Legislature(1995 - 1996)
04/26/1995 01:50 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
HOUSE BILL 315
"An Act relating to the financing of technological
developments by public corporations of the state; and
relating to the financing of the Kodiak launch complex,
the Fairbanks satellite ground station space park, and
a low-rank coal water fuel technology project."
ARLISS STURGULEWSKI, (TESTIFIED VIA TELECONFERENCE), INTERIM
EXECUTIVE DIRECTOR, ALASKA SCIENCE & TECHNOLOGY FOUNDATION,
ANCHORAGE, provided Committee members with a memorandum
dated 4/26/95 regarding the "Budget Information Requested".
[Attachment #1]. She offered to answer questions from the
Committee.
Representative Navarre questioned how the interest of the
fund would be protected. Representative Brown referenced
Section #6 and asked if award money would result from the
interest of the foundation or from the principle. Ms.
Sturgulewski explained that the coal water fuel proposal
would be phased over a three year period originating from a
grant line. If Phase 2 of the project is accepted, the
first payment would be made this fiscal year.
Ms. Sturgulewski referenced Attachment #1, pointing out that
the analysis would remove the University Agriculture Station
and the Aerospace Development Corporation. Representative
Brown questioned why the earnings listed on Attachment #1
were greater without the inclusion of coal. Ms.
Sturgulewski indicated that those earning would amount to
$7.2 million dollars. Discussion followed between
Representative Brown and Ms. Sturgulewski regarding the
estimated earning reserve payments. Representative Navarre
recommended removing the agriculture component and then
focusing the availability of that grant money to other
projects.
Representative Martin thought that Business and Industrial
Development Corporations and Organizations (BIDCO) made a
commitment to support the Alaska Science and Technology
Foundation. Ms. Sturgulewski responded that a BIDCO package
has been submitted. The return should be available on May
15th, 1995.
Representative Martin asked how many projects would be
eliminated with the advance of aerospace. Senator
Sturgulewski replied that aerospace would move forward only
if appropriate funding was available. She emphasized that
this was not an appropriation bill. Representative Martin
stressed his concerns with future complications resulting
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from the legislation.
Ms. Sturgulewski responded that the foundation currently
handles many small grants and that the board of directors
will continue to serve the needs of the small grant
community.
Ms. Sturgulewski explained that the cold water fuels and
royalties plan bids should arrive soon. The repayments for
the Science and Tech Foundation and the Department of
Education will come from royalties received on commercial
sales and from licensing of that technology. Repayments
will then become a portion of the negotiation, which must
begin in order that Phase 2 can start.
Representative Brown asked if satellite facilities are
commercially viable. Ms. Sturgulewski stated that there are
private interests from business and that it is anticipated
that the operation would allow for significant private
sector information. She added that the investment of the
project is under review from Alaska Industrial Development
Export Authority (AIDEA). Representative Brown questioned
if that was the normal sequence of events in obtaining AIDEA
bonding.
H. PAT LADNER, EXECUTIVE DIRECTOR, ALASKA AEROSPACE
DEVELOPMENT CORPORATION (AADC), ANCHORAGE, explained that
was an appropriate procedure and noted that the proposed
legislation would provide Alaska the opportunity to enter
into a new industry without placing money at risk.
Representative Martin MOVED to adopt Amendment #1.
Representative Mulder OBJECTED. Representative Martin
stressed that free enterprise should "pay" their own way.
Representative Kelly advised that the legislation would be
for the benefit of the entire State, agreeing that the 50%
application would not be appropriate. Representative
Therriault stated that fees would be paid for by the debt
service, and noted that the enterprise would be responsible
for more than 50%. Representative Mulder added that there
would be a financial return through AIDEA and said that this
would be a good project.
Representative Martin emphasized that the Kodiak launch
complex, the Fairbanks satellite ground space park and the
low rank coal water fuel technology should be able to
accumulate the remaining funds through a private match.
Ms. Sturgulewski responded to Representative Brown's
questioned regarding the coal water fuel project stating
that the major amount of money would be received from the
U.S. Department of Energy and would not be private funds.
