stalnaker responded that if this information is available, it
would be provided.
Language Section: Alaska Drinking Water Fund
$9,663,000
$1,010,500 DWF Bond
$8,052,500 Fed Rcpts
$ 600,000 G/F Match
Reference No.: 35266
Project Type: Health and Safety
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
Alaska Drinking Water Fund capitalization
On-Going Project
State Match Required
Mr. Stalnaker stated that this is a request to capitalize the
Alaska Drinking Water Fund.
Language Section: Alaska Clean Water Fund
$9,720,000
$1,620,000 CWF Bond
$8,100,000 Fed Rcpts
Reference No.: 35265
Project Type: Health and Safety
Category: Health/Safety
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002-06/30/2007
Alaska Clean Water Fund capitalization
On-Going Project
State Match Required
Mr. Stalnaker stated that this is a request to capitalize the
Alaska Clean Water Fund.
Department of Transportation and Public Facilities
Alaska Marine Highway System - Vessel Overhaul and
Rehabilitation
$5,500,000 General Fund
Reference No.: 30624
Project Type: Renewal and Replacement
Category: Transportation
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 12/31/2003
Annual maintenance and overhaul on vessels and at terminals,
particularly component or system failures which will impact
service in the short term.
On-going project
NANCY SLAGLE, Director, Division of Administrative Service,
Department of Transportation and Public Facilities, stated that
this annual request would provide funds for the required overhaul
and maintenance work on the nine vessels comprising the Alaska
Marine Highway System fleet. She noted that, as the vessels age,
the maintenance needs increase, and she informed the Committee that
the endeavor requires a minimum of six-weeks per vessel on an
annual or every-other-year basis. She stated that the work includes
such things as painting of decks and hulls, replacement of worn
parts, and engine overhauls and dismantlement for Coast Guard
inspection and re-certification.
Ms. Slagle furthered that this request would provide funds to
perform annual maintenance on twenty terminal buildings. She
detailed that the proposed upgrades pertain to such things as
replacement of freshwater lines, heating systems, and berth repair,
and measures to offset corrosion of underwater equipment.
Ms. Slagle continued that funding would also address safety issues
onboard the ships such as non-skid protection on walkways, safety
handrails, and video cameras being placed on car-decks to ensure
that the vessel's doors are closed. She remarked that the request
would additionally provide for implementation of a computer program
to track and schedule vessel maintenance.
Senator Leman asked whether the majority of the work would be
conducted at either the Ketchikan or Seward shipyards.
Ms. Slagle confirmed that would be the case.
Senator Leman asked whether these shipyards have provided quality
workmanship in a timely manner.
KURT PARKAN, Deputy Commissioner, Department of Transportation and
Public Facilities, responded that the Department has been "very
satisfied" by the quality of work conducted by the shipyards. He
noted that, with the exception of the Tustumena whose overhaul work
has been done in Seward, most of the overhaul work has been
conducted at the Ketchikan shipyard.
Safety Inspection of State Owned High Risk Facilities
$200,000 General Fund
Reference No.: 33855
Project Type: Health and Safety
Category: Transportation
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
Field inspection of approximately 25 high risk buildings. This
will include structural analysis of each facility to determine
if they may be subject to catastrophic failure.
Phased project
Mr. Parkan stated that the collapse of a maintenance station roof a
few years prior, under a heavy snow load, initiated the need for
this request. He stated that 25 buildings received inspection in FY
02 and this funding would provide funds to inspect an additional 25
State-owned buildings considered to be at high risk of failure. He
informed the Committee that three of the buildings inspected in FY
02 were found to be in need of immediate repair to prevent
collapse, and that the cost to repair those buildings was included
in the FY 02 supplemental budget request.
Senator Leman, referring to comments in the backup material, asked
why blueprints for some of these State-owned buildings are not
available.
Mr. Parkan responded that blueprint availability depends on when
the buildings were built, as some are very old, and whether they
were purchased from other entities that might not have provided
blueprints.
Senator Leman opined that blueprint availability would depend on
how and when the facility was acquired.
