Legislature(2005 - 2006)BUTROVICH 205
04/07/2005 01:30 PM Senate TRANSPORTATION
| Audio | Topic |
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| SB153 | |
| Overview: Dotpf Projects | |
| Adjourn |
* first hearing in first committee of referral
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+ teleconferenced
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| *+ | SB 153 | TELECONFERENCED | |
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ALASKA STATE LEGISLATURE
SENATE TRANSPORTATION STANDING COMMITTEE
April 7, 2005
1:36 p.m.
MEMBERS PRESENT
Senator Charlie Huggins, Chair
Senator John Cowdery, Vice Chair
Senator Gene Therriault
Senator Hollis French
Senator Albert Kookesh
MEMBERS ABSENT
All members present
COMMITTEE CALENDAR
SENATE BILL NO. 153
"An Act relating to international airports revenue bonds; and
providing for an effective date."
HEARD AND HELD
Overview: Department of Transportation and Public Facilities
Projects
PREVIOUS COMMITTEE ACTION
BILL: SB 153
SHORT TITLE: INTERNATIONAL AIRPORTS REVENUE BONDS
SPONSOR(s): RULES BY REQUEST OF THE GOVERNOR
03/29/05 (S) READ THE FIRST TIME - REFERRALS
03/29/05 (S) TRA, FIN
04/07/05 (H) TRA AT 1:30 PM CAPITOL 17
04/07/05 (S) Moved SB 153 Out of Committee
04/07/05 (S) MINUTE(TRA)
04/08/05 (S) TRA RPT 2DP 3NR
04/08/05 (S) DP: HUGGINS, COWDERY
04/08/05 (S) NR: FRENCH, THERRIAULT, KOOKESH
WITNESS REGISTER
Mr. Mike Barton, Commissioner
Department of Transportation & Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Introduced SB 153.
Mr. Brad Sworts, Planner
Department of Transportation & Public Facilities
P.O. Box 196900
Anchorage, Alaska 99519-6900
POSITION STATEMENT: Presented the overview.
Mr. Dave Eberly, Director of Airport Construction
Department of Transportation & Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Participated in the overview.
Mr. Deven Mitchell, Executive Director
Alaska Municipal Bond Bank Authority
Department of Revenue
PO Box 110400
Juneau, AK 99811-0400
POSITION STATEMENT: Participated in the overview
Mr. Jerry Rafson
Chief of Finance
Northern Region
Department of Transportation & Public Facilities
3132 Channel Dr.
Juneau, AK 99801-7898
POSITION STATEMENT: Participated in the overview
ACTION NARRATIVE
CHAIR CHARLIE HUGGINS called the Senate Transportation Standing
Committee meeting to order at 1:36:08 PM. Present were Senators
John Cowdery, Gene Therriault, Hollis French, Albert Kookesh,
and Chair Charlie Huggins.
SB 153-INTERNATIONAL AIRPORTS REVENUE BONDS
1:36:39 PM
CHAIR HUGGINS announced SB 153 to be up for consideration.
MR. MIKE BARTON, Commissioner, Department of Transportation and
Public Facilities (DOTPF), said:
The bill before you raises the bond cap for the
issuance of international revenue assistance revenue
bonds by $288 million. This increase will allow us to
issue bonds that will be used to finance projects at
Fairbanks and Anchorage airports.
Anchorage is the number one cargo airport in North
America. The outlook for cargo at Anchorage indicates
a steady growth in cargo and much of the airports
operation is financed by cargo carriers. The airport
is operated in accordance with an agreement with a
carrier that obligates the carriers to pay for the
operation of the airport, including the redemption of
these bonds that we would like to issue. The operating
costs are paid out of revenues from the carriers and
federal FAA funds for capital programs.
1:38:21 PM
There are 27 carriers that are signatory to the
agreement and they voted in January on the Capital
Improvement Projects that these bonds will finance and
approved the package. Revenue bonds are commonly used
at airports across the country to finance this type of
capital improvement. As an example, I think that each
of the New York airports carries about $2 billion in
bond debt. These bonds will provide the financing for
new terminals in Fairbanks, the concourse A and B
retrofit in Anchorage and a number of airfield
projects. There are no general funds involved in this
project.
1:40:18 PM
SENATOR COWDERY said Anchorage International Airport sells more
fuel than Los Angles International Airport and Houston
International Airport, which indicates its size and importance.
He heard approximately 11 percent of the Anchorage workforce is
involved in the airport. He expressed support for SB 153.
