Legislature(2005 - 2006)HOUSE FINANCE 519
02/14/2005 01:30 PM House FINANCE
| Audio | Topic |
|---|---|
| Start | |
| HB42 | |
| HB102 | |
| HB115 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | HB 42 | TELECONFERENCED | |
| + | HB 102 | TELECONFERENCED | |
| + | HB 115 | TELECONFERENCED | |
HOUSE BILL NO. 115
An Act relating to charges paid or collected by users
or occupants of an airport facility owned or controlled
by the state.
JOSH APPLEBEE, STAFF, REPRESENTATIVE TOM ANDERSON, noted
that HB 115 would provide a mechanism for customer facility
charges or Consumer Finance Charges (CFC) to improve airport
facilities without the expenditures of State funds. The
most common projects that CFC's are used to fund are car
rental facilities. The bill provides a revenue stream to
maintain and operate the facilities, without requiring an
increase in the airport-operating budget, as the cost of
maintenance would be paid for by the related customer
facility maintenance charges.
He reiterated that HB 115 would implement a valuable private
market tool to construct improvements to Alaska airports,
without the expenditure of public funds. It would help to
improve amenities provided to the traveling public, both
Alaskan and non-Alaskan.
Mr. Applebee advised that this would be a private industry
initiated project, sponsored by local airport car rental
companies. He stated that they are in the process of
undertaking a similar project at Ted Stevens International
Airport in Anchorage. The project was delayed by 9-11
events and is now moving ahead. During negotiations with
the State over the implementation of the project, bond
counsel identified certain issues with language set forth in
Ch. 99, SLA 2001. That language needs to be clarified to
ensure that the bonds are marketable.
Mr. Applebee continued, issues revolve around clarifying a
new revenue stream generated by the CFC, which would not be
considered revenue for the State. The bond is a private
initiative and ensures that the bond trustee, not the State,
take custody for those funds. Without that clarification,
the 2001 language does not adequately clarify that the CFC's
are not revenues for the State to use for making the
determination of whether they would are subject to pre-
existing airport bonds. The definition of what bond related
purposes that the CFCs can be applied to, would also clarify
inclusion of debt reserve funds and other bond underwriter
requirements.
Mr. Applebee pointed out that HB 115 offers:
· New jobs,
· Efficiency and innovation in the car rental market,
· Partnership with private enterprise,
· Modernization to compete with airports nationally, and
· Enhanced convenience.
Vice-Chair Stoltze pointed out that the Attorney General
alluded to technical changes. Mr. Applebee advised that
they were working with that office; those changes are not
substantive enough to hold the bill up.
2:28:08 PM
Vice-Chair Stoltze asked where in the legislative process
would those considerations be addressed. Mr. Applebee
stated that until the changes are "flushed out" under the
current title, they will be addressed by the time the bill
passes out of the House to the Senate.
2:29:03 PM
Representative Weyhrauch questioned the statement regarding
"without public funds". Mr. Applebee stated that the
mechanism described in statute, the customer facility
charges, passed on to the consumer in addition to the public
maintenance charges, are the funds that would be used to
construct and maintain that facility without public funds.
Representative Weyhrauch asked where in the bill was that
language located. Mr. Applebee explained that the language
refers to the customer facility charges and that there are
not public funds.
Representative Weyrauch asked if the sponsor would object to
including that language. Mr. Applebee did not think it
would be appropriate within the drafting language. He
thought that the sponsor would know. Representative
Weyrauch requested to incorporate that intent into the bill.
Co-Chair Meyer requested that language be held until full
testimony had been taken.
Representative Hawker pointed out that the answer to that
concern was included on Page 3, Line 6, "if the State on
behalf of the department did not incur the indebtedness".
2:31:09 PM
Vice-Chair Stoltze asked if it was intended that the
legislation only apply to international airports. Mr.
Applebee responded that the intent was to provide it to any
area that has a market that could be sustained through their
customer activity, to build and maintain a facility.
Vice-Chair Stoltze inquired if it would be problematic to
limit it to that and not including rural airports. Mr.
Applebee replied that the sponsor would not object to that,
however it would limit them in any future circumstance and
the possibility of that area developing a market that could
sustain it.
Vice-Chair Stoltze pointed out that the airport in his
district, is the only rural airport that makes money in the
State. He acknowledged that he wanted to protect the small
business owners.
2:33:21 PM
Representative Weyhrauch understood that only the Anchorage
airport would be affected. Mr. Applebee replied that
currently, the only market studies and planned projects are
in Anchorage.
Representative Weyhrauch asked how many airport facilities
in Alaska are owned and controlled by the State of Alaska.
