Legislature(2001 - 2002)

03/22/2001 01:37 PM TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                     ALASKA STATE LEGISLATURE                                                                                   
                  SENATE TRANSPORTATION COMMITTEE                                                                             
                          March 22, 2001                                                                                        
                             1:37 p.m.                                                                                          
MEMBERS PRESENT                                                                                                               
Senator John Cowdery, Chair                                                                                                     
Senator Robin Taylor                                                                                                            
Senator Kim Elton                                                                                                               
MEMBERS ABSENT                                                                                                                
Senator Jerry Ward, Vice Chair                                                                                                  
Senator Gary Wilken                                                                                                             
COMMITTEE CALENDAR                                                                                                            
SENATE BILL NO. 123                                                                                                             
"An Act relating to legislative approval for the design and                                                                     
construction of facilities of the Alaska Railroad Corporation."                                                                 
     MOVED CSSB 123(TRA) OUT OF COMMITTEE                                                                                       
SENATE BILL NO. 111                                                                                                             
"An Act relating to financing facilities for municipal ports and                                                                
harbors; and providing for an effective date."                                                                                  
     MOVED CSSB 111(TRA) OUT OF COMMITTEE                                                                                       
SENATE BILL NO. 44                                                                                                              
"An Act establishing an Alaska Toll Bridge and Causeway Authority;                                                              
and providing for an effective date."                                                                                           
     SCHEDULED BUT NOT HEARD                                                                                                    
SENATE BILL NO. 45                                                                                                              
"An Act making an appropriation for the design of the Knik Arm                                                                  
crossing; and providing for an effective date."                                                                                 
     SCHEDULED BUT NOT HEARD                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
SB 44 - No previous Senate committee action.                                                                                    
SB 45 - No previous Senate committee action.                                                                                    
SB 111 - No previous Senate committee action.                                                                                   
SB 123 - No previous Senate committee action.                                                                                   
WITNESS REGISTER                                                                                                              
Senator Drue Pearce                                                                                                             
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Sponsor of SB 123.                                                                                       
Representative Andrew Halcro                                                                                                    
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Supports SB 123.                                                                                         
Representative Norm Rokeberg                                                                                                    
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Supports SB 123.                                                                                         
Kristy Tibbles                                                                                                                  
Aide to Senator Pearce                                                                                                          
Alaska State Capitol                                                                                                            
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT:  Provided information about SB 123.                                                                       
Johnne Binkley                                                                                                                  
Alaska Railroad Corporation                                                                                                     
PO Box 107500                                                                                                                   
Anchorage, AK  99510-7500                                                                                                       
POSITION STATEMENT:  Supports the intent of SB 123 but prefers                                                                
that a different procedure be used.                                                                                             
Wendy Lindskoog                                                                                                                 
Alaska Railroad Corporation                                                                                                     
PO Box 107500                                                                                                                   
Anchorage, AK  99510-7500                                                                                                       
POSITION STATEMENT:  Answered questions about ARRC's public                                                                   
Jerry McCutcheon                                                                                                                
Box 101538                                                                                                                      
Anchorage, AK  99510                                                                                                            
POSITION STATEMENT:  Commented about ARRC's operations.                                                                       
Paul Laberty                                                                                                                    
224 E. Manor Ave.                                                                                                               
Anchorage, AK  99501                                                                                                            
POSITION STATEMENT:  Supports CSSB 123(TRA).                                                                                  
Linda Anderson                                                                                                                  
River's Edge Resort                                                                                                             
Fairbanks, AK                                                                                                                   
POSITION STATEMENT:  Supports CSSB 123(TRA).                                                                                  
Kurt Parkan                                                                                                                     
Deputy Commissioner                                                                                                             
Department of Transportation &                                                                                                  
  Public Facilities                                                                                                             
3132 Channel Dr.                                                                                                                
Juneau, AK  99801-7898                                                                                                          
POSITION STATEMENT:  Answered questions about SB 111 and SB 118.                                                              
Charlie Branch                                                                                                                  
PO Box 1692                                                                                                                     
Cordova, AK                                                                                                                     
POSITION STATEMENT:  Supports CSSB 111(TRA).                                                                                  
Ray Majeski                                                                                                                     
617 Katlian St.                                                                                                                 
Sitka, AK  99835                                                                                                                
POSITION STATEMENT:  Supports CSSB 111(TRA).                                                                                  
Daniel Hickman                                                                                                                  
Petersburg Harbor Board                                                                                                         
Petersburg, AK  99833                                                                                                           
POSITION STATEMENT:  Supports CSSB 111(TRA).                                                                                  
Bob Prunella                                                                                                                    
City Manager                                                                                                                    
PO Box 531                                                                                                                      
Wrangell, AK  99929                                                                                                             
POSITION STATEMENT:  Supports CSSB 111(TRA).                                                                                  
Sandra Moller                                                                                                                   
President and CEO                                                                                                               
Aleut Enterprise Corporation                                                                                                    
Adak, AK                                                                                                                        
POSITION STATEMENT:  Supports Adak's inclusion in SB 111.                                                                     
Chris Gates                                                                                                                     
Aleut Enterprise Corporation                                                                                                    
Adak, AK                                                                                                                        
POSITION STATEMENT:  Supports Adak's inclusion in SB 111.                                                                     
Matt Rowley                                                                                                                     
City of Whittier                                                                                                                
Whittier, AK                                                                                                                    
POSITION STATEMENT:  Supports CSSB 111(TRA).                                                                                  
John Bitney                                                                                                                     
Alaska Housing Finance Corporation                                                                                              
POSITION STATEMENT:  Explained bond provisions of SB 111.                                                                     
Mark Hickey                                                                                                                     
Aleut Enterprise Corporation                                                                                                    
POSITION STATEMENT:  Explained the status of the harbor in Adak.                                                              
ACTION NARRATIVE                                                                                                              
TAPE 01-10, SIDE A                                                                                                            
Number 001                                                                                                                      
CHAIRMAN  JOHN COWDERY called  the Senate  Transportation  Committee                                                          
meeting to order  at 1:37 p.m.  Present were Senators  Taylor, Elton                                                            
and Cowdery.   Senator Pearce  was also present.   Chairman  Cowdery                                                            
