Legislature(2017 - 2018)BUTROVICH 205

03/30/2017 01:30 PM Senate TRANSPORTATION

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Audio Topic
01:31:45 PM Start
01:32:27 PM Overview: Ports & Harbors
02:20:06 PM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ Overview: Ports & Harbors TELECONFERENCED
                    ALASKA STATE LEGISLATURE                                                                                  
            SENATE TRANSPORTATION STANDING COMMITTEE                                                                          
                         March 30, 2017                                                                                         
                           1:31 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Senator Bert Stedman, Chair                                                                                                     
Senator David Wilson                                                                                                            
Senator Dennis Egan                                                                                                             
MEMBERS ABSENT                                                                                                                
Senator Anna MacKinnon                                                                                                          
Senator Click Bishop                                                                                                            
COMMITTEE CALENDAR                                                                                                            
OVERVIEW: PORTS & HARBORS                                                                                                       
     - HEARD                                                                                                                    
PREVIOUS COMMITTEE ACTION                                                                                                     
No previous action to record                                                                                                    
WITNESS REGISTER                                                                                                              
MICHAEL LUKSHIN, State Ports & Harbors Engineer                                                                                 
Division of Statewide Design & Engineering Services                                                                             
Department of Transportation and Public Facilities (DOTPF)                                                                      
Juneau, Alaska                                                                                                                  
POSITION STATEMENT: Presented an overview of Alaska's ports and                                                               
ACTION NARRATIVE                                                                                                              
1:31:45 PM                                                                                                                    
CHAIR BERT STEDMAN called the Senate Transportation Standing                                                                  
Committee meeting to order at 1:31 p.m. Present at the call to                                                                  
order were Senators Egan, Wilson, and Chair Stedman.                                                                            
^OVERVIEW: PORTS & HARBORS                                                                                                      
                   OVERVIEW: PORTS & HARBORS                                                                                
1:32:27 PM                                                                                                                    
CHAIR STEDMAN announced  an overview of Ports and  Harbors by the                                                               
Alaska  Department   of  Transportation  and   Public  Facilities                                                               
1:32:59 PM                                                                                                                    
MICHAEL  LUKSHIN, State  Ports &  Harbors  Engineer, Division  of                                                               
Statewide   Design   &   Engineering  Services,   Department   of                                                               
Transportation  and  Public   Facilities  (DOTPF),  presented  an                                                               
overview of Alaska's ports and harbors.                                                                                         
1:33:22 PM                                                                                                                    
MR. LUKSHIN  began by showing  a map of commercial,  private, and                                                               
public ports and harbors in Alaska,  of which there are over 500.                                                               
He  said DOTPF  only tracks  the publically-owned  facilities. He                                                               
listed   the  users   of  ports   and  harbors:   commercial  and                                                               
recreational   fishers  and   boaters,  freight   and  fuel   tug                                                               
operators, tourism-related charters,  and subsistence hunters and                                                               
fishers.  Numerous facilities  are unable  to maintain  or repair                                                               
aging  infrastructure due  to lack  of local  funding and  waning                                                               
state revenue.                                                                                                                  
He noted that  Alaska lacks a deep water Arctic  port, which is a                                                               
barrier   to  providing   infrastructure  necessary   to  develop                                                               
Alaska's resources and carry out  national strategic goals in the                                                               
1:34:49 PM                                                                                                                    
MR. LUKSHIN discussed the purpose of ports and harbors:                                                                         
     Provide for the movement of people and the transfer of                                                                     
     goods and services between coastal destinations and                                                                        
     other transportation modes (airports, ferries, trucks)                                                                     
     Provide access to nearby and distant Alaskan villages                                                                      
     and communities;                                                                                                           
     Enhance the mobility of a dynamic fishing fleet;                                                                           
     Provide a safe harbor for commercial fishermen, marine                                                                     
     operators, and recreational users;                                                                                         
     Provide a waterway portal for the public's benefit.                                                                        
He commented  that there are  43,000 miles of coastline  and most                                                               
Alaskans live within ten miles of the coast.                                                                                    
1:35:33 PM                                                                                                                    
MR. LUKSHIN provided details about why Alaska needs ports and                                                                   
