Legislature(2013 - 2014)SENATE FINANCE 532
04/02/2013 01:30 PM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB13 | |
| SB88 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 48 | TELECONFERENCED | |
| *+ | SB 88 | TELECONFERENCED | |
| + | HB 30 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | SB 13 | TELECONFERENCED | |
SENATE BILL NO. 13
"An Act relating to bonds of the Knik Arm Bridge and
Toll Authority; relating to reserve funds of the
authority; relating to taxes and assessments on a
person that is a party to an agreement with the
authority; and establishing the Knik Arm Crossing
fund."
Vice-Chair Fairclough looked at slide 16 of the PowerPoint,
"Knik Arm Crossing, Financial Briefing" (copy on file). She
remarked that the Resource Committee had conversations with
the Department of Revenue (DOR) regarding moral obligation
of the state. She shared that she was led to believe that
if the bonding agencies looked at Alaska and the moral
obligation, it would be moved to a debt owed by the State
of Alaska. She requested a comment regarding her
understanding of "moral obligation."
DAVID LIVINGSTONE, MANAGING DIRECTOR, CITI CORP, responded
that her assumptions were correct. He furthered that a
straight moral obligation, with no offsetting revenues,
would be analogous as a debt to the state. He shared that
Knik Arm Bridge and Toll Authority (KABATA) would use
availability payments that were backed by the state's moral
obligation. He furthered that the payments would be reduced
by toll revenues, which would reduce how the rating
agencies would view the moral obligation. The rating
agencies would assume that the toll revenues would reduce
the state's obligation to pay. He remarked that he had
looked at the toll revenues in a variety of sensitivities,
and felt that the rating agencies would impact the state's
rating.
Senator Olson looked at slide 9, and requested an
explanation of the factor of 1.5 percent. Mr. Livingstone
replied that CITI financed projects based on traffic and
revenue studies. He remarked that he examined the studies
to determine the accuracy of the projections. He stressed
that predicting the future is never precise, but pointed
out that he had analyzed approximately 10 studies for
traffic and revenues. He explained that there was an equal
number of traffic above and traffic below, and generally
they were all within 10 or 15 percent of projections. He
felt that the projections were fairly accurate.
Senator Olson remarked that the Transportation Resource
Board found that the estimates were too optimistic. Mr.
Livingstone replied that he was unfamiliar with that
analysis, and furthered that he financed projects based on
studies prepared by CDM Smith.
2:15:01 PM
Vice-Chair Fairclough wondered how the proposal would
control cost. Mr. Livingstone responded that there were a
number of reasons why the proposal provided a lower cost.
He stated that the normal procurement would hire an
engineering firm; bid to contractors; and there may be
change orders. He stressed that the engineering firm would
hire a contractor to both design and construct the project.
This alleviates the potential for design and construction
disagreements. He stressed that he the construction costs
for similar projects that separated contracting and design
firms were significantly greater than the owners' initial
estimates. He felt that using one firm for both contracting
and design would decrease cost.
Vice-Chair Fairclough wondered what the bank's risk would
be related to the Endangered Species Act. She stressed that
Alaska was holding the risk under the payments. She
wondered how the risk was weighted, when the federal
listing was beyond control. She pointed out that there were
daily risks related to earthquakes and other natural
disasters, but remarked that the federal government used
specific science to list specific species as "endangered."
Mr. Livingstone responded that there were wildlife surveys
that were completed in the Knik Arm, and along the right-
of-way. He remarked that the beluga whale was an endangered
species. He stressed that there were many conversations
between KABATA and the federal government regarding how the
bridge should be built to minimize the impact on the beluga
whales.
Senator Hoffman looked at slide 12, "Revenue Sensitivity
Results from Monte Carlo Simulations." He wondered if the
slide represented the total revenue for 45 years with a
downside of $5 billion with an aggressive upside of $9
billion. Mr. Livingstone replied in the affirmative, and
furthered that the results were formulated by an outside
firm, CDM Smith.
