Legislature(2021 - 2022)BELTZ 105 (TSBldg)
03/22/2022 01:30 PM Senate TRANSPORTATION
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| Audio | Topic |
|---|---|
| SB170 | |
| Start | |
| SB170 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 170 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
SB 170-MARINE HIGHWAY CORPORATION
1:37:51 PM
CHAIR MYERS announced the consideration of SENATE BILL NO. 170
"An Act relating to the Alaska marine highway system;
establishing the Alaska Marine Highway Corporation; and
providing for an effective date."
[SB 170 was previously heard on 2/17/22, 2/22/22, and 3/17/22.]
1:38:19 PM
THERESA WOLSTAD, Staff, Senator Robert Myers, Alaska State
Legislature, Juneau, Alaska, reviewed the financial provisions
in Article 6, Sec. 42.50.500 42.50.580 of SB 170. She
paraphrased her written testimony, which read:
Financial Provisions. (Article 6. Sec. 42.50.500 -
42.50.580) Page 23.
The board of directors would be responsible for
the management of financial and legal obligations of
the proposed Alaska Marine Highway Corporation. The
board shall appoint a chief executive officer and a
chief financial officer of the corporation that serve
at the pleasure of the board. The board shall by
regulation delegate powers and duties necessary for
the management and operation of the corporation to the
chief executive officer. However, specific board
approval is required for adoption of annual budgets,
long-range capital improvement and program plans, to
enter into collective bargaining agreements, mortgage
or pledge corporation assets, conveyance of entire
interest in corporation assets, and to begin a capital
project with an estimated completion more than one
year or cost of more than $500,000.
1:39:35 PM
Three funds of AMHS
SB 170 creates three funds or accounts for use by
the proposed corporation: the AMHS Operating Fund,
Revenue Accounting Fund, and the Vessel maintenance
and replacement account. The AMHS Operating Fund will
consist of money appropriated by legislature. The
corporation may use the money for the operation of
AMHS without further appropriation and money
appropriated to the fund does not lapse. The
corporation may request a direct appropriation or
grant from the legislature. It is important to note
that any Alaska state public corporation's expenditure
of income that must be specifically appropriated to a
public corporation as to not violate the prohibition
against dedicated funds in article IX Section 7, of
the Constitution of the State of Alaska.
1:40:34 PM
MS. WOLSTAD continued to paraphrase her written testimony, which
read:
The Revenue Accounting Fund is established as a
separate fund in the corporation composed of gross
revenue generated from the operation of the AMHS that
the corporation shall account for. The legislature may
appropriate the gross revenue deposited in the fund to
the Alaska marine highway system operating fund. Under
Chapter 5 of the Fiscal Procedures Act. (AS 37.05.146
(c)(4)); corporate receipts earned or managed by a
state of Alaska public corporation shall be accounted
for separately, and appropriations from these program
receipts are not made from the unrestricted general
fund.
The vessel maintenance and replacement account is
created as a separate account in the AMHS operating
fund. It will consist of money appropriated to the
proposed corporation by the legislature for
maintenance and replacement of vessels, and money
transferred to the account by the corporation. The
corporation may use the money in the account for the
maintenance and replacement of vessels without further
appropriation.
1:41:38 PM
Bonds (Article 7. Sec. 42.50.600 - 42.50.710). Page
26.
The proposed corporation would be authorized to
issue bonds by resolution of the board. The board
shall determine the types and amounts of the bonds
that the proposed corporation may issue. Bonds issued
by the corporation would not bear the full faith and
credit of the State, and its political subdivisions
are not liable for the debts of the corporation. Bonds
issued by the corporation are payable from the revenue
or assets of the corporation. In addition, the
proposed corporation may secure its bonds by obtaining
revenue pledges from Federal, Municipal, Corporate,
Associations, Institutional, or an Individual person.
The proposed AMH corporation would be able to issue
debt in a more flexible manner and with limited
oversight as compared to other public corporations in
the state of Alaska.
1:42:29 PM
MS. WOLSTAD continued to paraphrase her testimony on SB 170,
which read:
Dividends to the State AS 42.50.580 Page 26.