announced  that the order  of bills would be  SB 123, SB 111,  SB 44                                                            
and SB 45, and  that it is not his intention to move  SB 44 or SB 45                                                            
at this time.                                                                                                                   
          SB 123-LEGISLATIVE APPROVAL:RAILROAD FACILITIES                                                                   
SENATOR DRUE  PEARCE, sponsor of SB  123, noted that she  represents                                                            
District   F  in   Anchorage,   which  encompasses   the   Anchorage                                                            
international  airport  and the  international  access  road to  the                                                            
airport.  She  informed committee  members that both Representative                                                             
Halcro and  Representative  Rokeberg represent  corresponding  house                                                            
districts are were present to testify.                                                                                          
CHAIRMAN COWDERY asked  for a motion to adopt the proposed committee                                                            
substitute to SB 123 (Version C).                                                                                               
SENATOR TAYLOR so moved.                                                                                                        
CHAIRMAN  COWDERY announced  that with no  objection, CSSB  123(TRA)                                                            
was before the committee.                                                                                                       
SENATOR  PEARCE explained  that SB  123, as  originally introduced,                                                             
requires   the  Alaska   Railroad  Corporation   (ARRC)  to   obtain                                                            
legislative approval for  design and construction of facilities that                                                            
have an  estimated cost  greater than  $5 million.   She  introduced                                                            
this  legislation   in  response   to  a  specific  facility   under                                                            
construction at  the Ted Stevens International Airport  - the ARRC's                                                            
rail station project.   Financing for that project was received from                                                            
the  federal  government   back  in  1998.    The  first   time  the                                                            
legislature learned  of the project in any form was  during the 1999                                                            
session as part  of a Finance Committee overview.   The intent of SB
123 is  not to stop that  project; the money  has been appropriated                                                             
and the  project is underway.   Her goal is  to see ARRC use  a more                                                            
public process  for future projects that involves  Alaskans from the                                                            
SENATOR PEARCE  said the  rail station project  has caused a  lot of                                                            
consternation  in  her  district   for  a  number  of  reasons:  the                                                            
correctness  of the feasibility study  and market analysis;  and the                                                            
fact  that the  market analysis  was done  after the  money for  the                                                            
project was obtained - a cart before the horse.                                                                                 
SENATOR PEARCE stated that  in getting the rail to the airport, ARRC                                                            
will  need  tens  of millions  of  dollars  to  either  elevate  the                                                            
railroad  through  a neighborhood,   perhaps  requiring one  of  the                                                            
neighborhood's  main feeder  streets (Northwood)  to be closed  off.                                                            
Everyone   of  the  different   projects  has   an  impact   on  the                                                            
neighborhoods  but the residents  are particularly  concerned  about                                                            
noise and traffic  impacts.  SB 123 includes the legislature  in the                                                            
approval process  for ARRC projects.  She believes  that if a public                                                            
process was  required, the legislature  would be willing  to see the                                                            
railroad  expand.   The legislature  wants  ARRC to  continue to  be                                                            
financially  strong and the state  needs the railroad. However,  the                                                            
planning  process on the  public side  must be  handled in a  better                                                            
SENATOR  PEARCE said  the  committee  substitute has  an  additional                                                            
section (Section 7) on page 2.  Section 7 says the ARRC cannot:                                                                 
     begin  the design or construction  of a new railroad  line                                                                 
     realignment  and  railroad  corridor  project  through  an                                                                 
     existing  community having an  estimated total design  and                                                                 
     construction cost greater than $10,000,000.                                                                                
She noted  that section  speaks to  a specific idea  that is  on the                                                            
table in the  Fairbanks area to realign  the railroad.  Once  again,                                                            
while federal  dollars would  be used, some  of our highway  dollars                                                            
are likely  to  be necessary  to make  that project  feasible.   She                                                            
didn't know whether a market  analysis or feasibility study has been                                                            
done for that project.                                                                                                          
Number 447                                                                                                                      
REPRESENTATIVE  ANDREW HALCRO,  House District  12, thanked  Senator                                                            
Pearce for  introducing SB  123.  He said  SB 123 is more  about "it                                                            
can happen  in your community."  SB  123 is not a commentary  on the                                                            
operations  of ARRC, it is  simply a commentary  on how legislators                                                             
need  to  make   sure  they  have   some  accountability   to  their                                                            
constituents.    He  has  found  it  very  frustrating  to  talk  to                                                            
neighbors about this project.   They look at him as though he should                                                            
have had the leverage to  do something or have a greater impact.  He                                                            
has to  shake his head  and tell  them, "Well,  when they asked  for                                                            
public comment, I did write  a letter.  That basically, is the limit                                                            
to our influence over the process."                                                                                             
REPRESENTATIVE  HALCRO  stated  that  about  a month  after  he  was                                                            
elected in November of  1998, he had lunch with the chairman of ARRC                                                            
(Bill Sheffield).   They talked for an hour about  this project.  He                                                            
tried to convince  the chairman that  the project was a $20  million                                                            
waste  of taxpayers'  money.    The  chairman  assured him  that  an                                                            
economic feasibility  study would  be done and all options  would be                                                            
kept open. About  three or four months later, he read  a Wall Street                                                            
Journal article  about how rail links  to airports have been  a bust                                                            
in  some  major  cities.   For  example,  in  Philadelphia,  with  a                                                            
population 15  times that of Anchorage, the airport  rail service is                                                            
barely used because passengers  have to wait 30 minutes for a train.                                                            
He sent  a  copy of  the article  to the  chairman  and the  airport                                                            
manager,  Mr. Plumb.  A  few months later  the economic feasibility                                                             
study was done.  The study raised  more questions than answers.   It                                                            
pointed  out that  the railroad  has a  lack of  infrastructure  and                                                            
other salient  points that  concluded that  this project had  a slim                                                            
chance of succeeding.   He noted that  several years ago  the People                                                            
Mover bus  service to the  airport was reinstated  and greeted  with                                                            
fanfare. Today,  that route has the lowest rider-ship  in the People                                                            
Mover system,  which proves  that mass transit  is not conducive  to                                                            
the 8,000 people that work  at the airport.  Many of those employees                                                            
work at businesses  several miles from the terminal,  such as FedEx,                                                            
so a  train to the  terminal will  not be convenient  for them.   He                                                            
thought the study would  "put the brakes" on the project, but it did                                                            
REPRESENTATIVE  HALCRO said his primary concern is  that discussions                                                            
have just begun  about the additional  $15 to $20 million  that will                                                            
be needed to realign the  approach tracks down International Airport                                                            
Road.   Suddenly, some  of these  neighborhoods  are faced with  the                                                            
possibility  that their access to  some major thoroughfares  will be                                                            
cut off because  of the realignment.  He expressed  concern that the                                                            
public process  has been  less than adequate  for this project.   He                                                            
feels the  legislature needs  to send the  message that although  it                                                            
does not want  to get involved in  the day-to-day operations  of the                                                            
railroad, it wants  to be accountable to constituents  whose quality                                                            
of life is being impacted by these projects.                                                                                    
Number 745                                                                                                                      
CHAIRMAN COWDERY  said he wasn't sure whether Representative  Halcro                                                            
was chair or vice-chair  of the House Transportation  Committee when                                                            
it held hearings  on this project,  but the same issues were  raised                                                            
at  that time  and  the  rider-ship  question  was asked  but  never                                                            
adequately answered.   He maintained that he has been  approached by                                                            
some of  the private transport  companies and  they claim this  will                                                            
put them  out of business.   He  noted, "Just  because the money  is                                                            
free, so to speak, it's  a tough decision.  I don't want to be anti-                                                            
receiving money  but I think it could be better spent  in maybe some                                                            
of the other areas as needed."                                                                                                  
REPRESENTATIVE  HALCRO said  ARRC updated  the House Transportation                                                             
Committee last year on  its spill remediation process at Gold Creek.                                                            
ARRC also informed  the committee of the status of  the airport rail                                                            