     Over  62,000 vessels  of all  types use  our waterways.                                                                    
     Alaska does not title boats.                                                                                               
     Alaska's  fish  management  system  and  limited  entry                                                                    
     areas and high capital  investment in the fishing fleet                                                                    
     require mobility for maximum efficiency.                                                                                   
     Harbors are  spaced and sized to  minimize travel time,                                                                    
     fuel,  spoilage, and  safety cost  factors to  ensure a                                                                    
     productive fleet.                                                                                                          
     Weather is  a significant  risk for vessels  in transit                                                                    
     or engaged in fishing in Alaska's waters.                                                                                  
     Public   demands   access    to   the   waterways   for                                                                    
     recreational and cultural pursuits.                                                                                        
1:37:15 PM                                                                                                                    
MR. LUKSHIN provided DOTPF's perspective:                                                                                       
     DOT&PF   works  with   local   government  to   provide                                                                    
     navigation improvements in Alaska                                                                                          
     DOT&PF established to manage across all modes                                                                              
     Federal  funding  is  still  controlled  by  mode:  air                                                                    
     (FAA), highways (FHWA),  transit (FTA), railroad (FRA),                                                                    
     marine (Corps of Engineers)                                                                                                
     For  federal  projects,  we only  spend  the  necessary                                                                    
     state funds to match  Corps projects. Funds are limited                                                                    
     due to earmarks                                                                                                            
     Most port and harbor  projects are funded entirely with                                                                    
     state funds.                                                                                                               
1:38:32 PM                                                                                                                    
He described what the State Ports and Harbors Engineer does:                                                                    
     Manages DOT&PF investments in navigation projects.                                                                         
     Maximizes   federal  investment   in  Alaska's   marine                                                                    
     Provides  policy  and  guidance to  regional  functions                                                                    
     (i.e., planning, design,  construction, maintenance and                                                                    
     Maintains  database  of  conditions  of  DOT&PF  harbor                                                                    
     facilities and prioritizes harbor M&O projects.                                                                            
     Assists    local    government   with    their    water                                                                    
     transportation    needs,   providing    technical   and                                                                    
     financial assistance.                                                                                                      
     Administers   the  50/50   matching  Municipal   Harbor                                                                    
     Facility Grant program.                                                                                                    
1:39:25 PM                                                                                                                    
MR.  LUKSHIN said  DOTPF is  the largest  harbor owner  of harbor                                                               
facilities  in  the   state.  There  are  at   least  132  harbor                                                               
facilities  statewide and  102 were  built  by the  state in  the                                                               
1960s  and 1970s.  Today, DOTPF  manages only  20 harbors  and 20                                                               
seaplane floats  because they  have transferred  most of  them to                                                               
1:40:38 PM                                                                                                                    
MR. LUKSHIN turned to harbor maintenance and operations:                                                                        
     Deferred maintenance backlog = $15.7 million                                                                               
     No dedicated M&O staff                                                                                                     
     $80K harbor maintenance allocation in SLA16                                                                                
     Average facility  age =  29 years,  oldest is  66 years                                                                    
     Most major harbor maintenance projects cost $1 million                                                                     
     Recently  replaced  DOT&PF   harbor  facilities:  Hyder                                                                    
     (2010), Port Alexander Inner (2011), Kasaan (2012),                                                                        
     Tenakee  (2014),  Naukati   (2014),  Elfin  Cove  Outer                                                                    
     (2016), Baranof (2016)                                                                                                     
     In construction: Port Alexander Outer (2017)                                                                               
1:42:14 PM                                                                                                                    
SENATOR EGAN  noted that  when he  was the  mayor of  Juneau, the                                                               
state transferred harbors  to the City and Borough  of Juneau for                                                               
10 cents  on the  dollar and  now Juneau  must maintain  them. He                                                               
asked how Port Alexander will afford to maintain its harbor.                                                                    
MR.  LUKSHIN responded  that Port  Alexander  would collect  user                                                               
fees to  maintain its harbor.  This project will leave  them with                                                               
brand  new facilities  with a  30 to  40 year  design life.  They                                                               
could  also use  the harbor  facility grant  program to  maximize                                                               
local contributions.                                                                                                            
SENATOR EGAN  pointed out that  the deferred maintenance  fund is                                                               