The proposed corporation under SB 170 shall pay
as a dividend to the general fund any amount by which
the Alaska Marine highway operating fund exceeds the
projected costs of operating the corporation through
the next fiscal year. Thus, any excess revenue after
the operations, maintenance, and debt service will
flow to the State of Alaska from the proposed
corporation.
1:43:34 PM
ROB CARPENTER, Deputy Commissioner, Department of Transportation
and Public Facilities (DOTPF), Juneau, Alaska, began a
PowerPoint on the Alaska Marine Highway System Bonding,
Maintenance and Replacement of Vessels, AMHS budget, Property
and Assets of AMHS, and State Transportation Improvement Program
(STIP).
1:35:09 PM
MR. CARPENTER reviewed slide 2, CY 2023 Governor's Proposed. He
stated that the total budget was $141 million, with $135 million
in federal receipts from the $200 million program passed in the
infrastructure bill [H.R. 3684, Infrastructure Investment and
Jobs Act (IIJA)]. He noted the federal IIJA funding for Alaska
would be $200 million per year for the next five years. The
administration's plan for "All ships, all the time" means that
there are no scheduled budgetary layups because the department
plans to run the ships as much as possible, except for scheduled
maintenance and overhauls.
MR. CARPENTER stated that the $141 million would provide the
necessary funds, using $5 million from the Alaska Marine Highway
System (AMHS) revenue to cover any costs that were not federally
eligible.
1:45:43 PM
SENATOR SHOWER said he was unsure how federal funding would
work. He wondered what the state would not be taking advantage
of by leaving $50 million on the table.
MR. CARPENTER explained that the federal funding would
appropriate $200 million annually for rural ferry systems
throughout the nation for the next five years. He stated that to
qualify for ferry funding, states must have two ports separated
by 50 miles, and port cities must have a population of less than
50,000. DOTPF does not believe another ferry system in the
country qualifies. He related that anecdotally, the department
heard that Puerto Rico might be eligible, but the bill reads
explicitly indicates "states."
MR. CARPENTER Stated that the department prepared this proposal
before the committee introduced SB 170, so the department
planned to fund the operating budget. He admitted that Senator
Shower was correct that it leaves about $60 million on the
table. However, he anticipated that DOTPF could plan for capital
investment or other actions once the department receives more
information on the timing of cash flows.
MR. CARPENTER stated that another step in the planning process
was the governor's bill that would remove the Alaska Marine
Highway Fund from the General Fund. He explained that the
administration would like to collect revenue from the system for
future planning and use purposes. He related that the new Alaska
Marine Highway Operations Board, which has been moving forward
to modernize the fleet, will review the federal funding and the
best way to plan how to use the funding.
1:48:25 PM
SENATOR SHOWER asked if this would replace state operational
funds for AMHS over the next five years.
1:48:40 PM
MR. CARPENTER agreed. He indicated a later slide would discuss
the historical funding.
1:48:51 PM
SENATOR KIEHL related his understanding that AMHS does not have
sufficient crew to run all the ships continuously. He wondered
whether the department could run nine vessels by calendar 2023.
MR. CARPENTER responded that the department was struggling with
old ships and hiring sufficient crew this summer. He said AMHS
hopes to run the Columbia, but it does not look good. The
department currently has an intensive recruiting campaign
underway.
1:49:49 PM
SENATOR MICCICHE related his understanding that an amendment to
the federal infrastructure bill would change the requirement
from 50 miles to 20 miles between ports. He asked for the status
and if it was a realistic threat.
MR. CARPENTER responded that he was unsure.
1:50:28 PM
ANDY MILLS, Legislative Liaison, Office of the Commissioner,
Department of Transportation and Public Facilities (DOTPF),
Juneau, Alaska, offered his view the amendment to the federal
infrastructure bill passed the Senate but not the House. He
heard anecdotally that some other areas considered themselves
eligible. Still, DOTPF found other ferry systems did not meet
the criteria because the ferry run was from one rural port to a
park. He noted that DOPPF would work with the federal partner,
the Federal Transit Administration, to push back.
1:51:08 PM
SENATOR SHOWER asked if Alaska had any competition for the
funding.
MR. MILLS related his understanding that Rhode Island initially
had but determined that a $12.5 million add-on meant that the
state did not consider itself eligible.
1:52:05 PM
MR. CARPENTER added that DOPF was waiting for the Notice of
Funding Opportunity to provide clarity.