station.   Committee members asked many questions about the rider-                                                              
ship but  were given no answers.   He believes  there really  are no                                                            
answers.   The project is  being built because  ARRC has the  money.                                                            
That goes against what  he hopes would be a better public policy and                                                            
better public hearing process.                                                                                                  
SENATOR  TAYLOR indicated  that Senator  Ward has  suggested to  him                                                            
that  the profits  of the  railroad  should  be used  to offset  the                                                            
losses of the ferry.                                                                                                            
Number 857                                                                                                                      
SENATOR PEARCE  pointed out the market analysis showed  that because                                                            
Anchorage  is on the far  northern and western  coast of the  United                                                            
States,  most passengers  leave on  the "red eye"  or early  morning                                                            
flights so that they can  connect with other flights during the day.                                                            
That means the  passenger trains to the airport will  have to run at                                                            
night through  the neighborhoods.   Airport  noise is already  a big                                                            
issue  in  Anchorage  so adding  trains  to  the  mix is  cause  for                                                            
REPRESENTATIVE HALCRO said  the market analysis projects that by the                                                            
year 2005, 80,000  local residents will utilize this  service.  That                                                            
equates to over  7,200 people per month.  He asked  ARRC where those                                                            
people will come  from and received no answer.  He  repeated that he                                                            
questions the projections.                                                                                                      
SENATOR  TAYLOR asked  if SB  123 just  "closes the  barn door"  and                                                            
takes care of future concerns.                                                                                                  
SENATOR PEARCE  said the  federal dollar spigot  is open, thanks  to                                                            
the  Congressman  and the  Senator.   She  is concerned  that  money                                                            
should not be  granted before a market analysis is  done.  It should                                                            
be the other way  around.  Also, ARRC projects should  be integrated                                                            
with  what is  being  done at  the legislative  level  with  federal                                                            
highway and airport funds.   She said Senator Taylor's assessment is                                                            
correct and  that the additional  monies  for the track realignment                                                             
have  not actually  been  procured as  of yet,  but  there is  every                                                            
expectation  the delegation will help  with that.  ARRC is  an asset                                                            
that  the  state  should  protect  but  the  legislature  should  be                                                            
involved in long term planning for the railroad.                                                                                
Number 1071                                                                                                                     
REPRESENTATIVE   NORMAN  ROKEBERG,   representing  District   11  in                                                            
Anchorage,  stated   the  proposed  track  realignment   is  in  his                                                            
district.   He is very  concerned and appreciates  Senator  Pearce's                                                            
and Representative Halcro's  comments.  SB 123 speaks to the failure                                                            
of  the process;  it  is  a case  of  a lack  of  communication  and                                                            
coordination  between  the  various   transportation  sectors.    He                                                            
stated, "And I'd say to  Senator Taylor, if you want the railroad to                                                            
produce a profit, they  can't be building money-losing projects like                                                            
this.  The  estimates   are  up  to  $18  to  $20  million   on  the                                                            
realignment,  depending  on which  route  or style  of construction                                                             
would be selected ...."                                                                                                         
REPRESENTATIVE  ROKEBERG  said  a real  breakdown in  involving  the                                                            
public  in this  process happened  during  the life  of this  entire                                                            
project.   As stated in  prior testimony,  the cart came before  the                                                            
horse.  The effect on the  community is only being recognized now as                                                            
the Department  of Transportation and Public Facilities  (DOTPF) and                                                            
ARRC  are looking  at  the  down track  realignment  to  be able  to                                                            
properly  service  the airport  depot.    This legislature  and  the                                                            
affected  community had no  involvement in  the process.  The  first                                                            
public meeting,  to his knowledge,  was held on September  13, 2000.                                                            
That meeting  was about the  route realignment.   He notified  1,500                                                            
residents  in his  area  of the  meeting;  almost 100  attended  the                                                            
meeting.   Most  said they  wouldn't have  known  about the  meeting                                                            
without  his mailing.   People were  aware of  the depot but  didn't                                                            
realize that  by putting  that project in,  there was an  assumption                                                            
made that the track would  have to be realigned.  He is very pleased                                                            
to see the  committee substitute to  SB 123 because he was  going to                                                            
suggest to the  sponsor that such a provision be added  to the bill.                                                            
REPRESENTATIVE  ROKEBERG  said  the  track probably  needs  to  stay                                                            
exactly where  it is because about 700 families right  above it will                                                            
be impacted.  The location  is west of the intersection of Minnesota                                                            
and International Airport  Road going to Northwood, which goes north                                                            
and services  the ingress  and egress to the  South Spenard  area by                                                            
the Spenard  recreation center.   The various  suggested lanes  will                                                            
cut that ingress  and egress off and  funnel the traffic  down Aspen                                                            
out to Spenard Road, basically  turning a neighborhood street into a                                                            
major arterial.   One of  the other alignment  routes would  cut off                                                            
the Northwood  ingress and egress to all of the commercial  land and                                                            
the city snow dump and  maintenance area as well as the ball fields.                                                            
That area consists  of about 80 acres of commercial,  public use and                                                            
park  lands  that   would  be  cut  off.    All  of  the   suggested                                                            
alternatives  have significant problems  associated with  them.  The                                                            
realignment  project is  further complicated  by  an interchange  at                                                            
Jewel Lake  - International Airport  Road, where the rail  will have                                                            
to come in.                                                                                                                     
REPRESENTATIVE  ROKEBERG stated full support for CSSB  123(TRA).  He                                                            
felt it  is unfortunate  that if there  was any  way the people  who                                                            
live  in  that area  could  have  stopped  the  development  of  the                                                            
railroad  depot at  the  airport, they  would  have.   He added  the                                                            
Anchorage  Convention and  Visitors' Bureau  spends probably  $15 or                                                            
$20 million to entice tourists  to say a day longer in the Anchorage                                                            
area.   This proposal may  whisk those cruise  ship passengers  from                                                            
Seward directly to the airport, bypassing Anchorage.                                                                            
SENATOR  ELTON asked  what kind  of a  local process  the ARRC  goes                                                            
through when making routing decisions through urban communities.                                                                
REPRESENTATIVE ROKEBERG  replied the state is subject to Title 21 of                                                            
the Anchorage  Building  Code, but  he acknowledged  that is  a good                                                            
question and should be directed to ARRC.                                                                                        
Number 1406                                                                                                                     
SENATOR  ELTON  said  the  reason  he  asks is  that  if  there  are                                                            
established local processes  that govern decisions that are inimical                                                            
to the  interests of  some of  the neighborhoods  in Anchorage,  and                                                            
then another  political layer  is established  where legislators  of                                                            
all stripes  are making  those kinds of  investment decisions,  that                                                            
will put a heavy burden on ARRC.                                                                                                
SENATOR PEARCE indicated  that Mr. Binkley could answer that but she                                                            
pointed out  that in Anchorage, a  land exchange, like the  one done                                                            
last year with  the ARRC, must go  through the legislative  process.                                                            
However,  she  doesn't  believe  the terminal  facility  had  to  go                                                            
through a local  process.  If someone  wants to rezone a  lot in her                                                            
area, all of the house  sites within a certain area must be notified                                                            
of the public hearing.   That process wasn't followed for the depot.                                                            
The same  is true  of airport projects;  because  they are on  state                                                            
land, local  zoning things  do not have to  happen.  She noted  when                                                            
the railroad  was transferred to the  state, the legislature  made a                                                            
conscious  decision to  try to make  the railroad  as autonomous  as                                                            
possible.   Over the years, various  communities have been  angry at                                                            
the railroad at  different times.  Much of the legislation  that has                                                            
been put  forward  about the railroad,  because  of frustrations  of                                                            
various constituencies,  has not met with success.   Usually someone                                                            
was out there  who was willing to protect the railroad  - it used to                                                            