Ms. Slagle furthered that records for some buildings, such as the
State-owned maintenance facility in Nome that is more than 60 years
old, are difficult to maintain.
Ms. Slagle mentioned that information is available pertaining to
construction timelines and repair costs for the three buildings
that were identified in FY 02 to be in need of immediate repair.
Vice-Chair Ward inquired as to what factors are used to determine
which facilities would be inspected each year.
Ms. Slagle responded that the ranking is based on such risk factors
as age, location, and the systems operating within the facility.
Vice-Chair Ward asked the ranking of the 60-year old Nome facility.
Ms. Slagle responded that this facility ranks high on the list of
facilities in need of inspection. She stated that, while a copy of
the ranking list was supplied to Committee members in FY 02, the
list could be re-supplied to Committee members.
Senator Austerman communicated that the Department has identified
the Nome facility for closure under their budget reduction plan.
Ms. Slagle stated that further analysis would be undertaken.
Senator Leman asked whether the funding provides for Department
engineering staff expenses or for contractual engineers.
Mr. Parkan replied that a private engineering firm in Fairbanks is
currently under contract with the State to perform the assessments.
Material Stockpiles - Dalton Highway, Glenn Highway and Tok
Cutoff
$600,000 General Fund
Reference No.: 33853
Project Type: Deferred Maintenance
Category: Transportation
Location: Dalton Highway
Election District: Rural Interior
Estimated Project Dates: 07/01/2002 - 06/30/2007
Pay for crushing materials used for maintenance that is not
reimbursable by federal funding. Materials stockpiles will be
contracted in conjunction with major federal-aid highway
projects on the Dalton Highway, Glenn Highway, and Tok Cutoff.
Phased project
Mr. Parkan stated that this on-going and cost effective program
allows the State to stockpile materials in areas in which
contractors and their equipment are currently conducting road
construction projects. He stated that by using contractors who are
working in an area, the State could stockpile materials for $10 to
$13 per yard as compared to $18 to $20 per yard for an independent
stockpile. He stated that the stockpiles provide materials that
would be used to repair roads throughout the year.
Senator Leman asked whether this type of project is awarded at the
time of the corresponding construction project or if rates are
negotiated with a contractor after they are on site.
Mr. Parkan responded that this information would be provided to the
Committee, as he is not familiar with the process.
Airport Deferred Maintenance
$1,500,000 General Fund
Reference No.: 30633
Project Type: Deferred Maintenance
Category: Transportation
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 09/30/2003
To repair the backlog of maintenance items that cannot be done
through the operating budget funding levels. Typical items are
pavement repairs, lighting repairs, fencing repairs, and bird
and animal control.
On-going project
Mr. Parkan stated that this annual request would address
approximately $25 million of total deferred maintenance needs at
rural airports.
Ms. Slagle noted that this funding addresses maintenance needs such
as brush cutting at rural airports, miscellaneous electrical needs,
and equipment needs specific to a rural airport that are not
associated with on-going regular maintenance projects. She stated
that runway painting at Gamble airport, leveling and resurfacing
gravel apron work at Bettles, and brush and tree removal at Gulkana
would fall into this category of needs.
Mr. Parkan noted that these projects are usually "out-of-the-
ordinary" and, therefore, not included in the routine maintenance
contract agreements established at most of these airports.
Vice-Chair Ward inquired as to how bird, and specifically animal,
control is managed at these airports.
Ms. Slagle responded that bird and animal control have proven
difficult to manage. She exampled the variety of methods being used
to address the situation such as using explosives as a method of
bird control and fencing being used to prevent animals from
venturing onto airport runways.
Mr. Parkan interjected that culverts are also utilized as a
preventive measure against beavers.
Senator Austerman inquired why the FY 03 request is significantly
higher than the FY 02 budget amount; specifically whether the
requested funding level has traditionally been $1.5 million; but
the authorization was granted at a lower amount.
Ms. Slagle responded that the requested level of funding has
historically been reduced during the budget process.
Senator Austerman asked the FY 02 funding level that the Department
requested for this project.
Ms. Slagle responded that the FY 02 funding request was for either
$1 million or $1.5 million.