1:52:25 PM
MR. CARPENTER reviewed slide 3, CY2023 Governor's Proposed
Budget.
MR. CARPENTER stated that this slide showed a look back to FY
2019 that shows the authorized budget and the actual
expenditures. He noted the comparisons on slide 3 for the
planned weeks of service versus actual weeks of service; the
planned port calls, the budgeted revenue versus actual revenue,
and the planned fare box recovery compared to the actual fare
box recovery.
MR. CARPENTER directed attention to the CY2023 (Calendar Year)
Governor's Proposed column, which plans for 362.7 weeks of
service, similar to the FY 2019 final authorized plan. Thus, the
department believes it is returning to better times. He stated
that the planned port calls were 6,300 in the governor's
proposed budget compared to 5,900 in FY 2019.
MR. CARPENTER reported that AMHS anticipates revenue of $53
million. AMHS budgeted revenue of $48 million in FY 20 and
collected $28 million. It budgeted $51 million in FY 2021 but
only collected $27 million, leaving unrealized earnings of $46
million for those two years, which was reimbursed by the
Coronavirus Aid, Relief, and Economic Security (CARES) Act or
the Coronavirus Response and Relief Supplemental Appropriations
Act (CRRSA (2020).
1:54:22 PM
MR. CARPENTER directed attention to the budget funding sources
for previous years. The governor's proposal for FY 2023 is $135
million in federal funding. However, in prior years the funding
is broken out into unrestricted general funds (UGF), designated
general funds (DGF), and other fund sources. He pointed out that
the UGF portion was $63 million in FY 2022 and $54 million in FY
2020. He related that the DGF was essentially the system's
revenue, which averaged approximately $53 million. He directed
attention to the last two lines on the table that shows the
change of $23 million over CY 2022 without forward funding. He
reminded members that the legislature was able to provide bridge
funding to allow the department to move to a calendar year
budget. This allowed the department to put out a schedule a year
in advance.
1:55:38 PM
SENATOR SHOWER pointed out that one issue is that vessels are
scheduled but not canceled if ridership is down and the vessels
are only partially full. He asked whether the budget would show
a decrement because of the IIJA funding. He wondered if it would
look like the state would save money over the next five years
when the federal government provided infrastructure funding. He
further asked if the proposal would capture all or a portion of
that funding for the future.
1:56:43 PM
MR. CARPENTER answered that the immediate DOTPF budget would
show a reduction of general funds due to the IIJA federal funds
replacing state funds. However, he was unsure how the federal
funds would be reflected in the overall state budget. In terms
of the best use of the $200 million annual windfall, the
department proposed fully funding the operating budget and
saving the state funding, essentially banking the revenue into
the AMH Fund for future use. The revenue could accumulate, and
the AMH system would have a savings account if the federal
funding dried up.
1:58:13 PM
SENATOR SHOWER said he hoped the department would save the money
to operate into the future.
1:58:27 PM
SENATOR MICCICHE asked how the department would propose
preserving UGF. He further asked how far the five years of
federal funding would affect the AMH service in the future
without an additional appropriation. He stated his support for
putting it into the AMH Fund if it would result in seven or
eight years of operation. He wondered if he foresaw any
adjustments to the fee schedule for services that might
encourage ridership and cargo on the marine highway. He asked if
people would acclimate to the additional service resulting in
higher ridership levels and fare box recovery.
MR. CARPENTER noted that the new Alaska Marine Highway
Operations Board had met biweekly. He indicated that the board
was looking at capital revitalization, how it would occur, what
would be needed, and the cost. He emphasized that the $200
million annual windfall would play directly into it. The board
would examine how to invest funds and whether it would result in
savings. He said he was hopeful that the board would decide to
invest in new ships over time to modernize the fleet to provide
reliability. He emphasized that the primary mission is to
provide reliable service. He said the board and department are
open to suggestions. He said one key piece would be to create a
new fund separate from the general fund to ensure that the AMHS
receipts don't get swept.
2:01:11 PM
MR. CARPENTER acknowledged that it was always a challenge to
find the sweet spot. Last year the goal was to increase the fare
box recovery by 50 percent, with 50 percent in fare box and 50
percent state funds. However, the public tends not to support an
increase in fees and tariffs. He indicated that the department's
goal is to provide some essential level of service to all
communities. He acknowledged that arriving at the sweet spot for
the fare box would be tough.