be  Senator [Tim]  Kelly.   She  thinks when  this  sort of  project                                                            
happens with no public  process and the money is procured before the                                                            
project is  designed, a better process  is necessary. Although  ARRC                                                            
now says it will  change the way it does things, she  has heard that                                                            
many times.                                                                                                                     
SENATOR  ELTON  asked  how  "facility"   is  defined.    He  assumes                                                            
"facility"  does not  cover planting  a fiber optic  line along  the                                                            
railroad right-of-way.                                                                                                          
KRISTY TIBBLES,  legislative assistant  to Senator Pearce,  said she                                                            
will check with the Division  of Legal Services but she believes the                                                            
drafter told her it was the common dictionary definition.                                                                       
SENATOR  PEARCE said  it is  not her  intent for  right-of-ways  for                                                            
other services, like the  fiber optic system, to be affected by this                                                            
bill.  She  is referring to bricks  and mortar projects.   She noted                                                            
it also  wasn't her original  intent if the  railroad, in  upgrading                                                            
its rail,  straightens out  a curve a bit  to be safer, to  get into                                                            
that area.   She believes that arguably  there are areas  in between                                                            
Anchorage and Fairbanks  that need realignment, but when ARRC starts                                                            
making changes  inside areas like the Fairbanks North  Star Borough,                                                            
there needs to  be a process that integrates all of  these different                                                            
REPRESENTATIVE  ROKEBERG   said,  in  response  to  Senator  Elton's                                                            
question, that Anchorage  has a problem in the way it deals with the                                                            
federal government.   The realignment project is federally  financed                                                            
so it may or  may not go through the  AMATS process.  That's  why he                                                            
supports this  bill very strongly.  It's one of those  other methods                                                            
with  which  we  can reconnect,   particularly  even  the  Anchorage                                                            
delegation, with transportation planning in the Anchorage area.                                                                 
Number 1695                                                                                                                     
CHAIRMAN COWDERY asked Mr. Johnne Binkley to testify.                                                                           
MR.  JOHNNE BINKLEY,  a  former Alaska  Senator,  current  riverboat                                                            
captain, and ARRC  board member, gave the following  testimony on SB
He  had  a  chance  to  talk  with  Senator   Pearce  prior  to  the                                                            
introduction  of  SB  123.    He  appreciates   why  Senator  Pearce                                                            
introduced the bill;  ARRC  needs a better process when working with                                                            
the  legislature   on  some  of  these   projects  that   do  impact                                                            
constituents so that they have input into that process.                                                                         
When  the  State  of  Alaska  purchased  the  railroad  and  it  was                                                            
transferred to  the state, the railroad had tremendous  deficiencies                                                            
that were noted  by the federal government.  The federal  government                                                            
promised  to  take  care of  those  deficiencies,  but  the  federal                                                            
government  was never  willing to  come forward  with those  dollars                                                            
over  the  years  until  Senator  Stevens  became  Chairman  of  the                                                            
Appropriations Committee.   Senator Stevens was very involved in the                                                            
railroad  transfer  when  it took  place  in the  mid  1980s and  he                                                            
distinctly recalled  the commitments made by the federal  government                                                            
to the  State of Alaska.   Senator Stevens  has felt compelled  over                                                            
the  years to  live  up to  that commitment  and  he  has been  very                                                            
effective  in securing federal  dollars apportioned  for rail  lines                                                            
throughout  the country  for ARRC.   ARRC has  felt very blessed  to                                                            
receive a portion of those federal dollars.                                                                                     
Initially,  when Senator Stevens was  successful in securing  funds,                                                            
the  funds were  in  smaller  amounts.   The  first amount  was  $10                                                            
million for the  purchase of new railroad ties.  The  last major tie                                                            
renewal program  was in the early 1950s.  The ties  were wearing out                                                            
and it  was noted in  the transfer.   As ARRC  began to replace  the                                                            
ties, it  also replaced some  of the rail  and improved the  ballast                                                            
system under the track.                                                                                                         
The airport rail  project is a major project for ARRC  that is a bit                                                            
outside  of the scope  ARRC  is used to.   That  project involves  a                                                            
building.   ARRC has  maintained its  buildings but  is not  used to                                                            
building new  buildings, especially  those that impact communities.                                                             
As a  result  of this  project, ARRC  has  learned a  lot.   Senator                                                            
Stevens  was able  to secure  the full  amount of  the airport  rail                                                            
appropriation  ($28 million).  That appropriation  did not require a                                                            
match  from ARRC.   Those  funds arrived  sooner  than anticipated.                                                             
When  ARRC decided  to pursue  this project,  it was  because of  an                                                            
opportunity  to preserve  a  rail corridor  into  the international                                                             
airport  for  future use  when  the state  was  looking  at a  major                                                            
expansion of the Anchorage airport.                                                                                             
MR. BINKLEY  repeated that ARRC has  learned a lot from the  airport                                                            
rail project.   It made a lot of mistakes  in the way it  approached                                                            
this project.   Hopefully  ARRC has  learned from  those.  ARRC  has                                                            
other projects  in the works:  new depots in Denali,  a new depot in                                                            
Fairbanks,  a cruise  ship dock  facility in  Seward, upgrading  the                                                            
existing  depot in Anchorage,  and  a new shop  for passenger  cars.                                                            
ARRC is learning  how to engage the community to make  sure everyone                                                            
is involved  in these projects.   In addition,  there is a  proposed                                                            
realignment project in  Fairbanks to eliminate 48 at-grade crossings                                                            
where roads and  rails intersect.  ARRC has learned  in that process                                                            
that before  it just barges into a  project, it has to explain  what                                                            
it is doing to the community.                                                                                                   
MR. BINKLEY said  he believes ARRC has gained insight  and, that the                                                            
purpose  of SB  123, to formalize  ARRC's  process,  is a good  one.                                                            
However, he would  like to see something short of  legislation, that                                                            
requires an  approval process before  ARRC begins the design  of any                                                            
project.   He  cautioned  that it  takes  a long  time  to do  those                                                            
things,  including  reconnaissance  engineering and  design,  before                                                            
ARRC  knows  whether   a  project  is  even  feasible.     Requiring                                                            
legislative  approval  before ARRC  starts  down that  road will  be                                                            
difficult.   He agrees that  a more formal  process that will  allow                                                            
for legislative input is  necessary.  He does not have a proposal at                                                            
this  time  but suggested  using  a  Legislative  Budget  and  Audit                                                            
process  or  a  process  similar  to the  Statewide  Transportation                                                             
Improvement Plan used by DOTPF.                                                                                                 
MR. BINKLEY indicated  that ARRC is concerned about  maintaining its                                                            
autonomy, which is the  key to its profitability.   To do that, ARRC                                                            
has to  be careful  that the  decisions  it makes are  not made  for                                                            
political  reasons.  He hopes  to have an  opportunity to work  with                                                            
the sponsor and  Chairman on crafting a mechanism  that provides for                                                            
legislative  input  short  of  introducing  a bill  for  a  specific                                                            
Number 2078                                                                                                                     
CHAIRMAN  COWDERY acknowledged  that he has  heard complaints  about                                                            
how the Fairbanks realignment  project will impact businesses in the                                                            
area.  He asked  if ARRC has followed through on public  hearings in                                                            
Fairbanks for that project.                                                                                                     
MR. BINKLEY  said ARRC  has just begun  that process.   It has  just                                                            
completed  the conceptual  engineering  to determine  the costs  and                                                            
whether the project  is technically feasible.  ARRC  is now inviting                                                            
the affected  neighborhoods  to comment  on the  proposal.  If  ARRC                                                            
continues  to proceed with  that project, the  process will  be long                                                            
and drawn out and an environmental  impact study will most likely be                                                            
CHAIRMAN  COWDERY  referred  to  Mr.  Binkley's  comment  about  the                                                            
federal government's  promise of deficiency upgrades  when the state                                                            
purchased  the railroad,  and asked  if ARRC  considers the  airport                                                            
rail extension to be a deficiency upgrade.                                                                                      
MR. BINKLEY said it does not.                                                                                                   
CHAIRMAN COWDERY noted  that he owns property in different areas and                                                            