Senator Hoffman affirmed that this request has been traditionally
"trimmed back."
Emergency and Non-Routine Repairs
$1,000,000 General Fund
Reference No.: 30634
Project Type: Health and Safety
Category: Transportation
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 09/30/2003
Repairs to transportation facilities needed because of natural
disasters, such as floods, snow, wind, earthquakes, etc. These
repairs would be ineligible for federal funds. Also used to
meet imminent failure caused by deferred maintenance.
On-going project
Mr. Parkan informed the Committee that this request would provide
funding for emergency repairs to roads resulting from such things
as flood or avalanche damage.
Ms. Slagle elaborated that this request also includes funding for
emergency repairs to airports and facilities.
Senator Austerman asked the Department to supply the Committee with
a list of the emergency repairs and associated expenses that have
been performed within the previous four or five-years.
Ms. Slagle responded that a list would be supplied.
Facilities Deferred Maintenance and Critical Repairs
$800,000 General Fund
Reference No.: 30632
Project Type: Deferred Maintenance
Category: Transportation
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 09/30/2003
To address the most urgent, critical repairs on state
buildings.
On-going project
Ms. Slagle stated that this request addresses deferred maintenance
needs for State facilities. She noted that the Department's 600
office buildings, road maintenance stations, materials labs, and
joint-use facilities' have total deferred maintenance needs
amounting to approximately $50 million dollars.
Harbor Deferred Maintenance
$1,000,000 General Fund
Reference No.: 7090
Project Type: Deferred Maintenance
Category: Transportation
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2003
To address backlogged deferred maintenance for state-owned
harbors.
On-going project
Ms. Slagle stated that the backlog of deferred maintenance needs
for harbors totals approximately $45 million, and she stated that
this request specifically addresses dredging and electrical work
repairs in Hoonah, replacement of ramps in Ninilchik, and dredging
needs in Pelican.
Highway Deferred Maintenance
$1,500,000 General Fund
Reference No.: 60631
Project Type: Deferred Maintenance
Category: Transportation
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 09/30/2003
To address some of the needs that have not been handled
through the operating budget maintenance funds. Typical items
are surface and embankment repairs, drainage culverts and
ditch repairs, marking and sign repairs, and brushing.
On-going project
Mr. Parkan noted that this funding addresses such things as
drainage and culverts that are not recognized as normal routine
maintenance requirements, and therefore are not provided for in the
operating budget. He stated that the total of deferred maintenance
needs of this sort exceeds $200 million.
Weights and Measures Testing Unit Replacement
$525,100 General Fund
Reference No.: 32605
Project Type: Equipment
Category: Transportation
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2007
The Weights and Measures Equipment, which is beyond its
useable service life.
Phased project
Ms. Slagle stated that this funding is needed to replace and update
old Weights and Measures equipment used in metrology labs to test
such things as flow meters used in the fuel industry, and the
Weights and Measures field testing equipment used to verify the
accuracy of fish, fuel industry scales and meters.
Ms. Slagle exampled that one of the needed pieces of equipment is a
$200,000 mobile, large-scale testing unit that is used throughout
Southeast Alaska to test truck, contractor, freight, and fishing
scales. She explained that the current unit, which contains 10,000
pounds of test weights and has a hydraulic boom, is old, parts are
no longer available, and safety concerns arise about its operation.
She stated that this piece of equipment is critical to the
continuance of testing and certifying of commercial scales in
Southeast Alaska.
Vice-Chair Ward asked whether re-certification of these scales
would be negatively affected were this unit not available.
Ms. Slagle stated that re-certification in Southeast Alaska would
be affected.
Corps of Engineers - Harbors Program Formulation
$200,000 G/F Match
Reference No.: 7091
Project Type: Planning
Category: Transportation
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2003
Participation with the Corps of Engineers and local
governments in harbor breakwaters, dredging, feasibility
studies, and program assistance.
On-going project
Mr. Parkan stated that this request historically provided matching
funds to support specific projects; however, because funding for
harbor projects is being separately addressed through a harbors
bond package in FY 03, this funding would be used to assist
communities in developing projects, determining whether those
projects would be eligible for federal funding, and identifying a
priority list of the projects.
