Legislature(1995 - 1996)
02/27/1996 01:38 PM House FIN
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 352
"An Act giving notice of and approving a lease-purchase
agreement with the City of Palmer for a fire management
facility at the Palmer Airport."
REPRESENTATIVE SCOTT OGAN, sponsor HB 352, testified in
support of the legislation. He noted that HB 352 would
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provide authorization for a lease-purchase agreement with
the City of Palmer to finance and build a Department of
Natural Resources fire management facility at the Palmer
Airport. He asserted that the agreement will save the State
$282.0 thousand dollars a year. He stressed that the State
will save $8.5 million dollars over 20 years. He observed
that the new facility would consolidate four wildland fire
facilities in the area of the Palmer Airport. He observed
that the Department of Natural Resources' flight operations
are currently run from a lease space at the Palmer Airport.
The administrative operations are coordinated in Anchorage.
Warehouse support is provided in Eagle River. Additional
administrative and warehousing activities occur at Big Lake.
He asserted that the legislation will make wildland fire
fighting response time more efficient. He explained that
materials are transported from the warehouse in Eagle River
to the Palmer Airport. He noted that response time effects
the level of fire support needed. He observed that the
Governor's Budget Summary recognizes that the project will
save the Department of Natural Resources money. The State
would own the facility at the end of the agreement.
Representative Ogan stressed that the City of Palmer has an
airport and undeveloped land available. The runway at the
Palmer Airport is long enough to operate fire support
planes. He emphasized that air traffic at the Palmer
Airport is less than at the Anchorage International Airport.
He maintained that the Palmer Airport is centrally located.
He added that Palmer also has community services and
commercial support options available. He observed that the
City of Palmer supports the project.
Representative Brown questioned how the project will improve
access. Representative Ogan observed that burning permits
would be transferred from Big Lake to Palmer.
Representative Brown questioned what services are located in
the Anchorage Frontier Building that would be moved to
Palmer.
TOM BOUTIN, DIRECTOR, DIVISION OF FORESTRY, DEPARTMENT OF
NATURAL RESOURCES replied that 4,200 square feet for
wildland fire logistics would be transferred. He noted that
the Urban and Community Forestry Program, Support Services,
Forest Stewardship and Resource Management Program will
remain in the Frontier Building. He clarified that Wildland
Fire Logistics would be the only function transferred.
Representative Brown asked why the legislation was not
introduced by the Governor. Mr. Boutin noted that the
legislation had already been introduced. He emphasized that
the Commissioner of the Department of Natural Resources
strongly supports the project.
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Representative Brown noted that the Department has pursued a
policy of letting fires burn. Mr. Boutin agreed that the
majority of land under state protection is in the let burn
category. He added that due to suburban sprawl the
percentage of land in the let burn category is at the
maximum. In response to a question by Representative Brown,
Mr. Boutin clarified that AS 41.15 requires the State to
perform fire suppression on state, municipal and private
land. He noted that the federal government reimburses the
State for fires fought on federal land and on Alaska Native
Claims Settlement Act lands. He noted that the 56 fire
districts around the State act under a cooperative
agreement.
DEAN BROWN, DEPUTY DIRECTOR, DIVISION OF FORESTRY,
DEPARTMENT OF NATURAL RESOURCES clarified that the Division
responds to wildland fires within the Municipality of
Anchorage. The Division does not respond to structure
protection unless a structure is threatened by an out growth
of a wildland fire. The Division does not respond to house
fires. Representative Brown questioned if fees for services
have been considered. Ms. Brown stated that they have not
considered instituting user fees.
Representative Brown asked if the City of Palmer is
available to bond for the facility. Mr. Boutin noted that
financing would be identical to the lease financing
obligation used to build the Palmer Courthouse.
Representative Brown suggested that most of the economic
benefit goes to the City of Palmer. She expressed concern
over the number of lease purchase agreements the State has
acquired. Mr. Boutin observed that lease purchases for real
estate are located in the front section of the operating
budget.
Representative Parnell asked if the State currently owns
other facilities used by the Division. Mr. Boutin observed
that the Eagle River facility is a portable warehouse that
could be moved or used by other agencies. It is on state
land. The Big Lake facility is state owned and is on state
land. He observed that the Department will not be out of
the lease space in the Frontier Building until the end of
the current rental agreement. The lease will expire in
July, 1999. The State could rent the space for another
agency. Representative Parnell questioned if the savings
would be to the State or to the Department only. Mr. Boutin
argued that there will be a savings to the State. He added
that materials are transported back and forth from Eagle
River to Palmer. Representative Ogan noted that other
agencies are interested in the Eagle River facility.