Senator Hoffman queried the numbers derivation of the
represented scenarios. He wondered if the toll charges were
constant or fixed under each scenario, and wondered if the
set toll would be in place for 45 years. Mr. Livingstone
replied that that the scenarios took into account both the
traffic and the toll rate. He remarked that the same toll
rate was assumed for each scenario.
Senator Hoffman queried the toll rate. Mr. Livingstone
replied that the toll rate started at $5 per passenger car,
with a lower rate for motorcycles and a greater rate for
trucks. This rate would start upon bridge opening in 2016.
He pointed out that the rate would increase with inflation
by approximately 2 percent.
2:21:07 PM
Senator Hoffman wondered who would make the final
determination of rate increase. Mr. Livingstone replied
that the KABATA Board would make that final decision. He
stressed that the projections were based on assumed
inflation. He pointed out that it would be assumed that the
rate would not be increased, if that particular year
experienced no inflation.
Senator Hoffman asked if the board had the authority to
raise the rate higher than inflation, if there was a
downside. Mr. Livingstone responded that the KABATA Board
had the discretion to increase the toll rates at any time.
Senator Hoffman looked at slide 14, "Sensitivity Results."
He asked for further detail of the severe downside and
aggressive upside under the five different scenarios. Mr.
Livingstone replied that the state had the initial funding
of $150 million in the reserve. He remarked that the state
would be asked to appropriate $627 million over time in the
aggressive upside. He stated that the $627 million would
allow for no requests until 2025. The first request would
be $8.9 million in 2025, and the largest request in any
year would be $37.5 million in 2044. He furthered that, in
the aggregate, the total appropriation requests, over time,
would be $627 million. He explained that the total state
liability would be $777 million. He stated that late in
their analysis, the project would generate revenues in
excess of the expenses at a total of $910 million that
would be returned to the state to fund other transportation
needs across the state. He stressed that the project would
generate $133 million for the state.
Senator Hoffman looked at slide 12, and surmised that it
represented total revenues over 45 years of slightly under
$5 billion. Mr. Livingstone agreed, and furthered that the
projections assumed that KABATA and the state would expand
the bridge as traffic warrants. He declared that the money
for expansions was included in the scenarios. He remarked
that the state had the option to defer the cost assumptions
for expansion, but stressed that the downside would cause
much more congested on the bridge.
2:25:55 PM
Senator Olson looked at slide 4, and queried an example of
the state's liability. Mr. Livingstone responded with slide
6, and pointed out the specific events. He stated that
there was a contract between KABATA and the private partner
that held 21 events. He explained that there were two types
of "unforeseen surface conditions", but he only listed one
on the list. He stressed that KABATA was not taking a
"blind risk" with this project. He pointed out that there
were various extensive studies that were used as
information with the private partner.
Senator Olson wondered if the state would be liable for the
risk, if the project fails. Mr. Livingstone deferred to the
Department of Law (DOL).
PAT KEMP, COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND
PUBLIC FACILITIES, introduced himself.
Co-Chair Meyer wondered if Commissioner Kemp had any
testimony that he would like to share. Commissioner Kemp
explained that the Department of Transportation and Public
Facilities (DOT/PF) was not privy to much of the shared
information regarding KABATA. He explained that he was on
the KABATA Board; DOT/PF had sub-recipient rights from the
federal government; and worked with KABATA regarding right-
of-way. He stressed that he was not an expert regarding the
details with their reports.
Co-Chair Meyer wondered if Alaska had ever had a
Public/Private Partnership (PPP) Commissioner Kemp replied
that DOT/PF had never done a PPP, but furthered that there
may be PPP for the road to Ambler. He stressed that DOT/PF
did not do the PPP financing, bit mostly focused on the
engineering and environmental issues related to preparing a
project.
2:32:34 PM
Co-Chair Meyer wondered if there were any suggestions
regarding the liability concerns. He wondered if the bridge
belonged to the state or KABATA. Commissioner Kemp
responded that sight conditions were the responsibility of
KABATA, but deferred most of the liability concerns to DOL.
He remarked that the contractor does the geotechnical work,
so some liability may fall to the contractor.