whenever  a zoning change  is proposed,  he receives  a card  in the                                                            
mail.  He asked  if the people impacted by the airport  rail project                                                            
ever received such a notice from ARRC.                                                                                          
MR. BINKLEY asked that Wendy Lindskoog answer that question.                                                                    
MS. WENDY LINDSKOOG,  Director of External Affairs  for ARRC, agreed                                                            
with Mr. Binkley  that ARRC did not  do a good job regarding  public                                                            
involvement  in the airport  rail project.   She came on board  with                                                            
ARRC  in October  of  1999.   At that  point,  ARRC stepped  up  the                                                            
project,  tried to  get out  to community  councils,  and held  open                                                            
houses,  some of  which  included mailings.    Unfortunately,  those                                                            
activities were  not held at the inception of the  project.  She can                                                            
support what ARRC  has done since October of 1999  but prior to that                                                            
she  cannot say  that ARRC  did  an adequate  job  as a state-owned                                                             
entity in getting the word out to the public.                                                                                   
CHAIRMAN COWDERY  asked if the cost of the right-of-way  acquisition                                                            
will be an added expense.                                                                                                       
MR. BINKLEY asked  if Chairman Cowdery was referring  to the airport                                                            
rail project.                                                                                                                   
CHAIRMAN  COWDERY  said  he  was referring  to  the  realignment  in                                                            
Senator Pearce's district.                                                                                                      
MR. BINKLEY  said he  believes there  are several  options for  that                                                            
realignment.   He noted the realignment is just a  proposal and that                                                            
an  existing rail  line  goes into  the  airport.   Initially,  that                                                            
existing rail line would  be used to serve the airport.  If the rail                                                            
station  has a  huge commuter  demand  that interrupts  the  traffic                                                            
flows  at  the  at-grade  crossings,  the  grade  will  need  to  be                                                            
separated to  minimize any impact  to vehicular traffic.   When this                                                            
station was  opened initially,  its anticipated  use was for  cruise                                                            
ship passengers  coming from Seward.  ARRC is looking  at two trains                                                            
per day for those  passengers; one in and one out.   Its use will be                                                            
very limited and  he anticipates using the existing  right-of-way in                                                            
and out of the airport.                                                                                                         
CHAIRMAN COWDERY  said one concern that he has is  that once ARRC is                                                            
tied  into  a  project,   it  might  incur  added  costs,   yet  the                                                            
legislature  is not aware of the full  picture.  He doesn't  believe                                                            
the legislature intends  to micromanage ARRC. He noted AS 36.03.0800                                                            
says that  any lease  cost of $500,000  or more,  or a $2.5  million                                                            
cost  during  the  life  of the  lease,  must  be  reported  to  the                                                            
legislature.   He  pointed  out it  relates to  SB 123  in that  the                                                            
legislature,  in his opinion, only  wants to know what is  going on.                                                            
SENATOR PEARCE  stated that she does not know what  solution lies in                                                            
the   middle,   regarding   legislative   approval   or   at   least                                                            
authorization  for  utilization of  the monies,  which  is what  the                                                            
legislature  does for federal highway  funding and airport  funding.                                                            
She appreciates  what Mr.  Binkley is asking  the legislature  to do                                                            
but she is not sure what  that would look like.  She noted that when                                                            
she hears that  the airport rail project  will cost $28 million  and                                                            
will have one  train in and one train out per day  during the summer                                                            
only, she questions  whether that is the best use  of $28 million to                                                            
TAPE 01-10, SIDE B                                                                                                              
SENATOR PEARCE  said she  has no problem  with keeping the  railroad                                                            
corridor to the airport,  but that project seems like a waste of $28                                                            
million,  especially when the  state has so  many needs.  She  feels                                                            
the legislature and ARRC  need to discuss these projects before ARRC                                                            
makes requests from Senator Stevens.                                                                                            
SENATOR ELTON  asked if the solution  might be to make SB  123 apply                                                            
only  when the  facility  is going  to be  located  in an  organized                                                            
community so that ARRC  doesn't have to get legislative approval for                                                            
a facility outside of an organized community.                                                                                   
MR. BINKLEY responded  that ARRC doesn't build too  many facilities.                                                            
SENATOR ELTON asked if Denali park is unorganized.                                                                              
SENATOR PEARCE said it  is a borough.  She said she can't think of a                                                            
Senate district that doesn't already have a depot.                                                                              
SENATOR ELTON asked about realignments.                                                                                         
MR. BINKLEY  said the major alignments  that ARRC is looking  at are                                                            
at Wasilla, Nenana, Fairbanks,  and the existing one between Wasilla                                                            
and Anchorage.                                                                                                                  
CHAIRMAN  COWDERY asked  if the  Wasilla/Anchorage  realignment  has                                                            
been approved by the Legislature.                                                                                               
MR. BINKLEY said the land exchanges have.                                                                                       
SENATOR PEARCE  noted that  Section 7 of CSSB  123(TRA) refers  to a                                                            
project in an existing  community.  That was specifically put in the                                                            
bill to try to get away from alignments through Healy Canyon.                                                                   
Number 2248                                                                                                                     
SENATOR  TAYLOR   said  it  amazes   him  that  all  of   the  major                                                            
transportation  infrastructure in this state, with  the exception of                                                            
the ferries,  was built  in World  War II.  He  finds it  incredible                                                            
that ARRC is using  this type of funding to upgrade  for the tourist                                                            
community.   It is  building new  terminals at  a tourist park  that                                                            
Alaskans  have  to  get on  a  waiting  list to  get  into.   It  is                                                            
upgrading facilities at  the airport for tourists and facilities for                                                            
tourists going  in and out of Fairbanks.   He asked why ARRC  is not                                                            
extending the  railroad south.  He  commented that every  highway in                                                            
this state was built in  World War II and the only thing that's been                                                            
done, especially  during this Administration, is make  them a little                                                            
wider with better  paving and put bike paths on both  sides of them.                                                            
He guarantees  that no one in his district would complain  about the                                                            
noise from  a railroad.  He said he  wonders how many miles  of rail                                                            
the $28 million could extend south.                                                                                             
MR. BINKLEY said  the $28 million for the airport  rail project came                                                            
through  the Federal  Railway  Administration.   It was  part of  an                                                            
expenditure  specifically for depots  around the country.   ARRC did                                                            
not  have the  opportunity  to use  it in  a different  manner.   He                                                            
pointed  out that  the cost  of constructing  new rail  is about  $2                                                            
million per mile,  if there are no major grade problems  or bridges.                                                            
ARRC would  love to  extend the rail  line.   It is working  closely                                                            
with Representative  James to extend  the line East to the  Canadian                                                            
border.   He is part  of a Northwest  transportation  group  that is                                                            
looking at  extending the rail to  the Northwest Arctic.   Under the                                                            
original  act by  Congress,  Alaska was  guaranteed  1,000 miles  of                                                            
rail, which  has never  come about.   ARRC stands  ready to  talk to                                                            
Alaska's congressional  delegation on a regular basis  about dollars                                                            
to expand the rail.  That would be ARRC's preference as well.                                                                   
Number 2092                                                                                                                     
SENATOR  TAYLOR  said,  regarding  the  question  of  ARRC's  future                                                            
development strategy and  politicizing the process, maybe it is time                                                            
to take  some  of the decision-making   out of the  Railbelt,  which                                                            
dominates the  entire question of  expansion.  He expressed  support                                                            
for SB 123  and said he  wouldn't want to  see a procedure  like the                                                            
STIP used as that is just a rubber stamp process.                                                                               
MR. BINKLEY clarified that  any projects that ARRC does in Anchorage                                                            
go through the AMATS process.                                                                                                   
Number 2004                                                                                                                     
CHAIRMAN COWDERY took public testimony.                                                                                         
MR. JERRY McCUTCHEON,  testifying from Anchorage said,  with respect                                                            
to Mr. Binkley, former  Governor Sheffield did not get the money for                                                            
ARRC.  He  attended a recent  ARRC open house  at which the  airport                                                            