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Representative Parnell questioned if there would be a
savings to the State to build the facility with state funds.
Mr. Boutin noted that the true interest cost would be tax
free at approximately 5 percent. The state general fund is
invested at a taxable yield. He added that there is
arbitrage every time the State enters into a tax exempt
obligation.
Representative Therriault noted that the let burn policy is
based on the decision that there are benefits to letting
some areas burn. He pointed out that the policy is not
necessarily driven by the budget. He added that fees would
be difficult to administer and could have adverse effects on
fire suppression efforts.
Representative Navarre noted the Majority's budget plan
calls for significant reductions in the operating budget.
He suggested that it is premature to consider the project
authorization until the impact of reductions is seen. He
stated that the project does not appear to be a bad idea.
He asked what kinds of needs assessments are being done. He
maintained that today's assumptions will not hold true over
time.
Representative Brown referred to backup material provided to
the Committee by the Department of Natural Resources, "South
Zone Facilities Consolidation, Proposed Lease Finance at
Palmer Airport (copy on file). Brown noted that the FY 99
savings is shown at $24.8 thousand dollars. Mr. Boutin
explained that the on going annual facility savings is
estimated at $282.9 thousand dollars. There will be an
additional one time savings of $24.8 thousand dollar in FY
99. Ms. Brown explained that the transfer would occur in
phases transfer due to the seasonal nature of the fire
season.
NICO BUS, ACTING DIRECTOR, DIVISION OF ADMINISTRATIVE
SERVICES, DEPARTMENT OF NATURAL RESOURCES clarified that the
savings in
FY 99 will occur as the Department partially vacates the
office space at the Frontier Building. He explained that
General Services can move other positions into the space as
they are vacated before the lease expires. As positions are
transferred other rental space can be cancelled as leases
expire.
Representative Brown noted that the Department stated that
the cost of underground fuel storage tank replacements will
be mitigated by the move. Ms. Brown explained that the move
to Palmer will allow the Department to use available
commercial facilities for fuel storage. The Department
would no longer need to use underground oil tanks located at
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the Big Lake facility. These tanks would need to be
replaced if their use was continued.
TOM SMITH, CITY MANAGER, CITY OF PALMER testified via the
teleconference network. He observed that the City of Palmer
passed Resolution No. 1049 in support of the Forestry
Consolidation Project at the Palmer Municipal Airport.
Ms. Brown reviewed charts provided to the Committee. She
noted that 80 percent of fires are caused by humans. She
noted that the Department's operations are spread between
five locations. She emphasized that if the Department can
catch a fire when it is small that the cost is minimal. She
stressed that a project fire can cost the State $2.0 million
dollars or more. She emphasized that consolidation will
decrease response time and increase safety. She pointed out
that there are 30 miles between the Eagle River facility and
the Palmer Airport.
(Tape Change, HFC 96-51, Side 2)
Ms. Brown noted that basic public services would be
maintained in Anchorage. The central office which houses
all the federal programs and urban and community forestry
will remain in the Frontier Building. She stressed that
expenses associated with large project fires can be reduced
through greater efficiencies. She observed that population
has increased in areas that are not readily accessible by
road.
Co-Chair Foster MOVED to report HB 352 out of Committee with
individual recommendations and with the accompanying fiscal
notes. There being NO OBJECTION, it was so ordered.
HB 352 was reported out of Committee with a "do pass"
recommendation and with a fiscal impact note by the
Department of Revenue, dated 2/2/96; and with a zero fiscal
note by the Department of Transportation and Public
Facilities, dated 2/2/96.
Representative Navarre OBJECTED for purpose of discussion.
He questioned where the debt service on the project fits
into the Majority's overall plan and with the impact of
budget cuts. Representative Navarre WITHDREW his
objections.
Representative Brown OBJECTED for purpose of discussion.
Co-Chair Hanley stressed that the State will always have
fire fighting capability. He asked how current costs will
be financed if consolidation does not take effect. He
stressed that consolidation will save money over time.
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Representative Navarre questioned if consolidation will
result in savings. Mr. Boutin stated that the numbers show
both a future value and a discounted net present value
savings. He emphasized that the State will own the building
at the end of the lease. Representative Navarre argued that
reductions in the budget could result in deferred
maintenance. He emphasized that deferred maintenance could
result in the failure of the building before projected
savings can be realized. He stressed that any budget plan
must build in the project's cost over the next 20 years.
Representative Brown WITHDREW her objection.
Representative Kohring observed that savings will be
realized by increased efficiencies and improvements in
response time.
Representative Brown asked how the $6.0 million dollar
construction cost will be financed. Mr. Boutin noted that
the City of Palmer will issue a lease obligation.
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