CHAIR HUGGINS said it is important for the committee to know
what projects the bill would allow and how the bill would affect
the price of airline tickets in Alaska.
COMMISSIONER BARTON said ticket purchasers and federal taxpayers
would pay for the improvements. In addition to the terminal
projects, SB 153 would allow runway reconstruction and airfield
maintenance equipment in Fairbanks. The runway reconstruction
would cost almost $52 million; the airfield maintenance
equipment would be just under $3 million. With the terminal
projects, the total cost of maintenance and improvements at
Fairbanks would be $155 million over the next five years.
Expenditures in Anchorage will include aprons, general aviation
parking, additional taxiway, a snow melting system, homeland
security upgrades in the terminal, noise abatement improvements,
safety, security, and information system improvements,
utilities, roads and grounds upgrades, airfield maintenance
equipment and advanced project planning and design. The total
investment will be Anchorage is $288 million over the next five
years.
SENATOR KOOKESH arrived at 1:46:04 PM.
CHAIR HUGGINS asked whether additional land has been set aside
to accommodate the planned expansion of the Anchorage
International Airport.
COMMISSIONER BARTON said land has been set aside to accommodate
the future expansion of the Anchorage International Airport.
CHAIR HUGGINS said:
Let's take a worst-case scenario, which is this bond
package doesn't happen. Could you give us your
thoughts as Department of Transportation Commissioner,
about the impact of that in terms of the concourses
and hazardous materials and things of that nature.
COMMISSIONER BARTON responded:
One of the major reasons for the concourse A and B
retrofit is that they are deficient in terms of
seismic standards. The octagonal end of concourse B is
at extreme risk. The concourse itself is the next
level down in risk and the ticket and concessions area
is also at extreme risk.
1:49:37 PM
DAVE EBERLE, Director of Airport Construction, Department of
Transportation and Public Facilities (DOTPF), said:
Concourse B poses the largest risk. The hexagon at the
end of concourse B and the ticket lobby and concession
area are at the next highest-level risk. Concourse B
itself could actually suffer a total collapse in the
event of a major quake according to a recent thorough
evaluation of all of the airport structures. Concourse
A is in the best shape. It is the most recently
constructed and only has a few seismic deficiencies.
However, there are some structural upgrades that
should be done to A at this time.
COMMISSIONER BARTON asked Mr. Eberle to address the Fairbanks
terminal.
MR. EBERLE responded:
I don't know all of the details of Fairbanks, but I do
know they have similar structural deficiencies in the
older sections of their buildings. There are
additional problems in Fairbanks due to the location
of the terminal to the taxiways. There are some
interference issues arising from clearance
requirements between the taxiway and any jets parked
at the terminal.
1:52:09 PM
They have evaluated whether they should rehabilitate
the existing terminal or build a new terminal. They
have decided that it is most cost effective to upgrade
the newer sections of the terminal and to rebuild the
older sections of the terminal.
COMMISSIONER BARTON said that the vulnerability of the airport
to seismic activity represents a great liability to the state
since it could be accountable for losses associated with a
collapse of the concourse. He added that in the event of an
earthquake, it would be very important to have an operational
airport.
CHAIR HUGGINS said:
Mr. Commissioner, I think that it is important to
Alaskans to have some assurance that we won't have a
repeat of the cost overruns that we had in the
previous concourse.Could you speak to us for a few
moments about that.
COMMISSIONER BARTON responded:
I would be delighted to address that. First, part of
an overrun on concourse C was the result of 9/11.
Second, part of the additional cost was a result of
increased space needs that were identified by the
airlines. The third part was a result of the building
permit process and none of us want to revisit what
happened there. We have decided to use a different
management process for both Fairbanks and Anchorage,
what is commonly called 'Construction Manager at
Risk'. Before we enter into the final construction
contract, we will ask for a guaranteed maximum price
for each of the terminal facilities.
This is a process that has not been used much in
Alaska. It has been used in other parts of the
country. It has been used extensively by the City of
Phoenix. I think that, coupled with the management
structure that we have agreed with, with the airlines
called 'Program Executive Committee' which is a
committee composed of an airline representative and
some DOT staff, which will look at any changes in
scope that might come forth as this project moves down
the road, and they will make recommendations to me on
whether to accept or reject them. Our goal is to bring
this project in on time and on budget and we think
that this process will allow us to accomplish that.