rail project  was shown.   He asked  the engineer  about taking  the                                                            
parking areas  and was told  ARRC was paying  for the parking  area.                                                            
He believes the airport  rail project makes no sense.  That terminal                                                            
cannot  be supported  by tour ship  passengers only.   He  suggested                                                            
scrapping the  project right now.   He pointed out the problem  with                                                            
the derailments  was caused by the fact that employees  were paid to                                                            
not maintain the track.   ARRC employees are currently being paid to                                                            
figure  out design projects,  no matter  absurd,  on which ARRC  can                                                            
spend its  free money.  SB  123 does not  address that problem.   He                                                            
told legislators they need  to address what is going on at the spill                                                            
sight.  ARRC  is still trying to pump,  with suction pumps,  fuel up                                                            
35 feet.                                                                                                                        
Number 1863                                                                                                                     
PAUL LABERTY,  a resident  of the  [indisc. The  government ?]  hill                                                            
neighborhood, which is  immediately adjacent to the rail yard in the                                                            
downtown Anchorage area,  said he supports CSSB 123(TRA).  Regarding                                                            
Senator  Pearce's comment  about the  rail project  market  analysis                                                            
being a cart  before the horse, he  attended the ARRC board  meeting                                                            
in the  summer of  1998.  Commissioner  Perkins  asked staff  if the                                                            
feasibility  study for the airport  terminal had been done,  because                                                            
DOTPF was  looking at  spending $20  million of  ARRC funds  at that                                                            
time.   No feasibility  study had  been done to  verify whether  the                                                            
project  was viable.   About  three or  four months  later,  Senator                                                            
Stevens came  through with  money for the  construction.   Regarding                                                            
Senator Elton's question,  ARRC basically answers to no one locally,                                                            
at least  on the planning  and zoning level.   For example,  ARRC is                                                            
proposing to mine  gravel on ARRC land adjacent to  his neighborhood                                                            
within  a couple  hundred feet  of people's  homes.   ARRC does  not                                                            
believe  it needs to  get a conditional  use permit  for the  gravel                                                            
extraction.    Mr. Laberty  said  that  Mr. Binkley  does  not  want                                                            
construction  projects to become political  before the legislature,                                                             
yet ARRC executives  go Washington,  D.C. to lobby Senator  Stevens.                                                            
He urged the committee to support CSSB 123(TRA).                                                                                
Number 1750                                                                                                                     
LINDA  ANDERSON,  representing  River's  Edge Resort  in  Fairbanks,                                                            
stated support  for CSSB 123(TRA).   The Resort is in the  middle of                                                            
discussions   and   a  local   debate   on  the   Fairbanks   Bypass                                                            
Reconnaissance  Study.   Having  just  learned about  the  Anchorage                                                            
situation,  she is  concerned that  Fairbanks is  heading down  that                                                            
same path.  ARRC  is making an effort to involve the  public in that                                                            
process,  but  as  she speaks  to  people  in  Fairbanks  about  the                                                            
Fairbanks realignment  proposal, she has found that  many people who                                                            
should be  at the table  are not.  Waiting  until the environmental                                                             
impact statement  process occurs is not the answer.   Many people in                                                            
the community  would like to be able  to work with ARRC and  look at                                                            
alternatives.   It appears as though  ARRC has already selected  one                                                            
certain  route.    This route  is  creating  an  entirely  new  rail                                                            
corridor  through the community  of Fairbanks  down the meridian  of                                                            
the Parks  Highway.   Of five new  hotel developments  in one  area,                                                            
four were not notified  about this process.  She has spoken with Mr.                                                            
Binkley at  length about this issue,  but many of the other  resorts                                                            
have not.  To engage the  legislature in this process is appropriate                                                            
and critical.   ARRC  has approached  our  congressional  delegation                                                            
about funding  for the Fairbanks  project.   It's estimated  to cost                                                            
about $85  to $100 million.   The bottom line  is there has  to be a                                                            
lot  more community  input.   In  a second  class  borough, such  as                                                            
Fairbanks,  and most of the entire  Railbelt, except for  Anchorage,                                                            
there  is no required  authority  process  that has  to take  place,                                                            
other than  resolutions, for a railroad  project.  Once a  right-of-                                                            
way is acquired,  the project can  proceed.  Fairbanks does  have an                                                            
FMATS process but ARRC is not required to be engaged in it.                                                                     
CHAIRMAN COWDERY  asked for questions  or further testimony.   There                                                            
being none, the committee took a brief at-ease.                                                                                 
SENATOR TAYLOR  moved CSSB 123(TRA)  from committee with  individual                                                            
SENATOR  ELTON objected  to comment  that  he does not  like to  get                                                            
involved  in local  issues.   He will defer  for now  to the  people                                                            
whose communities  have been  most affected.   He then withdrew  his                                                            
CHAIRMAN COWDERY announced  that CSSB 123(TRA) would be moved to the                                                            
next committee of referral.                                                                                                     
              SB 111-BONDS TO FUND PORTS AND HARBORS                                                                        
SENATOR ROBIN  TAYLOR, prime sponsor of SB 111, explained  that last                                                            
year the legislature passed  legislation that provided for upgrading                                                            
ports and harbors  across the state.   This was a major part  of the                                                            
commitment  the legislature  made  to the  taxpayers  and voters  of                                                            
Alaska  when  it  said  it  would  begin  addressing   the  deferred                                                            
maintenance needs in the  five year plan.  Because ports and harbors                                                            
do not  fall within the  statewide transportation  improvement  plan                                                            
(STIP), money  was appropriated last year for specific  harbors.  SB
111 reflects a  problem that was occasioned by an  amendment made in                                                            
the Finance Committee to  last year's bill.  That amendment provided                                                            
that each community  would have to pay for and obligate  itself to a                                                            
bond and, upon  accomplishing the  repair, the harbor would  then be                                                            
transferred  to the community.  None  of the communities  that he is                                                            
aware of wanted to do that.   The final version of the bill provided                                                            
a mechanism  the communities  could  not take  advantage of  without                                                            
significantly increasing  the cost to themselves.  The harbors would                                                            
not be transferred to the  communities until DOTPF signed off on the                                                            
repairs.   That process  has never  been used  before.  The  harbors                                                            
were originally  built with 50 percent federal money  and 50 percent                                                            
state money.   Unfortunately, the  state never set up an  account to                                                            
maintain the harbors.                                                                                                           
SENATOR TAYLOR  explained  that the only  difference between  SB 111                                                            
and last  year's bill is  that SB 111 would  fund harbor repairs  in                                                            
the same  way they  have been funded  in the  past, through  general                                                            
obligation  bonds.   Those  bonds are  backed  up by  a $50  million                                                            
appropriation  that  the  state receives  from  the  Alaska  Housing                                                            
Finance Corporation.   That appropriation  accomplishes the  purpose                                                            
of funding these  projects.  He hopes that additional  funds will be                                                            
forthcoming  from AHFC  and that the  legislature  will hold  to its                                                            
commitment made last year.                                                                                                      
SENATOR TAYLOR  recommended two amendments to the  committee: one by                                                            
Senator Elton  for funding  to renovate the  harbors in Juneau;  and                                                            
one that includes the Adak  small boat harbor at a cost of $500,000.                                                            
The Adak small  boat harbor could play a large role  in fisheries in                                                            
that area,  especially small  boats that  deliver to the  processing                                                            
plants.   He pointed  out SB 111  will need to  be accompanied  by a                                                            
companion  bill that  will provide  for the transfer  of the  harbor                                                            
facilities and require  the communities to be responsible for harbor                                                            
SENATOR  TAYLOR  moved  to adopt  CSSB  111(TRA).   There  being  no                                                            
objection, the motion carried.                                                                                                  
SENATOR  ELTON noted  that he hardly  ever completely  concurs  with                                                            
Senator Taylor,  but SB 111  is one of those  instances in  which he                                                            
does.    He believes  Senator  Taylor  is  absolutely  right.    The                                                            
deferred maintenance  task force and the legislature  recognized the                                                            
perfect  arrangement  of constellations  in  which  the state  could                                                            
bring the harbors  up to snuff and then step aside  from the ongoing                                                            
maintenance  responsibilities  by turning  the harbors  over to  the                                                            