Mr. Applebee did not know and offered to provide that
information to Committee members.
Representative Weyhrauch asked why the legislation would
exempt the entire process of the Administrative Procedures
Act in terms of notice and the opportunity to comment. He
pointed out that the public will be paying these fees and
the increases associated with them.
Representative Weyhrauch asked why the 501-C-3's would be
exempt from paying rent and would the public be deprived of
equal use of the airport. He emphasized that one entity
would be paying and another would not and how could that be
equal. Mr. Applebee did not know.
Representative Weyhrauch pointed out that the Department's
Commissioner periodically adjusts the fees to pay the debt.
He asked what "periodically" means. Mr. Applebee responded
that would depend on the Commissioner; the bill provides
some latitude.
2:35:42 PM
MARK PFEFFER, CO-OWNER, VENTURE DEVELOPMENT GROUP,
ANCHORAGE, noted that his company has contracted
individually with the operations of 7 rental car companies
that operate at the Anchorage International Airport. The
project started in 2000 and was put on hold during the 9-11
events. He stated that the rental car companies have worked
closely with the airport in Anchorage to come up with a
solution to address the congestion and rental car problems
at that location.
The project provides for a facility outside the Anchorage
International Airport to be connected to a rail depot
tunnel. It would allow for passengers to come through the
tunnel and be out of the weather into a rental car lobby.
He spoke to the intended process, which could eliminate
traffic and trips to and from remote sites. The facility
would be paid for by a customer facility charge and there
would be no obligation on the part of the State. Funds
would be generated by revenue bonds.
Mr. Pfeffer stated that the intent is to begin construction
by this spring. Language needs to be clarified for the bond
issuance in April 2005, whereby allowing construction. He
offered to answer questions of the Committee.
2:39:04 PM
Representative Weyhrauch asked if the proposal was for a
garage for parked cars. Mr. Pfeffer replied that it was
initially called a garage but now it is called a terminal
and it would park 1,400 cars. Representative Weyrauch
clarified that it will be a rental car facility.
Representative Weyhrauch inquired if there would be a
lounge. Mr. Pfeffer understood that the lounge would remain
in the airport terminal. Representative Weyhrauch asked
where that language was located in the bill. Mr. Pfeffer
replied that was language in existing legislation and that
certain sections would be amended addressing customer
facility charges.
Representative Weyhrauch asked if the same language was in
existing statute, which exempts the notice for the comment
period for the public. Mr. Pfeffer did not know referencing
Page 3, Lines 21-22, that the Department "shall provide a
public notice". He stated that because of timing issues,
that will not happen.
Representative Weyhrauch clarified that since it is going to
be revenue bonds, essentially, the rental car companies will
have a surcharge on the cars that they rent, a facility
charge, and that the revenue for that would be used for the
bonding purposes. Mr. Pfeffer responded that the car rental
companies will collect a charge from the customer, which
would be remitted to a third party trustee that would pay
back the bondholders. That money will never become funds
for the State. The anticipated cost of the project is $42
million dollars and will be built all at one time, not in
phases. In response to Representative Weyhrauch, Mr.
Pfeffer explained that bonds sold would be in the amount of
$42 million dollars and that the facility would be
earthquake proof and have a bomb blast test.
2:42:25 PM
Representative Hawker asked if the finance community drove
the need for the legislative change. He believed that the
change was needed so that a bond trustee could directly
receive the funds. Mr. Pfeffer acknowledged that was
correct and that the State could impose the charge. In this
case, the industry said to the State that they did not like
the State's plan and wanted to submit their own proposal.
2:44:25 PM
Representative Weyhrauch asked if the title would prohibit
the Fairbanks and/or Juneau area.
2:45:49 PM
Representative Kelly asked where the clean up would be
occurring. Mr. Pfeffer responded that the bond insurers and
underwriters are working to clarify the language in order to
get the best bond rates; that work is not quite complete.
Language changes are run through the airport attorney, Mr.
John Steiner who works with the Department of Law. He has
provided some stylistic changes. Mr. Steiner offered to
draft language for the Senate Transportation Committee.
Those changes will be submitted at that time so that they
can be dealt within a transportation committee.
2:48:09 PM
Vice-Chair Stoltze believed that there would be a through
look into the legislation in the Senate.
2:48:49 PM
Representative Hawker MOVED to report CS HB 115 (TRS) out of
Committee with individual recommendations and with the
accompanying fiscal note. There being NO OBJECTION, it was
so ordered.
CS HB 115 (TRS) was reported out of Committee with a "do
pass" recommendation and with a zero note #1 by the
Department of Transportation & Public Facilities.
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