Legislature(2021 - 2022)BARNES 124
03/15/2022 01:00 PM House TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| HB366 | |
| HB357 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 366 | TELECONFERENCED | |
| *+ | HB 357 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
HB 366-LEG. APPROVAL: AK RAILROAD REVENUE BONDS
1:03:26 PM
CHAIR HOPKINS announced that the first order of business would
be HOUSE BILL NO. 366, "An Act authorizing the Alaska Railroad
Corporation to issue revenue bonds to finance the replacement of
the Alaska Railroad Corporation's passenger dock and related
terminal facility in Seward, Alaska; and providing for an
effective date."
1:04:08 PM
BILL O'LEARY, President and CEO, Alaska Railroad Corporation
(ARRC), expressed the opinion that the project would be great
for Alaska.
1:05:27 PM
MR. O'LEARY, in response to a series of questions from
Representative McCabe, answered that the current design is for a
fixed dock. He responded that the railroad would be responsible
for the maintenance, and he responded that as the dock is
currently designed, it would not be suitable for ferry usage
without significant modifications.
1:08:21 PM
REPRESENTATIVE DRUMMOND commented that the ferry used to stop in
Seward, but a stop on the road system is not always necessary.
1:09:39 PM
MR. O'LEARY, in response to Chair Hopkins, answered that the
freight dock is being rebuilt, but incentives are not a current
part of the plan. In response to a follow-up question, he said
that the dock would be rebuilt in 2023.
1:10:57 PM
REPRESENTATIVE MCCABE questioned the cruise ship dock versus the
freight dock at Lowell Point.
MR. O'LEARY answered that he is unsure about Lowell Point. In
response to a follow-up question, he said that he is unsure
whether there would be any delays. Concerning the amortization
schedule, he answered that there is a current 30-year model for
tax exempt debt. In response to a follow-up question, he said
Royal Caribbean Cruise Line would be using the dock, and
possibly the Norwegian Cruise Line is considering moving into
Whittier.
REPRESENTATIVE MCCABE asked how the budget would affect the
Whittier lease.
MR. O'LEARY answered that it is still under consideration by the
railroad.
1:14:59 PM
REPRESENTATIVE DRUMMOND commented that the MV Tustumena serviced
Seward.
1:15:49 PM
REPRESENTATIVE CRONK commented that people who live in Seward
are experiencing housing shortages.
1:16:27 PM
REPRESENTATIVE MCCABE moved Amendment 1 to HB 366, labeled 32-
LS1559\A.1, Marx, 3/4/22, which read as follows:
Page 1, line 3, following "Alaska;";
Insert "authorizing the Alaska Railroad
Corporation to issue revenue bonds to finance the
extension of the Port MacKenzie Rail Spur from Port
MacKenzie to Houston, Alaska;"
Page 1, line 7, following "APPROVAL"
Insert ":PASSENGER DOCK AND RELATED TERMINAL
FACILITY"
Page 2, line7:
Delete "Act" in both places
Insert "section" in both places
Page 2, following line 15:
Insert a new bill section to read:
..."*Sec. 2. The uncodified law of the State of Alaska
is amended by adding a new section to read:
LEGISLATIVE AUTHORIZATION AND APPROVAL: PORT
MACKENZIE RAIL SPUR. (a) The Alaska Railroad
Corporation is authorized to issue revenue bonds under
AS 42.40.250 to finance the extension of the Port
MacKenzie Rail Spur from Port MacKenzie to Houston,
Alaska, and associated costs, including, without
limitation, reserves for debt service and capitalized
interest, if necessary or appropriate, and costs of
issuance. The maximum principal amount of bonds that
the Alaska Railroad Corporation may issue under this
section is $140,000,000. The Alaska Railroad
Corporation may issue the bonds in a single issuance
or in several issuances, without limitation as to the
number of issuances or timing, and as the Alaska
Railroad Corporation determines best furthers the
purpose of financing the extension of the Port
MacKenzie Rail Spur from Port MacKenzie to Houston,
Alaska, and associated costs. The bonds shall be
repaid from resource or economic development revenue
or other funds available to the Alaska Railroad
Corporation. The general credit of the Alaska Railroad
Corporation and state may not be pledged for the
repayment of the bonds.
(b) the authorization under (a) of the section
extends to bonds issued to refund the bonds authorized
in this section. The principal amount of the bonds
authorized in this section may be increased in an
issue of refunding bonds in an amount equal to the
costs of refunding.
(c) This section constitutes the approval
required by AS 42.40.285 for the issuance of the bonds
described in this section.
(d) the bonds authorized to be issued under this
section are issued by a public corporation and an
instrumentality of the state for an essential public
and governmental purpose.
(e) In this section, "bonds" means bonds, bond
anticipation notes, notes, refunding bonds, or other
obligations."
Renumber the following bill sections accordingly.
1:16:31 PM
CHAIR HOPKINS objected for the purpose of discussion.
1:16:35 PM
REPRESENTATIVE MCCABE explained Amendment 1 to HB 366. He noted
the revenue services and the aggregate rate revenue from the
railroad and gave his opinion that businesses would not invest
in the area until the project is finished due to Alaska's
history of "not finishing projects." He said that with
investment, larger ships would be able to dock in Alaska.
1:20:42 PM
REPRESENTATIVE HANNAN questioned the amount which would be
needed for the project bonds to reach $140 million.
REPRESENTATIVE MCCABE answered that he is unsure.
MR. O'LEARY added that he is unsure of a way for the Alaska
Railroad to issue enough bonds to reach $140 million.
REPRESENTATIVE HANNAN asked for an explanation of revenue bonds.