nearly depleted.                                                                                                                
MR.  LUKSHIN  reiterated that  Port  Alexander  must accept  user                                                               
fees. He  said DOTPF is  not doing deferred maintenance  in other                                                               
places; all available funds will be invested in Port Alexander.                                                                 
1:44:42 PM                                                                                                                    
CHAIR STEDMAN noted many user  groups use Port Alexander and they                                                               
are able to  generate funds to pay for their  own facilities. The                                                               
smaller communities  have a  hard time  accepting that  the state                                                               
will  not build  new harbors  for free.  The matching  grant fund                                                               
could  help  them. For  example,  Gustavus  may  not be  able  to                                                               
maintain a harbor, but Port Alexander is a commercial harbor.                                                                   
1:46:09 PM                                                                                                                    
MR. LUKSHIN explained how harbor facilities are preserved:                                                                      
      Transfer of ownership is the most efficient way for                                                                       
     these assets to be preserved because it:                                                                                   
        Promotes local ownership of the facility and the                                                                        
      responsibility to advocate locally for preservation                                                                       
     and quality of facility.                                                                                                   
     Strengthens the State's position that fees must cover                                                                      
     all expenses, including capital replacement.                                                                               
       Reduces the long term state burden to preserve and                                                                       
     make improvements.                                                                                                         
         State to local ownership is an objective that                                                                          
     satisfies the administration and legislature.                                                                              
He stated that  to date, there have been 82  harbor transfers. He                                                               
showed a graph  of transfers per year and which  ones are locally                                                               
owned and  which are  DOTPF harbors. He  said the  first transfer                                                               
was to Klawock.                                                                                                                 
1:47:59 PM                                                                                                                    
CHAIR STEDMAN asked about Klawock.                                                                                              
MR. LUKSHIN said it was the first transfer they did in 1986.                                                                    
CHAIR STEDMAN noted that their dock already needs an upgrade.                                                                   
MR. LUKSHIN replied that Klawock has not contacted DOTPF.                                                                       
1:48:45 PM                                                                                                                    
SENATOR EGAN commented that the municipalities had to pay to                                                                    
upkeep the "free" harbors.                                                                                                      
CHAIR STEDMAN requested more information about the harbor                                                                       
matching grant fund and how facility requests are ranked.  He                                                                   
said it has been a subject of great discussion.                                                                                 
MR. LUKSHIN said he would address that shortly.                                                                                 
1:49:38 PM                                                                                                                    
MR. LUKSHIN remarked that Juneau received seven harbors in 2003                                                                 
as part of a general obligation bond, along with $7 million. He                                                                 
agreed with Senator Egan that it was not enough.                                                                                
1:50:13 PM                                                                                                                    
MR. LUKSHIN spoke of types of local government assistance:                                                                      
     Deferred  maintenance and  transfer  (AS 35.10.120),  a                                                                    
     formal resolution  declaring local  government's intent                                                                    
     to take over harbor ownership from DOT&PF                                                                                  
     Bond debt service for certain named port and harbor                                                                        
     projects (AS 29.60.700)  for Matanuska-Susitna Borough,                                                                    
     Valdez, Akutan,  False Pass, Unalaska,  Fairbanks North                                                                    
     Star Borough, Fairbanks, Chignik, Nome                                                                                     
     Municipal  Harbor  Facility  Grant  (AS  29.60.800),  a                                                                    
     State 50/50 matching grant program                                                                                         
     Corps  of  Engineer   projects  (AS  35.10.090),  which                                                                    
     requires  a  formal  letter asking  for  technical  and                                                                    
     financial assistance. Federal  funding varies depending                                                                    
     on depth and  the Corps is 100  percent responsible for                                                                    
     any maintenance dredging.                                                                                                  
1:52:32 PM                                                                                                                    
CHAIR STEDMAN  asked for more  details on the bond  debt service.                                                               
He wondered  if the  Fairbanks and  North Slope  Borough projects                                                               
were for the Chena River.                                                                                                       
MR. LUKSHIN  explained that they  were unique pieces  of statute.                                                               
The  Fairbanks  North  Slope  Borough  project  was  for  Eielson                                                               