SENATOR COWDERY asked if the state would insure the contractors
working on the projects or if the contractors would insure
themselves.
1:57:27 PM
MR. EBERLE replied that the design firm would have annual
insurance through the Division of Insurance. He said the
department has not decided if it will buy a project-specific
policy such as it did for the concourse C project. The
construction manager at risk would not be the appropriate
contracting body to carry the annual insurance; it would be
carried through the designer. Either the department would place
a separate policy or it would be done through the design
department.
1:59:04 PM
SENATOR FRENCH asked how the projects would add to the cost of
an airline ticket.
MR. BARTON replied he assumes the airlines have considered the
question and have determined that it would not significantly
affect their market.
2:00:40 PM
SENATOR FRENCH asked whether the cost of improvements would be
paid by local ticket revenue.
COMMISSIONER BARTON said the payment would not be localized
since the airports of Anchorage and Fairbanks are operated as a
single entity in terms of cost recovery.
COMMISSIONER BARTON remarked about 80 percent of the revenue
collected from the International Airport System is collected
from cargo carriers is not related to passenger ticket prices.
2:03:11 PM
SENATOR FRENCH asked the state's upper limit to pay for bonds at
both airports.
COMMISSIONER BARTON replied the limit is ultimately determined
by what the bond buyers are willing to pay. He does not know a
specific number and he reminded the committee that many airports
have a greater bond debt than Alaska has.
DEVEN MITCHELL, debt manager, Department of Revenue, commented:
The question as far as what is the airports capacity
to borrow is answered by a complex equation, if you
will. There are rates and charges at the airport as
it is operated as an enterprise fund as Commissioner
Barton pointed out, and there is potential competition
for the cargo carriers from other airport systems in
North America. I think that Anchorage has certain
strategic advantages in terms of its geographic
location and its regulations. As far as how their
fees compare to the other potential competition, they
are well below the other airports.
As far as additional bonds, we have covenants that are
in our bond documents which are already outstanding
that limit our ability to issue additional bonds. We
have to have a feasibility report conducted and meet
both an additional bonds test as well as an early
recovery requirement projected into the future. So
those are assurances that we have provided to
purchasers of this debt that we won't borrow too much.
Again, as commissioner Barton pointed out, the market
has indicated what they are comfortable with this
level of borrowing and if we were to go beyond that,
the rating of the airport system as a revenue
enterprise would be in jeopardy and it would be more
difficult to sell such bonds.
In all of my interactions with the ratings analyst
that cover the airport system as well as underwrites
that follow the state generally and the airport
specifically, they have all been of the opinion that
it is still reasonable and very doable for the system
to undertake this level of construction activity.
SENATOR FRENCH asked how one determines the expenses included in
a bond package.
MR. BARTON replied the first determination is whether it is a
capital improvement project or equipment for a capital
improvement project. After that is decided, a meeting is held
with the airlines to go through the non-operating budget items
and come to an agreement on what the program would be.
2:07:45 PM
SENATOR FRENCwhether all of the aforementioned improvements fall
under capital expenses rather than operating expenses.
COMMISSIONER BARTON responded that all of the expenses that have
been put before the committee are capital expenses.
2:08:49 PM
CHAIR HUGGINS remarked there were 27 carriers on the list of
signatories and asked if some of them were swept up in the
momentum.
COMMISSIONER BARTON said:
There is no question, some of them didn't even vote.
They were provided a ballot to vote. I think that
there were only a total of 15 or 17 votes for the
highest project. Some of the carriers do not
participate, but the way that the voting structure is
set up is that two-thirds of them have to disapprove a
project for it to be not approved. In other words, not
voting is recorded as approval. So some of them may
well have thought this through and understanding that
process, just didn't bother to go through the process
of voting.
CHAIR HUGGINS asked whether it is possible that a number of
carriers could go away and thus cause general fund dollars to
have to be used on the bonds process.
COMMISSIONER BARTON said these bonds are insured and no general
fund dollars are at risk since the insurance will cover any
failure on the part of the signatories. Secondly the probability
of carriers going away is higher than that of the markets going
away. If an individual carrier leaves the Anchorage market,
somebody would replace it.
2:12:42 PM
SENATOR COWDERY asked whether the pavement construction problems
associated with non-layered pavement have been corrected.
COMMISSIONER BARTON responded they have been corrected. He asked
his assistant to explain the cause of the problems.
MR. EBERLY said he did not know.