MR. O'LEARY answered that a revenue bond would involve a revenue
source related to the project to permit them to pay back the
money plus a premium.
REPRESENTATIVE HANNAN shared her understanding that the
Matanuska-Susitna Borough, rather than the railroad, put $180
million into an extension.
REPRESENTATIVE MCCABE commented that the borough is still
interested, but the money is not available.
1:24:36 PM
REPRESENTATIVE HANNAN asked Mr. O'Leary to describe the leases
and arrangements of the cruise industry.
MR. O'LEARY responded that there are a number of different
brands and subsidiaries. Royal Caribbean is the largest tenant
in Seward, and more tenants would be needed long term.
1:25:51 PM
REPRESENTATIVE MCKAY questioned how much of Port Mackenzie has
been built.
MR. O'LEARY answered that Port Mackenzie is a Matanuska-Susitna
Borough project which had been envisioned in the previous
decade, and a significant amount of work has already been done
from Houston, Alaska to the port. He stated that the missing
infrastructure is a railroad to the port and the work to
increase the port's size. He said that the latest estimate
would cost approximately $325 million, which is supported by
ARRC.
1:29:32 PM
REPRESENTATIVE MCCABE commented that the railroad is important
to development and food security in Alaska, and it is the
gateway to the Arctic. He questioned why the railroad has been
unable to find an anchor tenant much like Seward has.
1:31:07 PM
REPRESENTATIVE STUTES asked why the Matanuska-Susitna Borough
cannot issue revenue bonds.
REPRESENTATIVE MCCABE answered that he is unsure. He added that
unless the railroad builds rails to the port, it cannot be
expanded.
1:32:27 PM
REPRESENTATIVE MCKAY asked whether the borough or the railroad
could apply for a grant through the [Infrastructure and jobs Act
(IIJA)].
MR. O'LEARY answered that IIJA is meant as grant funding and not
finance debt. He added that there are possible opportunities to
seek out.
1:34:17 PM
REPRESENTATIVE HANNAN asked for the depth of Port Mackenzie.
REPRESENTATIVE MCCABE answered that it is 90 feet at high tide,
and 30 feet under the keel of a Panamax vessel.
REPRESENTATIVE HANNAN expressed the understanding that most
vessels are looking for substantially deeper ports, and the port
in Anchorage is not deep enough for cruise ships.
REPRESENTATIVE MCCABE responded that he has spoken to pilots who
consider Port Mackenzie to be a deep-water port. He added that
the Port of Alaska in Anchorage requires dredging, and this is
not necessary at Port Mackenzie.
1:36:33 PM
REPRESENTATIVE DRUMMOND commented that creating a rail project
would benefit from the cooperation between the Matanuska-Susitna
Borough and the Municipality of Anchorage, and this could
possibly include a joint port authority.
1:38:47 PM
REPRESENTATIVE MCCABE commented that 50 feet is required for a
large container ship.
1:39:02 PM
CHAIR HOPKINS asked whether the railroad has a position on this
amendment.
MR. O'LEARY answered that the railroad would not be supportive
of the amendment as drafted because of authorization issues.
1:39:44 PM
REPRESENTATIVE MCCABE questioned whether, with given the
authority, would the railroad only use it if necessary.
MR. O'LEARY responded that as drafted, the amendment refers to a
greater cost than the benefit ARRC would receive.
1:41:46 PM
REPRESENTATIVE MCCABE commented that as a second-class borough,
the Matanuska-Susitna Borough has limited authority. He added
that the strength of a port is the revenue it can generate.
1:43:16 PM
REPRESENTATIVE STUTES expressed support for the idea, but added
she does not believe the amendment is the best way to move it
forward.
1:44:18 PM
CHAIR HOPKINS expressed the opinion that having multiple ports
in Alaska would be a great investment for the state, but a
better plan needs to be developed.
1:45:43 PM
REPRESENTATIVE DRUMMOND read a statement from the Matanuska-
Susitna Borough website expressing support for connecting Port
Mackenzie to the Railbelt.
1:47:52 PM
REPRESENTATIVE HANNAN commented that she supports the concept of
adding more ports but does not support the amendment. She said
that she represents two communities who have chosen to build
their own docks with plans which have not fully materialized.
When the cruise ship corporations build new docks in other parts
of the state, they bring all their subsidiaries with them.
1:50:41 PM
REPRESENTATIVE MCCABE withdrew Amendment 1 to HB 366.
1:51:42 PM
CHAIR HOPKINS opened public testimony on HB 366. After
ascertaining there was nobody who wished to testify, he closed
public testimony.
1:52:37 PM
REPRESENTATIVE HANNAN moved to report HB 366 out of committee
with individual recommendations and the accompanying fiscal
notes. Without objection, HB 366 was moved from the House
Transportation Standing Committee.
1:53:02 PM
The committee took an at-ease from 1:53 p.m. to 1:56 p.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 357 Sectional Analysis version A 3.14.2022.pdf |
HTRA 3/15/2022 1:00:00 PM |
HB 357 |
| HB 357 Sponsor Statement 3.14.2022.pdf |
HTRA 3/15/2022 1:00:00 PM |
HB 357 |
| HB0357A.PDF |
HTRA 3/15/2022 1:00:00 PM |
HB 357 |
| HB 357 Supporting Documents 3.14.2022.pdf |
HTRA 3/15/2022 1:00:00 PM |
HB 357 |
| HB 357 Presentation 3.14.2022.pdf |
HTRA 3/15/2022 1:00:00 PM |
HB 357 |
| HB 366 - Amendment 1 3.14.2022.pdf |
HTRA 3/15/2022 1:00:00 PM |
HB 366 |