Airforce Base  school maintenance  and upgrades  and the  City of                                                               
Fairbanks  project   was  for   the  fire   station  headquarters                                                               
replacement. They were  contained in the same  legislation as the                                                               
harbor and port projects.                                                                                                       
CHAIR STEDMAN  said they were  not port  programs, but part  of a                                                               
political package.                                                                                                              
MR. LUKSHIN  added that the  Mat-Su Borough project was  for Port                                                               
1:54:04 PM                                                                                                                    
MR. LUKSHIN described the harbor facility grant program:                                                                        
     Purpose: State funding for Small Boat Harbors                                                                              
     State money only for construction projects                                                                                 
     State provides 50/50 matching funds with a maximum of                                                                      
       $5 million per municipality per year and a minimum                                                                       
     state match of $50,000                                                                                                     
     Projects locally inspired and managed                                                                                      
     Competitive process                                                                                                        
He  explained  that the  grant  program  is the  most  successful                                                               
harbor program. Once the grant  program has been used, the harbor                                                               
moves from  tier one  to tier  two status.  Over time,  the grant                                                               
program  will  ensure  that  all  harbors  compete  equally.  The                                                               
department allows for  local control on projects.  A highlight of                                                               
the grant program is the  fast delivery timeframe; municipalities                                                               
don't have to wait for planning or design work.                                                                                 
1:56:06 PM                                                                                                                    
CHAIR  STEDMAN  referred  to Senator  Egan's  concern  about  the                                                               
inequities related to previously  transferred harbors and floats.                                                               
He provided  a historical perspective  of the transfer,  the lack                                                               
of  a deferred  maintenance program,  and the  need for  a harbor                                                               
grant. He  said the  legislature enacted  a 50/50  matching grant                                                               
harbor program and a plan  for municipalities to charge user fees                                                               
after  that. He  noted  that the  originally transferred  harbors                                                               
have the first  options for the grant. Communities  also have the                                                               
option to  build their own harbors.  If they go to  the state for                                                               
monies,  they  must  run  their harbor  as  an  enterprise  fund,                                                               
maintain it, and have a  sinking reserve. Rate increases to users                                                               
have caused some objections.                                                                                                    
He noted  that small  communities can build  their own  docks. He                                                               
used Port  Alexander as an example  of a community that  made use                                                               
of the grant. He thought the  program worked well and he hoped it                                                               
would  be in  Governor Walker's  budget. The  old system  was not                                                               
working any more.                                                                                                               
2:01:31 PM                                                                                                                    
SENATOR EGAN agreed.  He described the problem  that when harbors                                                               
were transferred they were in  disrepair and they became a burden                                                               
on  the  municipalities. He  noted  that  there  is a  very  long                                                               
waiting  list  for  the  grant. He  reported  that  the  American                                                               
Society  of Civil  Engineers recently  gave  Alaska a  D plus  on                                                               
harbors.  He  asked Mr.  Lukshin  what  DOTPF's solution  is  for                                                               
getting that grade up to a C.                                                                                                   
MR. LUKSHIN replied "more investment and higher fees."                                                                          
CHAIR  STEDMAN said  at least  the state  is going  in the  right                                                               
direction  from F  minus  to  a D  plus.  He  described the  huge                                                               
improvements recently made to harbors  and did not understand the                                                               
reasoning behind the low grade.                                                                                                 
He asked for information about the matching grant list.                                                                         
2:03:58 PM                                                                                                                    
MR. LUKSHIN explained that DOTPF  received seven applications for                                                               
this year's harbor  facility matching grant program.  They had an                                                               
aggregate total of $18.1 million.  DOTPF ranked the projects; the                                                               
highest  ranked  project  was   from  Wrangell  for  $5  million,                                                               
followed  by Sitka  for  $5  million. Next,  were  five tier  two                                                               
projects - Sitka, Valdez, Ketchikan,  Kake, and Skagway. He noted                                                               
these are requests from the  state and the municipalities provide                                                               
an equal match for a total of $36 million.                                                                                      
SENATOR EGAN commented  that most of the projects  are in Senator                                                               
Stedman's district.                                                                                                             
CHAIR STEDMAN said  it is very costly to build  your own dock and                                                               
