ALASKA STATE LEGISLATURE  LEGISLATIVE COUNCIL  AUGUST 17, 2017  12:02 PM    MEMBERS PRESENT    Representative Sam Kito, Chair  Senator Bert Stedman, Vice Chair  Representative Matt Claman  Representative David Guttenberg  Representative Charisse Millett  Representative Dan Ortiz  Representative Louise Stutes  Representative Harriet Drummond, Majority Alternate  Representative David Eastman, Minority Alternate  Senator Pete Kelly  Senator Anna MacKinnon  Senator Kevin Meyer  Senator Peter Micciche  Senator Cathy Giessel    MEMBERS ABSENT    Representative Bryce Edgmon  Senator Lyman Hoffman    OTHER MEMBERS PRESENT    Senators Egan and Olson    AGENDA    APPROVAL OF AGENDA  RATIFICATION OF CHARITY EVENTS  CONTRACT APPROVALS  EXECUTIVE SESSION  OTHER COMMITTEE BUSINESS    SPEAKER REGISTER    Tim Banaszak, Information Technology Manager, Legislative  Affairs Agency  Doug Gardner, Director, Legal and Research Services  Pam Varni, Executive Director, Legislative Affairs Agency  Jeff Rader, VP Corporate Properties Group, Wells Fargo Bank    12:02:24 PM    I. CHAIR SAM KITO called the Legislative Council meeting to  order at 12:02 p.m. in Room 519 (House Finance) of the  State Capitol. Present at the call were Representatives  Millett and Kito; and Senator Stedman. Present on  teleconference were Representatives Claman, Guttenberg,  Ortiz, Stutes, and Drummond (alternate); and Senators  MacKinnon, Giessel, Meyer, and Micciche. Senator Hoffman  joined after the Charitable Events item. Representatives  Edgmon, and Eastman (alternate), and Senator Kelly, were  absent.    CHAIR KITO noted for the record that because many Council  members were participating via teleconference, a roll call  vote would be taken for each motion.    II. APPROVAL OF AGENDA    VICE CHAIR STEDMAN moved that Legislative Council approve  the agenda.    A roll call vote was taken.    YEAS: Claman, Guttenberg, Millett, Ortiz, Stutes,  Drummond, MacKinnon, Meyer, Micciche, Giessel,  Stedman, Kito    NAYS: None    The motion passed 12-0.    III. RATIFICATION OF CHARITABLE EVENTS  a. Boys & Girls Club of the Kenai Peninsula Annual Auction  Gala    SENATOR MICCICHE stated for the record that he has been a  member of the Boys & Girls Club of the Kenai Peninsula  Board of Directors for the last 25 years and requested to  abstain from voting on this item. There was an objection  and Senator Micciche was required to vote.    VICE CHAIR STEDMAN moved that Legislative Council ratify  the Chair's sanctioning of the following charitable event  per AS 24.60.080(a)(2)(B):  • Boys & Girls Club of the Kenai Peninsula Annual  Auction Gala    A roll call vote was taken.    YEAS: Claman, Guttenberg, Millett, Ortiz, Stutes,  Drummond, MacKinnon, Meyer, Micciche, Giessel,  Stedman, Kito    NAYS: None    The motion passed 12-0.    IV. CONTRACT APPROVALS  a. FY18 Microsoft Software Renewal  b. Wells Fargo Lease Amendment and Extension    a. FY18 Microsoft Software Renewal    TIM BANASZAK, Manager for Information Technology for the  Legislative Affairs Agency, stated that the Alaska  Legislature, along with the Executive and Judicial  Branches, are in the third and final year of a three-year  licensing agreement with Microsoft for software products  used by the State of Alaska. Software House International  (SHI) is the State's re-seller/provider of these products,  which include Windows 10, Windows server operating systems,  and the Office software suite (Word, Excel, Outlook,  PowerPoint, etc.). Other important products covered under  the Agreement include the Legislature's network software  and internet systems that provide us with email (Exchange),  SQL databases (BASIS), network storage (N Drives), web  servers (akleg.gov), SharePoint and Skype for Business  communication services, as well as increased email storage  capacity, software licensing and collaboration for mobile  devices.    He said this Agreement provides the benefits of reduced  volume pricing, enhanced technical support, regular  software upgrades and training vouchers for technical  staff.    The Legislature's portion of the renewal for FY2018 is  $124,826.62, which is budgeted under the Administrative  Services component each year, and requires Legislative  Council's approval.    He advised members that the Executive Branch was beginning  its negotiations now with Microsoft for next year's  contract.    In response to a question by the Chair, Mr. Banaszak  confirmed that this Agreement allowed the Legislature the  ability to take part in the pilot program Office 365.    REPRESENTATIVE MILLETT thanked Mr. Banaszak and  acknowledged that he and his staff recently received a  national award at the National Conference of State  Legislatures annual meeting for the Alaska Legislature's  website; she added that Alaska is on par with much larger  states in technological advancements, and thanked him for  all the hard work that he and his staff do.    