2:02:02 PM
SENATOR SHOWER noted that ridership had consistently dropped but
that cargo was relatively consistent. He noted the planned port
calls for CY2023. He said if ridership is down, it relates to
operating costs and vessel usage, so running fewer vessels could
result in reduced maintenance costs. He asked whether the board
was flexible about making changes. He questioned why the ferry
would make 6,300 port calls if only 4,000 were justifiable.
MR. CARPENTER pointed out that the car deck had been relatively
consistent even though passengers were down substantially. He
indicated that the car deck provides the primary source of
revenue for the marine highway. It makes sense to tie ships up
when not at full or optimal capacity level. However, it is
challenging to provide the crew with year-round jobs. He
acknowledged that AMHS did not fully utilize the ferries.
2:04:06 PM
SENATOR MICCICHE suggested that there might be a reverse
opportunity by getting Alaskans and tour companies back in love
with the Alaska Marine Highway System now that the department
has some cushion with the federal funding. He stated that it
would be nice to revitalize that ridership. He wondered if there
might be creative ways to accomplish that goal rather than to
figure out how to squeeze every penny out of each rider and
vehicle.
SENATOR MICCICHE said he would leave it to the administration
and the board to figure out, but he was interested in those
developments as they occur. He suggested feeding the department
minutes of the Senate Transportation Committee. He characterized
the IIJA funding for ferries as a once-in-a-lifetime opportunity
to ignite usage and contracts with tour or cruise companies for
passengers not taking additional legs. He offered his view that
it could reap long-term benefits.
MR. CARPENTER responded that the department received criticism
on its dynamic pricing, so it tried other options, such as
running specials on some low routes to generate interest.
Although they had mixed results, the marketing team continues to
seek opportunities by going to trade shows. He stated that AMHS
has worked to create a buzz. He viewed this as an opportunity to
reinvigorate the fleet for the next generation. He indicated
that all ideas are welcome. He offered to provide the minutes
from the department's Alaska Marine Highway Operations Board
(AMHOB) meetings to the committee.
2:06:25 PM
MR. CARPENTER reviewed slide 4, AMHS Revenue & Weeks of Service
FY2014 CY2023, consisting of a bar chart and line graph. He
explained that the bars represent the revenue collected, and the
line graph shows the weeks of service provided. He indicated
that the 362 weeks in AMHSs FY 2023 proposal was similar to the
actuals in FY 2014 and 2015. He directed attention to the drop
in revenue in FY 2020 and FY 2021 due to the pandemic.
2:07:18 PM
MR. CARPENTER directed attention to slide 5, State Funded
Overhauls. He stated that AMHS receives an annual capital budget
appropriation to maintain its vessels, ranging from $15-20
million. He explained that AMHS could not use federal funding
for routine vessel maintenance. The overhaul consists of annual
US Coast Guard and American Bureau of Shipping (ABS)
requirements to obtain a Certificate of Inspection to ensure
that the vessels are safe to run.
2:08:44 PM
SENATOR KIEHL stated that besides the general fund (GF) funding,
GF match and federal overhaul funding also provide substantial
funds to keep the vessels running. He asked for an adjustment to
slide 5 figures if it included federal overhaul funding.
MR. CARPENTER indicated that he had developed a slide to show
the last 10 years of federal funds, but staff struggled to get
the figures precise so he removed that slide. He referred to the
$15-17 million in discretionary funding for ferries from the
Federal Highway Administration (FHWA) and additional FHWA funds
of about $250 million for 10 years. He characterized these as
major Capital Improvement Program (CIP) projects rather than
routine maintenance projects. He acknowledged that keeping the
vessels running requires a significant investment.
2:10:01 PM
SENATOR KIEHL expressed his interest in the total cost of
converting AMHS to AMHC, including integrating the overhauls in
the Statewide Transportation Improvement Program (STIP) planning
process for all fund sources.
SENATOR KIEHL indicated that he had compared the Actuals by
Vessel on slide 5 to the Office of Management and Budget (OMB)
backup information on state-funded overhauls. He noted that the
figures were higher on this chart than OMB. He asked for the
source of the additional funds.