Senator Bishop asked for a restatement of DOT/PF's
participation in the project. Commissioner Kemp replied
that KABATA was the sub-recipient of federal highway funds,
so DOT/PF had no oversight until the environment document
was complete. He furthered that the federal highway program
turned the project over to DOT/PF to monitor the
expenditures.
Senator Bishop wondered who would provide the snow removal
for the bridge. Commissioner Kemp replied that KABATA would
provide the snow removal.
Co-Chair Meyer wondered if DOT/PF was responsible for the
roads that were attached to the bridge. Commissioner Kemp
responded that DOT/PF would be responsible for those roads.
Senator Dunleavy understood that this project proposal was
unique in Alaska, but pointed out that there were many toll
roads and bridges in other parts of the United States. He
felt that there could be insurance that might deal with
liability concerns.
Senator Olson stressed that the project may not yield
enough revenue, because of the small population in Alaska.
2:37:36 PM
Senator Olson noted that Commissioner Kemp's background was
in surface transportation. He wondered if bedrock drilling
was a concern. Commissioner Kemp responded that he hoped
the geotechnical work would be done properly. He furthered
that the requirements include an exploratory hole for every
pier.
Senator Olson wondered if earthquakes were a concern.
Commissioner Kemp responded that there were methods that
were used to design around the potential for an earthquake,
but stressed that he was not familiar with the geology
around the bridge.
Senator Bishop shared that he felt that there was
technology to ensure that bridges could withstand
earthquakes.
Vice-Chair Fairclough queried the estimated cost of the
road from both sides of the bridge. Commissioner Kemp
responded that the Mat-Su side was approximately $150 to
$200 million, and the Anchorage side was approximately $250
million.
Co-Chair Meyer wondered who would pay for the cost of those
roads. Mr. Livingstone replied that the excess toll and
federal aid would pay for those roads.
Vice-Chair Fairclough understood that payments would not be
due until 2025, and wondered if the completion date for
traffic would be 2025. Commissioner Kemp did not know the
answer.
Vice-Chair Fairclough stressed that it was important to
understand the payment plan for the project.
Senator Olson remarked that he heard Mr. Livingstone state
that the bridge would be open in 2016. The committee nodded
in affirmation.
2:42:58 PM
LARRY DEVILBISS, MAYOR, MATANUSKA-SUSITNA BOROUGH (via
teleconference), testified in support of SB 13. He shared
that every mayor in the Mat-Su borough supported the
project. He remarked that the bridge would open a window to
40 percent of the Kenai borough. He shared that the impact
of KABATA to the Mat-Su borough would be extremely
positive. He stated that the fasted demographic in the Mat-
Su borough was very near where the bridge would be built,
and he stressed that the population growth was placing
stress on that area. He remarked that the Mat-Su borough
was anticipating the project by laying out two separate
town sites near the landing of the bridge. He shared that
there were already discussions regarding a new middle
school and high school near the bridge. He felt that the
consequences of not building a bridge would be "horrific."
Senator Olson wondered if the Mat-Su was contributing any
money for the project. Mayor Devilbiss replied that there
were some corporations within the Mat-Su that were
contributing. He furthered that there was some local money
that would be used for road infrastructure on the Mat-Su
side. He shared that the Mat-Su borough passed a $60
million road-bond package in the year prior, which the
state matched.
Senator Olson stressed that the legislature was trying to
avoid the problems that were created from the Mat-Su Ferry,
which was a previously proposed project. Mayor Devilbiss
felt that the current project was much different than the
ferry.
2:48:38 PM
DAN SULLIVAN, MAYOR, ANCHORAGE (via teleconference),
testified in support of SB 13. He announced that he had
supported KABATA for many years. The bridge was first
proposed in 1959. He remarked that there was currently only
one route between the two most populated areas of the
state. He felt that it was imperative to expand the access
between Anchorage and the Mat-Su borough. He furthered that
18,000 to 20,000 daily commuters used the Glenn Highway. He
stressed that there were multiple times in the winter
months when that highway is closed, either due to a car
accident or weather. He felt that limiting those commuters
with only one access did not make logistical sense. He
shared that the Port of Anchorage was a very important hub
to the rest of Alaska. The bridge would allow for the
container trucks to avoid downtown Anchorage, which would
alleviate much of the congestion that already plagued
Anchorage. He stressed that 1000 to 1500 jobs would be
created with this project.