MR. BANASZAK responded that there were many folks who  worked on that project, notably the LIO's Tim Powers, in  addition to his staff. He said he appreciated her  acknowledgement.    12:14:01 PM  VICE CHAIR STEDMAN moved that Legislative Council approve  the expenditure of $124,826.62 to Software House  International (SHI) for the Legislature's portion of the  annual Microsoft Enterprise Agreement.    A roll call vote was taken.    YEAS: Claman, Millett, Ortiz, Stutes, Drummond, MacKinnon,  Meyer, Micciche, Giessel, Stedman, Kito, Hoffman*    NAYS: None    The motion passed 12-0.    *It was noted that Senator Hoffman had joined the meeting.    b. Wells Fargo Lease Amendment and Extension    DOUG GARDNER, Director of Legal Services, spoke on  teleconference and noted that, while Pam Varni had been  directly involved in the lease negotiations and this  particular amendment, he would speak to the legal portion  of this item. He said that this lease extension would allow  Wells to continue to extend their use of one of the floors  in the building for 3.5 additional months. It was his  understanding that they were having logistical issues with  a renovation of the space to which they hope to move. His  understanding is that the lease rate would remain the same  for that space and this was not harmful or disruptive to  the Legislature. He added that another thing the amendment  does, was that it responded to Wells Fargo's request under  federal law to try and address any resolution event that  might occur in the event that Wells Fargo enters into the  wonderful world of resolution and their assets, or a  portion of their assets, are picked up by an affiliate.    He said Emily Nauman, Legal Services Staff, put together a  memo to Legislative Council members and, on page two of  that memo, it pretty much goes through the punch list of  what the highlights of that are. He said he would be happy  to speak to that as the Chair desires.    CHAIR KITO asked Ms. Varni to speak to this item to provide  another perspective.    PAM VARNI, Executive Director of the Legislative Affairs  Agency, noted that Jeff Rader of Wells Fargo was also on  teleconference and could speak to the resolution issue. She  said presently Wells Fargo is leasing the third floor in  addition to the branch space on the ground floor. There is  a 10 year lease for the branch space; Wells Fargo has  vacated the fourth floor; their leased space on the third  floor was due to terminate on March 15, 2018, but there was  a delay with the renovations of their new space and thus  they requested an additional three months lease extension.  They are presently paying $34,648.75 per month, so this  would be an additional $121,270.63 of revenue to the  Legislature for the extra three months.    In response to a request for clarification by the Chair,  Ms. Varni confirmed that the lease extension was through  June 30, 2018.    CHAIR KITO asked for brief testimony from Mr. Rader of  Wells Fargo regarding the resolution piece of the lease  amendment.    JEFF RADER, Wells Fargo, said Mr. Gardner correctly  captured the resolution recovery plan. This was language  that the federal government was having all banks secure in  all of their leases across the country in the event that  there is a resolution or an insolvency. It provides that  the bank branch would be maintained and operated by a  receiver, and there would be no change in the rent payment.  It allows for affiliates or the receivership to run the  operation during the insolvency. He said it was his  understanding that most of this was current statutory law  anyway. It does go a little bit farther in its allowance of  affiliates than what the statute has. He said we have some  5,000 of these across the country and are asking landlords  to accommodate that request to have the language in the  leases.    REPRESENTATIVE CLAMAN asked if the Wells Fargo lease rate  was a competitive market rate.    MS. VARNI confirmed that was correct. There are two  different rates: one for the branch and one for the third  floor corporate office. She said she could get the exact  figures to Rep. Claman, but that it was her recollection  that one of the rates was in the $3.00 range and the other  was $2.65 per square foot.    REPRESENTATIVE GUTTENBERG said that while it may be a  statutory requirement for Wells Fargo, it wasn't a  statutory requirement for the Legislature. He wanted to  know what protections the Legislature would be given as the  landlord.    