communities.    He  thinks  the  communities  welcomed  that  notion                                                            
because they recognize  that ports and harbors are economic engines.                                                            
However, communities  were reluctant to take on that  responsibility                                                            
until the state  brought the harbors  up to code.  SB 111  gets back                                                            
to the original  intent of the legislature,  which was based  on the                                                            
deferred maintenance task force's recommendations.                                                                              
SENATOR ELTON  noted that the bill  may need two other changes  that                                                            
are technical  in nature.  He explained that his proposed  amendment                                                            
(Amendment  1) is  on page  2.   On line  9, the  $34,627,500  total                                                            
amount is changed  to $41,746,500  and after line 23, a new  line is                                                            
added that reads, "Juneau   7,119,000."  On page 3, lines 22 and 25,                                                            
the $34,627,500 total amount is replaced with $41,746,500.                                                                      
CHAIRMAN  COWDERY asked  Senator Taylor  if he is  agreeable  to the                                                            
SENATOR TAYLOR said he is.                                                                                                      
SENATOR  ELTON  moved  to  adopt   Amendment  1.    There  being  no                                                            
objection, the motion carried.                                                                                                  
CHAIRMAN COWDERY took public testimony.                                                                                         
MR. CHARLIE BRANCH,  City of Cordova Harbor Department,  stated that                                                            
last year's  last minute  change put  the transfer  of ownership  of                                                            
harbors on  the municipalities first  and promised to reimburse  for                                                            
repairs  after.   He  is glad  to see  the  return to  the  original                                                            
intent.  He supports CSSB 111(TRA).                                                                                             
MR. RAY MAJESKI,  Sitka Harbormaster, commented that  he appreciates                                                            
Senator  Taylor's effort.   Sitka has  been eager  to take over  the                                                            
three  state-owned  harbors,  but  it  needs  the money  to  do  the                                                            
repairs.   Sitka  needs  the  harbors repaired  and  transferred  as                                                            
quickly as  possible.  Any further  delay will cause the  harbors to                                                            
fall into  more disrepair  and cost  more as time  goes on.  DOTPF's                                                            
repair estimates are already  two years old.  It is critical that SB
111 pass  quickly with  no strings attached.  Obtaining permits  for                                                            
repairs could take up to five years.                                                                                            
Number 9993                                                                                                                     
SENATOR  TAYLOR asked  if the City  of Sitka  has already  initiated                                                            
some of the emergency repairs without state funding.                                                                            
MR. MAJESKI  said the A, B, C, and  D floats at Old Thompson  Harbor                                                            
were  sinking   so  the  City  appropriated   $156,000  to   replace                                                            
floatation and do some structural repairs.                                                                                      
SENATOR TAYLOR commented  that some of these cities are so desperate                                                            
they are having  to go into their  treasuries to repair state-owned                                                             
MR. BILL McLENDON,  Acting City Administrator  of Sitka,  said he is                                                            
encouraged  about returning  to the  original plan  of action,  that                                                            
being the money up front with no strings attached.                                                                              
MS. NANCY PETERSON, Assistant  City Manager of Valdez, said the City                                                            
of Valdez is very supportive  of CSSB 111(TRA).  She agrees with Mr.                                                            
Majeski that  passing the bill this  year would be very beneficial.                                                             
The  City of  Valdez is  in  need of  the money  now  and costs  are                                                            
increasing on a daily basis.                                                                                                    
The moderator  from  the Petersburg  LIO informed  Chairman  Cowdery                                                            
that  Daniel Hickman  would  like  to testify  and that  four  other                                                            
participants  from Petersburg  concur with  Mr. Hickman's  position.                                                            
Those participants are  Dean Weeden, Mark Jensen, John Stromdahl and                                                            
John Deboer.                                                                                                                    
MR. DANIEL  HICKMAN, a member of the  Petersburg harbor board,  said                                                            
he is speaking  for the members of  the harbor board, most  of which                                                            
were  present.   The board  supports  CSSB 111(TRA).   Petersburg's                                                             
harbors are  in definite need of renovation  and some construction.                                                             
The board  recognizes that  the harbors hold  an important  economic                                                            
position in the  community.  He asked whether the  bill contains any                                                            
local bond requirements  or responsibilities and what the intent and                                                            
timeline is to transfer the harbors to the municipalities.                                                                      
SENATOR  TAYLOR  explained  that  two bills  will  be  necessary  to                                                            
accomplish   this   purpose.  One   bill   will  provide   for   the                                                            
appropriation  and the second bill will provide for  the substantive                                                            
change in  law.  The second  bill will provide  for the transfer  of                                                            
the harbors  to the communities from  the state upon the  completion                                                            
of the  repairs.  He  assumes the  repairs will  have to be  done to                                                            
both DOTPF's  and  the communities'  satisfaction.   That bill  will                                                            
probably be filed by Monday.                                                                                                    
Number 615                                                                                                                      
MR. ROBERT  PRUNELLA,  City Manager  of Wrangell,  said the City  of                                                            
Wrangell  concurs  with  CSSB 111(TRA)  and  would  like  to see  it                                                            
MS.  SANDRA MOELLER,  President  and  CEO  of the  Aleut  Enterprise                                                            
Corporation, expressed  support for CSSB 111(TRA)  and the amendment                                                            
to include  work on  the Adak.   Adak  has a fish  processor and  is                                                            
trying to attract  small boats.  Adak  has five to six vessels  that                                                            
are less than  60 feet but port facilities are limited  and were not                                                            
set up  to accommodate  fishing vessels.   Adak  contributes  to the                                                            
general fund through its fish and fuel taxes.                                                                                   
MR. CHRIS GATES,  also with the Aleut  Enterprise Corporation,  told                                                            
committee members  that the U.S. Navy  has condemned the  small boat                                                            
harbor  on Adak.   A small boat  harbor is  important to  attracting                                                            
businesses and families to the community.                                                                                       
MR. MATT  ROWLEY,  City of Whittier,  stated  full concurrence  with                                                            
CSSB 111(TRA) and the amendments as presented.                                                                                  
MR. JOHN BITNEY, legislative  liaison for the Alaska Housing Finance                                                            
Corporation  (AHFC),  said  SB  111  is  a rewrite  of  a  piece  of                                                            
legislation   that  passed   last  year  that   made  various   bond                                                            
authorizations.    The projects  in  SB  111 are  being  added to  a                                                            
section of  last year's bill that  authorized AHFC to issue  general                                                            
obligation  bonds whereby the repayment  of those bonds was  to come                                                            
from the $50 million  dividend that AHFC provides  to the state each                                                            
year.  The bonds  authorized in last year's legislation  were closed                                                            
on  February 7.   The  full  $50 million  was  pledged  as the  debt                                                            
service payment  for those bonds out  to fiscal year 2007.   At this                                                            
time, the full  capacity of AHFC to  issue general obligation  bonds                                                            
has  been completed.    The  package  that was  done  completed  the                                                            
capacity  that was  made  available  to the  state when  AHFC  first                                                            
started doing this in 1998.   This was the first time that a housing                                                            
authority had gone out  and issued bonds backed by its own credit on                                                            
behalf of the state government.    He repeated the capacity has been                                                            
completed  at this  time  and the  full amount  of  funds have  been                                                            
obligated into the future.                                                                                                      
SENATOR TAYLOR  said he understood  AHFC's  fiscal note but  he does                                                            
not  understand how,  under  last year's  legislation,  had each  of                                                            
these communities  gone out and bonded themselves,  that legislation                                                            
provided the  mechanism for reimbursement.   He asked if  AHFC would                                                            
not have  had any  money available  to reimburse  those communities                                                             
until 2007.                                                                                                                     
MR. BITNEY replied,                                                                                                             
     The section in the bill  that offered reimbursement to the                                                                 
     municipalities was an offer  to these municipalities - the                                                                 
     reimbursement  was offered  from the  state general  fund.                                                                 
     The reimbursement  in this case  here was not intended  to                                                                 
     come from AHFC.  There were  two packages of bond projects                                                                 
     in that bill.   There were the reimbursements  that I just                                                                 
     discussed,  as  well as  the list  of projects  that  were                                                                 
     added  to here.   So the  projects that  we're running  in                                                                 