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The Alaska Science & Technology Foundation will contribute
$3.7 million dollars and the Department of Energy will
contribute $17 million dollars for the demonstration of the
project. She pointed out that the language of the amendment
would make receiving that contribution difficult.
Representative Brown referenced a letter from Mr. Snell at
AIDEA dated 3/7/95 explaining the anticipated $10.2 million
to be received from the federal government and $8 million to
be received from the consortium members in order to begin
Phase 2. The intention would be for the $4 million state
dollars to be spent up-front in order to provide the
preliminary study before the other participants provide
their money. Ms. Sturgulewski stated that all phases are
being worked on together, while indicating that her agency
has clarified that the pay back project would need to occur
in the first three years. Ms. Sturgulewski stated that
Phase 1 has been completed. Phase 2 has not been entered
into yet. Representative Brown advised that Representative
Martin's amendment would not conflict with the foundation's
intention. Ms. Sturgulewski disagreed stating that it would
conflict with the amount of money originating from the grant
and the Department of Energy.
Representative Brown asked if the legislation would affect
the Healy Claim Coal Project. Ms. Sturgulewski remarked
that the legislation would affect the tide waters
demonstration project on the beach. There are a number of
ownerships involved with the coal fields and she added, that
group was interested and would be participating in the
project.
A roll call was taken on the MOTION.
IN FAVOR: Brown, Martin
OPPOSED: Grussendorf, Kelly, Kohring, Mulder,
Navarre, Therriault, Hanley, Foster
Representative Parnell was not present for the vote.
The MOTION FAILED (2-8).
Representative Navarre explained Amendment #2. [Attachment
of Alaska to participate in the challenger learning center
feasibility study. This study would provide a computer
program and would establish a learning center addressing
interests in space industry technology. He pointed out that
Kenai had been listed because the Mayor of Kenai offered to
donate the land for that purpose. He agreed that Anchorage
would be a more accessible area.
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Co-Chair Hanley asked if there was a cost associated with
the feasibility study. Representative Navarre commented
that a cost had not yet been established although he
recommended providing a cap limit to those costs. Mr.
Ladner elaborated that he had spoken to AIDEA regarding the
feasibility study and that a capital budget submission has
been completed between Alaska Aerospace and AIDEA.
(Tape Change, HFC 95-100, Side 1).
Ms. Ladner reiterated that this would be a good program
resulting in positive impacts on children who use the center
in the math and science areas. Mr. Ladner noted that he
supported Amendment #2. He added that the cost to engage in
the proposal would be $700 thousand dollars and would be an
on-going cost. Representative Mulder asked the cost to
provide the feasibility study. Mr. Ladner replied that it
had not yet been submitted and that to date determining
those costs had been an explorative exercise of the
corporation.
Co-Chair Hanley suggested including a regional consideration
on the amendment. Representative Navarre agreed to amending
the amendment to include "other locations". Representative
Navarre recommended changing the language in the lower
section of the bill deleting "one-quarter" and inserting
"one-half".
Representative Navarre amended the amendment to Line 17,
changing the language to read "(1) one-half by the Alaska
Aerospace Development Corporation and AIDEA". Co-Chair
Hanley added a "friendly" amendment to the amendment by
deleting the language on Line 15 "Kenai and".
Representative Navarre MOVED to adopt the amended Amendment
Representative Mulder MOVED to report CS HB 315 (FIN) out of
Committee with individual recommendations and with the
accompanying fiscal note. Representative Martin OBJECTED.
A roll call was taken on the MOTION.
IN FAVOR: Grussendorf, Kelly, Kohring, Mulder,
Navarre, Parnell, Therriault, Foster,
Hanley
OPPOSED: Martin
Representative Brown was not present for the vote.
The MOTION PASSED (9-1).
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CS HB 315 (FIN) was reported out of Committee with
"individual recommendations" and with a zero fiscal note by
the Department of Commerce and Economic Development dated
4/20/95.
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