MR. CARPENTER responded that the figures represented the
actuals, whereas OMB backup often provides the appropriation
levels. He was unsure whether OMB included any supplemental
funds. He related that if the department estimated $15 million
but the actual cost was $18 million, it would request $3 million
in supplemental funding. He stated that the department requested
$20 million this year to avoid those discrepancies.
2:11:40 PM
MR. CARPENTER reviewed slide 6, Alaska Marine Highway System, An
Aging Fleet, showing the date each vessel was built during the
Kennedy, Nixon, Clinton, and Trump presidencies.
2:12:07 PM
SENATOR SHOWER asked where the vessels were built.
MR. CARPENTER answered that most are federal projects, so the
projects are competitively bid. He indicated that the two latest
ferries were fully state-funded and constructed in the Ketchikan
shipyard.
SENATOR SHOWER wondered whether the smaller ferries would be
more efficient and if so, they could be built in Alaska.
2:13:24 PM
SENATOR KIEHL asked whether the department could add the vessels
that were not in service, such as the Taku, Chenega, and
Fairweather.
MR. CARPENTER agreed the department could do so. Slide 6 only
listed the ferries currently owned.
2:14:02 PM
CHAIR MYERS asked when the Tustumena replacement would happen.
2:14:13 PM
MR. CARPENTER reviewed slide 7, TRV Construction, regarding the
Tustumena replacement. The preliminary design has been completed
and the department is currently working on the Construction
Manager/General Contractor (CMGC) Request for Proposal (RFP). He
explained that the contractor is involved in the final project
design to help avoid mistakes during construction. He reviewed
the timeline.
Public notice release January 15th, 2022
Design by Glosten
CMGC RFP to be released mid-March 2022
Public comments occurred in 2014 but truncated
comment period will be underway soon.
MR. CARPENTER deferred to Mr. McClaren for the completion date.
2:16:00 PM
MATT MCLAREN, Business Development Manager, Marine Highway
System Department of Transportation and Public Facilities
(DOTPF), Ketchikan, Alaska, answered that it is projected for
completion in 2027 so long as the CMGC process begins by 2023.
2:16:44 PM
MR. CARPENTER added that the Tustumena is old.
2:17:02 PM
MR. CARPENTER expressed a willingness to discuss other topics
shown on slide 8: Discussion: Bonding, Property & Assets, STIP.
He said he met with the planning division. The proposed
corporation would be a publicly-owned entity, making it eligible
for STIP funds. It would also qualify for additional federal
funds since it is on the National Highway System.
2:17:52 PM
CHAIR MYERS related his understanding that it would require
approval by Federal Transit Administration. He asked what needed
to be done for it to be designated.
MR. CARPENTER clarified that he was speaking about FHWA funding.
He deferred to Mr. McClaren.
2:18:41 PM
CHAIR MYERS asked whether the AMHS receives FTA funding.
2:18:49 PM
MR. MCCLAREN agreed AMHS receives some FTA funding. He offered
to provide the historical funding amounts.
CHAIR MYERS responded that he was more interested in ensuring
that AMHC would be eligible, what federal or state actions
needed to occur, and identifying any regulatory or legislative
action that would be necessary.
MR. MCCLAREN deferred to Captain Falvey to respond.
2:20:11 PM
JOHN FALVEY, General Manager, Marine Highway System, Ketchikan,
Alaska, asked if he was interested in the federal highway
formula funding.
CHAIR MYERS clarified that he wanted to ensure that the new
corporation would be eligible for Federal Transit Administration
(FTA) funding.
CAPTAIN FALVEY answered he held conversations with the
Department of Law about this. He stated that once the
corporation was established, it would have access to the same
Federal Highway Administration (FHWA) and FTA funds as AMHS.
MR. CARPENTER offered to confirm with the regional FTA
administrator what steps would be necessary to make this
transition. He clarified that he was discussing the $200 million
rural ferry infrastructure funding.
2:21:36 PM
SENATOR KIEHL asked how to ensure that AMHC was in meaningful
discussions with DOT planning staff who prepared the STIP to
ensure that the projects are considered.