Ms. Slagle furthered that matching funds would also be provided
"for the planning assistance to states, working in cooperation with
the Corps of Engineers for assisting these communities in
developing their projects." She voiced that some of these projects
involve communities such as Aniak, Little Diomede, and Saint
George.
Senator Austerman asked the match ratio of federal to State
dollars.
Ms. Slagle stated that the match is a one-to-one ratio; however,
she informed the Committee that this is a local community match
rather than a federal match.
Senator Austerman asked for clarification that this project
involves a local community match rather than a Corps of Engineers'
funding match.
Ms. Slagle clarified that this is a Corps of Engineers one-to-one
match; however, the portion owed by the State is shared between the
State and the community.
Vice-Chair Ward asked the testifier to prepare an analysis of the
match and supply it to the Committee.
Ms. Slagle agreed.
Moose Pass Maintenance Station Closure and Site Clean-up
$600,000 General Fund
Reference No.: 33854
Project Type: Health and Safety
Category: Transportation
Location: Moose Pass
Election District: Seward, Soldotna
Estimated Project Dates: 07/01/2002 - 06/30/2007
The department has closed this station and must responsibly
abandon the site completely. Project includes environmental
investigation, building pre-demolition assessment, facility
demolition, excavation and treatment of petroleum hydrocarbon
impacted soils, relocation of the sand/salt stockpile, and
well-installation and quarterly monitoring.
One-Time Project
Mr. Parkan noted that the Moose Pass Station has been closed for
more than three years, and that these funds would be used to
demolish the building and clean up environmental hazardous
material. He noted that the facility is located near the Kenai
River.
State Equipment Fleet Replacement
$11,800,000 Hwy Capiti
Reference No.: 30628
Project Type: Equipment
Category: Transportation
Location: Statewide
Election District: Statewide
Estimated Project Dates: 07/01/2002 - 06/30/2004
Replacement and/or refurbishment of equipment and vehicles
which have reached the end of their useful life cycle and all
extension periods and for the continued conversion of vehicles
to alternate fuel and related alternate fuel program expenses.
On-going project
Mr. Parkan voiced that this is an annual request to replace
equipment and vehicles.
Mr. Parkan noted that this concludes the Department's requests, as
the federally funded transportation construction projects would not
be presented.
Senator Wilken asked the current status of the Washington Street
intersection in Fairbanks.
MARTIN OTT, Chief, Planning & Administrative Services, Northern
Region, Department of Transportation and Public Facilities,
testified via teleconference from Fairbanks and responded that the
State would be advertising for a Request for Proposals (RFP) in
April 2002.
Senator Austerman asked for further information regarding the Corps
of Engineers - Harbors Program Formulation, Reference No: 7091. He
noted that this request has decreased during the past few years
from $8 million to $5 million, with an FY 03 request of only
$200,000. He asked how harbor projects would be funded.
Mr. Parkan clarified that the harbor projects that have
historically been included in this request are proposed to be
alternatively funded through a harbor bond bill. He stated that the
$200,000 request for community planning, which has historically
been included in this request, is the only component remaining.
Senator Austerman asked the FY 03 level of harbor funding being
requested in the bond bill legislation.
Mr. Parkan responded that this information would be supplied to the
Committee.
Vice-Chair Ward asked for further information regarding the harbor
bond bill.
Mr. Parkan stated that harbor bond bills have been introduced by
the Governor and Senator Robin Taylor and that projects are
identified in both bills.
Ms. Slagle informed the Committee that additional Department
capital appropriations are being addressed in the Homeland Security
Appropriations Bill. She stated that of the proposed $41 million
funding request, $38 million is federal funds. She stated that
these appropriations are required for the State to comply with
Federal Aviation Administration (FAA) requirements concerning
baggage screening, security systems, closed circuit television, and
surveillance system, and other components.
The bill was HELD in Committee.
ADJOURNMENT
Co-Chair Pete Kelly adjourned the meeting at 05:17 PM
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