drive your own pilings - $40,000  or more per dock. It costs more                                                               
to stay  in Juneau,  but less  than if  he had  to build  his own                                                               
2:06:41 PM                                                                                                                    
MR.  LUKSHIN continued  with a  map that  showed the  location of                                                               
harbor  facilities  funded  by   the  Municipal  Harbor  Facility                                                               
Grants. The program has broad  support from the coastal community                                                               
as demonstrated  by yearly resolutions.  He provided the  data on                                                               
the grants  and local  matches, which  equaled $169.9  million of                                                               
local match  offered by municipalities.  They have  authorized 37                                                               
grants this year.                                                                                                               
2:07:59 PM                                                                                                                    
MR. LUKSHIN  addressed one Corps  of Engineers project  using the                                                               
positive  benefit-to-cost ratio  for the  Arctic Deep  Draft Port                                                               
     In 2011, entered into a  cooperative joint agreement to                                                                    
     investigate and conduct  a study for a  deep water port                                                                    
     in the  Arctic. They identified fourteen  sites for in-                                                                    
     depth  study  and three  sites  were  short listed  and                                                                    
     studied in-depth.                                                                                                          
     Point Spencer/Port Clarence, requires  new 27 mile road                                                                    
     at cost of $137.2 million                                                                                                  
     Port of Nome                                                                                                               
     Cape Riley  (Teller), new  5.5 mile road  at a  cost of                                                                    
     $13.7 million                                                                                                              
     The  preferred alternative  is to  expand  the Port  of                                                                    
     Nome. They will extend a  causeway 2,150 feet and build                                                                    
     a  450 foot  long dock.  They will  deepen port  to -28                                                                    
     feet and the ration will be B/C = 1.75.                                                                                    
     The Corps  suspended the project in  October 2015 after                                                                    
     Shell  Oil discontinued  its  oil  and gas  exploration                                                                    
     activities in the Arctic.                                                                                                  
He noted  that the current Water  Infrastructure Improvements for                                                               
the Nation Act would help Nome  and provide hope for this project                                                               
to happen.                                                                                                                      
2:12:08 PM                                                                                                                    
CHAIR STEDMAN  drew attention to  the problem of floats  in Sitka                                                               
having  invasive species  underneath. He  asked if  DOTPF has  an                                                               
answer for that issue.                                                                                                          
MR.  LUKSHIN said  he has  heard  about it,  but it  seems to  be                                                               
unique to each harbor.                                                                                                          
CHAIR STEDMAN  said it is also  in Ketchikan and they  are trying                                                               
to  figure out  how widespread  it is.  It has  huge impacts  for                                                               
damage  to  harbors  and  would be  expensive  to  fix.  Crescent                                                               
Harbor, which  is on the  list to be redone,  is one of  them. He                                                               
thought it needed to be looked into.                                                                                            
MR. LUKSHIN agreed to do so.                                                                                                    
2:15:20 PM                                                                                                                    
CHAIR STEDMAN said another issue  is derelict vessels in harbors.                                                               
SB  92  is  in  another committee  and  addresses  that  problem.                                                               
Another problem is  live-aboards, but he did not  think the state                                                               
had requirements for them.                                                                                                      
MR. LUKSHIN thought it was a local issue.                                                                                       
2:17:05 PM                                                                                                                    
CHAIR STEDMAN  asked about  the availability  of funds  for ports                                                               
from the federal FAST Act Grant Program.                                                                                        
MR. LUKSHIN offered to help find information about it.                                                                          
2:18:23 PM                                                                                                                    
SENATOR  EGAN  asked  for information  about  unfunded  needs  of                                                               
MR. LUKSHIN said he could provide that information.                                                                             
CHAIR STEDMAN  requested more information on  the Harbor Matching                                                               
Grant Fund.                                                                                                                     
MR. LUKSHIN offered to provide that information.                                                                                
2:20:06 PM                                                                                                                    
There being  no further  business to  come before  the committee,                                                               
Chair  Stedman  adjourned   the  Senate  Transportation  Standing                                                               
Committee at 2:20 p.m.                                                                                                          

Document Name Date/Time Subjects
STWD Ports and Harbors presentation_03-30-17_final.pdf STRA 3/30/2017 1:30:00 PM