2:14:50 PM
CHAIR HUGGINS remarked highways in Alaska have a five-year life
expectancy. He asked what is the lifespan of Alaskan runways as
compared those of the Lower 48.
MR EBERLY replied:
A lot of the life expectancy of a runway has to do
with the volume and weight of the aircraft using that
runway; it has a lot to do with the materials used to
build the runway. I believe that the Fairbanks runway
is in excess of 30 years old and that is why they are
going through a major reconstruction effort. Here in
Anchorage I would expect a runway to last from four to
seven years.
SENATOR COWDERY moved SB 153 from committee with individual
recommendations and attached fiscal notes. There being no
objections, the motion carried.
^OVERVIEW: DOTPF PROJECTS
BRAD SWORTS, Mat-Su Area Planner, Department of Transportation
and Public Facilities (DOTPF), presented a slide and commentary
on the Parks Highway Multimodal Alternative Wasilla Corridor. He
said that the Wasilla area is growing so rapidly that it its
downtown area is becoming congested. At the present time 33,000
vehicles travel the Parks Highway per day and this rate is
projected to rise to 54,000 by the year 2025. He said that the
Department of Transportation and Public Facilities (DOT) needs
$2 million to begin an environmental process to build a
multimodal corridor, which will probably run south of Wasilla.
He said that he expects the Alaska Railroad Corporation to be a
full partner in the process.
2:29:11 PM
MR. SWORTS said one of the advantages of acting now instead of
later is as the area continues to develop; the cost of right-of-
way will continue to increase. Other Parks Highways projects
have demonstrated that right-of-way costs can exceed
construction costs. The second advantage is the preservation of
lower impact corridors and the longer one waits the less choice
one has of the corridor to choose. It is possible that many
presently viable corridors may be eliminated by development
around Wasilla.
MR. SWORTS said the department is trying to provide a freeway
style multi-lane, controlled access highway with interchanges at
major intersections. DOT projections show that without a
controlled access corridor, as many as 12 lanes would be
required to carry the east-west traffic load and those 12 lanes
will not fit through Wasilla, Meadow Lakes, or Houston.
COMMISSIONER BARTON said the next project is the North Pole
Interchange on the Richardson Highway.
JERRY RAFSON, Chief of Finance, Northern Region, Department of
Transportation and Public Facilities (DOTPF), said the North
Pole is a fast growing area with a lot of land available for
development. The City of North Pole has gravitated to the more
recently built section of the Richardson Highway and there is an
increasing amount of cross-town traffic as a result of the
development.
2:41:40 PM
The North Pole Interchange is at the intersection of Dawson Road
and the Richardson Highway. The project would convert an
existing ad grade unit section to a separated interchange. It
would also extended frontage roads to the east to connect up
with 5th Avenue and Mission Road and Lawrence Road. The project
includes extending Dawson Road to the south to connect with
Lawrence Road in the refinery area and extends Frontage Road to
the West towards Mission Road.
MR. RAFSON said the DOT is currently in the process of
preliminary engineering for the project and expects to finish it
this year. The utilities and right-of-way phases of the project
would begin shortly after. The DOT hopes to move to the
construction phase by 2007. GARVEE bonds originally funded the
project for $16 million, but changes made in the public review
and design process raised the cost of the project to about
$23.35 million. The DOT plans to cover the increase with federal
highway stipulated funds. He said that much additional work,
including everything from a bypass to additional overpasses, was
requested, but given the funding situation; the DOT has
determined that those projects would have to be carried out in a
later phase.
2:43:39 PM
SENATOR THERRIAULT said:
You have said that the design changes have upped the
dollar amount and the additional overpass at 5th
avenue will have to be a separate project. The
original GARVEE amount was light at that time was it
not?
MR. RAFSON said that is correct.
SENATOR THERRIAULT asked whether the department has a request
for funding for the 5th Street overpass project.
MR. RAFSON answered additional funding is included in the
stipulation for 2007 when funds for the project are needed.
SENATOR THERRIAULT asked whether the department would terminate
crossover traffic at 5th Avenue and Mission Road as part of the
project.
MR. RAFSON responded crossover traffic at 5th Avenue and Mission
Road would be terminated. He said cross traffic between Mission
Road and Lawrence Road would have to follow Frontage Road down
to the interchange to cross.