MR. GARDNER responded that the FDIC could wield a heavy  hand and probably would have a lot of influence, perhaps  even chart their own course to some extent on the lease;  however, if there is a resolution event, he wanted the  Legislature to be in a position to at least talk to the  affiliate, to Wells Fargo, and to the federal government on  some of these provisions. Having something in the lease,  where we have attempted to comply with federal law and we  at least have some protections and some bookends on it  would be helpful. He said, for example, the lease doesn't  require the Legislature to continue to extend it to the  affiliate beyond the period of the lease, but it might be  in negotiations that we've done our best to protect  ourselves and it might be that the affiliate and the  federal government really try to follow the lease; it was  his experience that people generally do. He summarized his  comments was that having some provisions that protect us  the best that we can under these circumstances, having some  language that we can fall back on in dealing with the  lessee and any potential affiliate was good.    Mr. Gardner went on to say that at the March 2018 meeting,  the over-arching issue seemed to be should we do this at  all if the federal government was just going to pave over  us anyway. His response is that (1) we control our destiny  as much as possible; and (2) we are in this together with  Wells Fargo, they are partners with us in terms of this  lease and we should do what we can to try and amend the  lease in a way that was mutually beneficial to comply with  federal law.  DISCUSSION FOLLOWED on the original lease language versus  the amendment regarding a resolution recovery; requirements  for banks to pass a "living will test, part of the Dodd- Frank Act; the lease extension versus the language change  request to comply with federal law; and that extending the  lease does not impact plans to renovate the third floor.  There was a comment of support in extending the lease for  additional revenue.    Representative Eastman joined the meeting at approximately  12:30 p.m.    12:34:49 PM  VICE CHAIR STEDMAN moved that Legislative Council approve  the Wells Fargo Resolution Recovery Plan and Lease  Extension which requires an amendment to our lease at 1500  W. Benson Blvd. with Wells Fargo.    A roll call vote was taken.    YEAS: Claman, Guttenberg, Millett, Ortiz, Stutes,  Drummond, Hoffman, MacKinnon, Meyer, Micciche,  Giessel, Stedman, Kito    NAYS: None    The motion passed 13-0.    V. EXECUTIVE SESSION    12:36:33 PM  VICE CHAIR STEDMAN moved that Legislative Council go into  Executive Session per Uniform Rule 22(b)(2) discussion of  subjects that tend to prejudice the reputation and  character of a person. He said staff to the Chair and Vice  Chair could remain in the room and everyone else was  excused.    CHAIR KITO asked if any Council members were concerned with  staff remaining on teleconference or in the room.    SENATOR MACKINNON responded that it depended on what was  being said. She said the issue had come up before with  folks in the room with cell phones and that the fewer  people in the room, the better.    CHAIR KITO said that his recommendation was that  Legislative Affairs staff would remain, legislative staff  remain, and of course any Legislators as well. He reminded  all participants that items discussed during executive  session are confidential and cannot be spoken of or  released outside the meeting. Legislative staff would be  barred from future meetings if any information was released  outside of executive session.    SENATOR MICCICHE said that he believed it would impede open  discussion if staff were allowed to remain in executive  session.    SENATOR GIESSEL concurred with Senator Micciche and had  concerns with staff being in executive session.    CHAIR KITO said he acknowledged those concerns. He amended  his recommendation to say that Legislators may remain on  teleconference or in the room; legislative staff aside from  Ms. Koeneman, staff to Chair Kito who helps to run the  meeting and Senator Stedman's staff Randy Ruaro, will not  be included in executive session. Legislative Affairs staff  allowed to remain in executive session included Executive  Director Pam Varni, Finance Manager Jessica Geary, Legal  Services Director Doug Gardner (on teleconference),  Recorder Molly Kiesel, and Moderator Danea Burns. Chair  Kito added legislative staff Jim Puckett to those allowed  to remain in executive session.    12:40:50 PM  Legislative Council went into executive session.    2:17:59 PM Legislative Council came out of executive session.    CHAIR KITO postponed the final item, Anchorage Legislative  Office Building - Phase I Reconciliation; he further noted  that Council would continue the executive session  discussion at a future meeting.    There being no further business before the committee,  Legislative Council adjourned at 2:20 p.m.    2:19:02 PM