     here were  ones that were supposed  to be reimbursed  from                                                                 
     the  state  general  fund, not  from  the  Alaska Housing                                                                  
     Finance Corporation.                                                                                                       
SENATOR TAYLOR  asked, had  the municipalities  gone out and  bonded                                                            
themselves  and rebuilt  their harbors  last  year, the legislature                                                             
would  have to come  up with  general funds  and there  would  be no                                                            
bonding capacity.                                                                                                               
MR. BITNEY said that is correct.                                                                                                
SENATOR TAYLOR  said, "Well, I guess  we got lied to two  ways then,                                                            
didn't we?  Thank you very  much.  I appreciate your comments John."                                                            
Number 24                                                                                                                       
KURT   PARKAN,   Deputy   Commissioner    of   the   Department   of                                                            
Transportation  and  Public Facilities,  introduced  Harold  Moeser,                                                            
DOTPF's  harbor engineer.    Mr.  Parkan said  DOTPF shares  Senator                                                            
Taylor's  concern and believes  the harbors  need to be repaired  as                                                            
soon  as  possible  and transferred  to  the  communities  that  are                                                            
willing to take ownership of them.                                                                                              
TAPE 01-11, SIDE A                                                                                                              
MR. PARKAN explained a  few differences between CSSB 111(TRA) and SB
118, the Administration's  bill.  First, the only  difference in the                                                            
list of harbors  in both bills, aside  from Adak and Juneau,  is the                                                            
inclusion  of the Yakutat  harbor at a cost  of $526,000 in  SB 118.                                                            
Yakutat is willing to take  over its harbor if it is fixed.  Second,                                                            
the  funding   mechanism   in  SB   118  is   via  certificates   of                                                            
participation.   Deven  Mitchell, debt  manager for  the state,  can                                                            
speak  to the details  of that  method.   He noted  SB 118 uses  the                                                            
marine  motor fuel tax  as a revenue  source and  issues debt  using                                                            
certificates  of participation  for that debt.   That debt  would be                                                            
issued  this  fall  and  the  money  would  go  to  the communities                                                             
immediately  after that.   The projects  could be  done as early  as                                                            
next  summer.   Using  a  general  obligation  bond  approach  would                                                            
require a vote  of the people in the  next general election  in 2002                                                            
and the bonds  would be sold in the following spring.   Essentially,                                                            
both  proposals look  at addressing  a  need that  is recognized  by                                                            
SENATOR  TAYLOR  asked if  Adak was  a  military facility  that  was                                                            
conveyed  to a Native  corporation  and whether  the state  actually                                                            
owns that harbor.                                                                                                               
MR. MOESER, Ports  and Harbors engineer, DOTPF, said  the state does                                                            
not own it.                                                                                                                     
SENATOR  TAYLOR  asked if  that presents  a  unique  question as  to                                                            
ownership and bonding and  the capacity of the state to go in and do                                                            
the repairs.                                                                                                                    
MR. MOESER  said that is correct in  the way SB 111 is written  now.                                                            
The bill would take some additional language.                                                                                   
SENATOR TAYLOR  said he would hold off on making the  Adak amendment                                                            
at this time  to get clarification  on the additional language.   He                                                            
moved a second  amendment (Amendment 2) to include  $526,000 for the                                                            
Yakutat harbor and to change  the totals in the bill to reflect that                                                            
addition.  There being no objection, the motion carried.                                                                        
SENATOR TAYLOR  then made  a conceptual amendment  (Amendment  3) to                                                            
integrate the  funding mechanisms for certificates  of participation                                                            
and  utilization  of the  marine fuels  tax  into CSSB  111(TRA)  as                                                            
opposed  to the paragraph  that  begins, "The  bond committee  shall                                                            
issue ...."                                                                                                                     
SENATOR ELTON  objected and asked  Mr. Parkan if, in the  process of                                                            
giving  the money  that  DOTPF  raises by  issuing  certificates  of                                                            
participation,  DOTPF is required  to put strings on how  that money                                                            
is used and whether communities  can determine the priorities on the                                                            
harbor fixes that are needed.                                                                                                   
MR.  PARKAN explained  that  DOTPF would  give the  communities  the                                                            
money and ownership  and would lease  back the facilities  until the                                                            
debt was paid off, at which point the transfer would take place.                                                                
SENATOR  ELTON  said  he  is  comfortable   with  DOTPF  giving  the                                                            
communities the money to  fix the harbors in the way the communities                                                            
see fit.   He is  less comfortable  if DOTPF  tells the communities                                                             
which projects the money can be spent on.                                                                                       
MR. MOESER said  it is DOTPF's intent to transfer  the money with as                                                            
few strings  as possible.  Whatever  strings the bonds put  on DOTPF                                                            
will have  to be put  on the communities.   DOTPF  needs to  have an                                                            
interest  in the  properties  in order  to pay  off the  bonds.   He                                                            
repeated  that  DOTPF's  intent is  to  transfer  the money  to  the                                                            
communities so  that they can implement the projects.   The basis of                                                            
the estimates  is on a "shell," meaning that if DOTPF  was going in,                                                            
that is  where they  would put the  money.   However, DOTPF  doesn't                                                            
care as  long as the  money goes  into the harbors.   He stated  the                                                            
communities do need to  establish their priorities and develop their                                                            
projects without any interference from DOTPF.                                                                                   
SENATOR ELTON  removed his  objection to  Amendment 3, therefore  it                                                            
was adopted.                                                                                                                    
SENATOR TAYLOR  thanked Mr. Moeser  for the work he has done  in the                                                            
communities  in  his district.   All  of  the harbormasters  in  his                                                            
district appreciate the way Mr. Moeser has assisted them.                                                                       
MR. MARK HICKEY,  representing the Aleut Enterprise  Corporation and                                                            
the community  of Adak, told Senator Taylor that the  harbor in Adak                                                            
is under  the control  of the Adak  Reeves Corporation,  which  is a                                                            
public non-profit  corporation  set up under  the Base Closing  Act.                                                            
The agreement  has the harbor ultimately  owned by the community  of                                                            
Adak.  The  community will be voting  for incorporation in  about 10                                                            
days and  that community  is expected  to  be set up  by July.   One                                                            
other harbor  project in the bill  is not for a state-owned  harbor,                                                            
and that is in Nome.  That  harbor is owned by the City of Nome.  SB
118, which  includes Adak and Nome,  has a mechanism to accommodate                                                             
Senator  Taylor's concern.   Under SB  118, the  state would  end up                                                            
with a lease-hold  interest covering  the time period of  payment of                                                            
the  debt  so  that  the  process  of  using  the  certificates   of                                                            
participation  would  be legitimate  for  both Nome  and  Adak.   He                                                            
suggested if the committee  is supportive of doing the Adak project,                                                            
it could treat  Adak consistent with  the way it is done  in SB 118.                                                            
He pointed out  the concern Senator Taylor is raising  is already in                                                            
SB 111  because of  Nome.  Adak  is a little  different in that  the                                                            
harbor is  expected to  be in the  city's hands  by August.   SB 118                                                            
does not allow  any money to be spent  on Adak unless that  happens.                                                            
SENATOR TAYLOR  said with that thought in mind, he  offers Amendment                                                            
4,  and that  is  to  include  Adak at  $500,000.    He said  he  is                                                            
concerned about that number  because he doesn't think Mr. Moeser has                                                            
had an opportunity  to go out and  see that harbor to determine  the                                                            
true cost  of that  project.  He  said that number  is soft  at this                                                            
point but he will offer  it as an amendment, as well as a conceptual                                                            
amendment (Amendment  5) to include the transitional  language (from                                                            
SB 118) necessary to allow Nome and Adak to receive funds.                                                                      
CHAIRMAN COWDERY  announced, with  no objection, Amendments  4 and 5                                                            
were adopted.                                                                                                                   
SENATOR TAYLOR  moved CSSB 111(TRA)  from committee with  individual                                                            
recommendations.  There being no objection, the motion carried.                                                                 
CHAIRMAN COWDERY announced  that the committee was out of time so he                                                            
would hold SB 44 and SB 45 until another hearing.  He then                                                                      
adjourned the meeting.                                                                                                          

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