Co-Chair Meyer wondered if there was a concern about
property taxes being reduced if the bridge was built. Mayor
Sullivan replied that the growth in the Mat-Su was already
occurring.
Vice-Chair Fairclough wondered if there were 18,000 to
20,000 daily commuters between the Mat-Su and Anchorage.
Mayor Sullivan replied in the affirmative.
Vice-Chair Fairclough wondered what percentage of those
commuters were "hauling loads." Mayor Sullivan replied that
most of the trucks were driving north and then returning to
Anchorage empty. He agreed to provide further information.
Vice-Chair Fairclough felt that the trucks would be more
likely to use the bridge, depending on the toll rate. Mayor
Sullivan agreed.
2:55:10 PM
BERKLEY TILTON, PRESIDENT, KNIK-FAIRVIEW COMMUNITY COUNCIL,
WASILLA (via teleconference), testified in support of SB
13. He shared that he had built roads in Alaska since 1965.
He remarked that Alaska made a commitment to maintain its
roads for its citizens. He felt that the project was a road
project that would benefit the entire state. He likened the
project to the Golden Gate Bridge, because the impact was
extremely important. He understood that the project was
expensive, but it would produce an extremely positive
effect. He echoed Mayor Devilbiss and Mayor Sullivan's
remarks. He reiterated that the project was the
responsibility of the state.
2:59:28 PM
DARCIE SALMON, ASSEMBLYMAN, MAT-SU (via teleconference),
spoke in support of SB 13. He shared that he had been the
mayor of the Mat-Su from 1997 to 2000, and was an original
commissioner for KABATA from 2003 to 2009. He felt that the
project included other economic interests including the
port at Point Mackenzie, the rail spur from Point Mackenzie
into the Interior, and the bridge from Anchorage to the
Mat-Su. He felt that those three projects would result in a
360-degree intermodal transportation corridor. He felt that
the bride was essential to the economic growth of the other
two projects.
3:06:10 PM
VERNE RUPRIGHT, MAYOR, CITY OF WASILLA, spoke in support of
SB 13. He stressed that the bridge was not only strategic
to the use and access to Alaska, but also a good investment
for the federal government. He remarked that the federal
government should express a greater participation in the
project. He stressed that Wasilla was experiencing a
population surge, and was the fastest population growing
area in the state. He felt that the bridge would simply
give people options, as the bridge would not shorten the
distance that was already in place through the Glenn
Highway.
SB 13 was HEARD and HELD in committee for further
consideration.
| Document Name | Date/Time | Subjects |
|---|---|---|
| BUSINESS PLAN version 03.27.13_Final.pdf |
SFIN 4/2/2013 1:30:00 PM |
SB 88 |
| SB 88 Sectional Analysis.docx |
SFIN 4/2/2013 1:30:00 PM |
SB 88 |
| Austerman & Stolze.HB 30.ACLU Review.2013-02-12.pdf |
SFIN 4/2/2013 1:30:00 PM |
HB 30 |
| HB 30 -- Sponsor Statement.PDF |
SFIN 4/2/2013 1:30:00 PM |
HB 30 |
| HB 30 History and Summary of Changes.PDF |
SFIN 4/2/2013 1:30:00 PM |
HB 30 |
| HB 30 Sectional Analysis.PDF |
SFIN 4/2/2013 1:30:00 PM |
HB 30 |
| HB 30 Sunset in Texas.PDF |
SFIN 4/2/2013 1:30:00 PM |
HB 30 |
| SB 88 Sponsor Statement.docx |
SFIN 4/2/2013 1:30:00 PM |
SB 88 |
| SB 88 Leters of Support.pdf |
SFIN 4/2/2013 1:30:00 PM |
SB 88 |
| SB 88 Letters of Support 2.pdf |
SFIN 4/2/2013 1:30:00 PM |
SB 88 |