2:46:03 PM
MR. RAFSON presented a slide on accident statistics pertaining
to the roads involved in the project. The main purpose of the
project is to improve safety while maintaining the pass for the
upper Richardson Highway. There have been a number of fatalities
and injuries in the area and the project would help reduce such
incidents by eliminating conflicts created by the slow speed
local traffic trying to cross the high speed Richardson highway.
SENATOR THERRIAULT asked Mr. Rafson whether he has the latitude;
within the design limitations imposed by the federal government,
to oversize the culverts in the Cheena Slough. He said that
North Pole has an ongoing problem with beavers damming the
culverts and preventing maintenance workers from clearing them.
MR. RAFSON replied the department has the ability to install
oversized culverts and he would look into having such culverts
installed.
SENATOR COWDERY stated the federal requirements associated with
the GARVEE bonds are more stringent than other available means
of funding and if so, whether the federal requirements might
create unnecessary delays for the project.
MR. RAFSON said to use GARVEE bonds, the federal aid process
must be followed compliance with the National Environmental
Policy Act must be met. Environmental requirements are not as
stringent with general fund bonds.
MR. RAFSON presented a series of slides and commentary on
proposed improvements for the University Avenue, Geist Road,
Johansen Expressway Intersection. The Johansen Expressway
carries over 20,000 vehicles a day and University Avenue carries
a similar amount. He said the traffic in the area is expected to
increase by 3 to 4 percent a year. The intersection has one of
the highest accident rates in the Northern Region largely
because of severe congestion during peak hours.
The severe congestion is partially due to a lack of dedicated
right turn lanes in the intersection. This project intends to
provide those lanes as well as similar modifications that are
required to move traffic through the intersection more
efficiently.
2:52:42 PM
MR. RAFSON presented a slide on the project's budget and
schedule. The department has proposed the project be funded with
general funds because that would allow it to be completed two to
three years sooner than the proposed federal project. He said
that the time saved through general funding would mean fewer
accidents in the area.
2:54:56 PM
MR. RAFSON presented a series of slides on projects that have
been proposed along the McCarthy Road.
2:56:56 PM
MR. RAFSON said the McCarthy road is a 59-mile road running from
the community of Chitna to the community of McCarthy. The
proposed projects would improve access to the Wrangle St. Elias
National Park and Reserve, the Town of McCarthy, and various
land holdings along the road. While there is very little summer
traffic along the road now, the department projects that traffic
will reach summer peaks of 600 vehicles per day in the next ten
years.
The existing road is very narrow and lacks surfacing and ditches
and there are many locations that have extensive mud and water
flowing over the road. The population of McCarthy, while only
about 66 now, swells in the summer with visitors and summer
transients. There are several hotels and bed and breakfasts in
the town.
2:59:05 PM
The department has research for an environmental impact
statement (EIS) underway for various proposed projects on the
McCarthy Road. The department has proposed major improvements
for the first section of the road, which would be initiated when
the environmental impact statements are completed.
3:01:27 PM
MR. RAFSON said the department expects to complete the draft
environmental impact statement for its various projects by next
winter. The department has determined that widening the road
into two lanes would cost an estimated $100 million. The
department has chosen to focus on the first section of the road,
which is the section that gets the most traffic and has the
worst potential for a landslide.
The department feels it is imperative to get funding just to
keep the road open and that is what the state funded project
proposal is intended to do. It would allow the department to
side step some of the federal red tape and, hopefully, allow it
to be able to deliver some drainage and surfacing improvements
by next summer.
3:05:31 PM
The department has another project called Slide and Flood Damage
Repairs. Several years ago there was a flooding event in which
the Cheena River ate into the approach to the Cheena River
Bridge. During the same storm there was a slide in the area
between Kennicott and McCarthy where the road was covered with
10 to 20 feet of mud. The department is currently designing
permanent repairs that would protect the bridge in the future
and ensure that the mudslide area is dry enough to allow for
permanent repairs.
MR. RAFSON related the department's final project involves
improvements in the parking situation on both sides of the
footbridge at the end of the McCarthy Road.
3:07:31 PM
CHAIR HUGGINS asked whether he correctly understood the witness
to say that the average daily projected peak use of the McCarthy
Road would rise to 600 vehicles per day.
MR. RAFSON repeated the peak daily traffic rate is projected to
rise to 600 vehicles per day.
CHAIR HUGGINS asked what the current peak traffic rate of the
McCarthy Road is.
MR. RAFSON replied it is about 100 vehicles per day.
There being no further business to come before the committee,
Chair Huggins adjourned the meeting at 3:10:09 PM.
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