MR. CARPENTER said he is concerned. He agreed that there were
some benefits to having AMHC within DOTPF, such as the overall
intermodal transportation system, but that did not mean it would
not occur with a corporation. He stated that the department was
in the final interview process to hire a dedicated marine
highway planner. The planner will work with the new board to
elevate the planning for the Marine Highway System. He
envisioned that even under the corporate structure, the position
could reside within the planning division at DOTPF. He
acknowledged one challenge is the Marine Highway System must
compete for limited dollars, given the many transportation needs
throughout the state.
2:23:50 PM
CHAIR MYERS referred to a document that showed AMHS unrestricted
revenue by vessel. He recalled a line for non-vessel revenue. He
asked for a description of AMHS non-vessel revenue. He noted
that it fluctuated, but the FY 2021 figure went up to $200
million when it had been substantially lower in other years.
2:25:07 PM
MR. CARPENTER directed attention to page 16 of the [Alaska
Marine Highway Fund (AMHF) Annual Financial Report 2021]. He
deferred to Mr. McLaren.
CHAIR MYERS referred to the bottom of page 16 that lists a
category for Non-Vessel Revenue. He asked for the source of the
revenue and whether it was derived from rentals or onboard
concessions. He asked about the big jump in FY 2018, FY 2019, FY
2020, and FY 2021.
MR. MCCLAREN responded that non-vessel revenue does not include
food. He stated that non-vessel revenue was derived from
concessions, facility rental, or reimbursement. However, the
revenue is not necessarily tied to an individual vessel. He
offered to provide the breakout.
2:27:01 PM
CHAIR MYERS asked him to identify several examples of recent
rentals.
MR. MCCLAREN offered to provide the details for the committee.
2:27:42 PM
CHAIR MYERS turned to questions on the bonding authority.
2:28:45 PM
RYAN WILLIAMS, Operations Research Analyst, Treasury Division,
Department of Revenue, Juneau, Alaska, stated that he and Deven
Mitchell, Debt Manager, had done an initial review of the
proposed AMHC compared to other state corporations. He noted
that AMHC was more flexible in its ability to issue debt, with
less oversight than other corporations. He reviewed similar
limitations, stating that the Alaska Industrial Development and
Export Authority (AIDEA) has a restriction on issuing bonds over
$25 million in a fiscal year. The University of Alaska has
certain restrictions if the annual debt service is over $2.5
million on a single issuance. He offered his view that it is
advisable to place bookends on limitations to issue debt from a
credit strategy perspective.
2:30:01 PM
CHAIR MYERS understood that some limitations would be imposed
because the bond market would have requirements. He asked him to
address that aspect.
MR. WILLIAMS explained that revenues would secure bonds issued
under SB 170 for nearly any purpose, whether it was federal,
municipal, corporate, association, institutional, or an
individual person. He characterized it as a broad spectrum of
revenues, similar to Alaska Railroad Corporation (ARRC) in terms
of pledges. He stated that any debt issue would be secured by
revenues generated from those bond proceeds or the assets of the
agency issuing the bonds.
CHAIR MYERS wondered if the Alaska Marine Highway Corporation
(AMHC) wanted to issue $20 million in bonds, what the bond
market would require for assurance that the corporation was
solvent. He wondered how that would mesh with the legislature's
statutory requirements.
MR. WILLIAMS stated that the legislature would authorize the
issuance of bonds by AMHC and provide a disclosure document. For
instance, if revenue bonds were issued, the disclosure document
would give a detailed description and history of any revenue
flowing into the corporation. Typically, revenue pledges have a
debt service ratio, and the net revenues should be about 1.25
times the amount of any outstanding debt service payments.
2:33:04 PM
SENATOR SHOWER asked how the bond market would treat a new
corporation.
2:33:41 PM
MR. WILLIAMS responded that the corporation would provide a
detailed write-up on prospective revenue-generating
capabilities. For example, the corporation could provide an
independent consultant report showing the pro forma revenue
projections for bonds issued that historically showed any
appropriations and Unrestricted General Funds (UGF) made to the
corporation. Thus, AMHC would be a state public corporation, the
corporation would provide information about the state in its
disclosure document showing the lookback on any transfers to the
corporation.
2:34:54 PM
SENATOR SHOWER asked whether the interest rates would be higher
initially or if the bond market would view it as being part of
the state.
MR. WILLIAMS offered to respond back to the committee on how it
would be structured.
2:35:45 PM
SENATOR KIEHL recalled he had suggested having bookend or
sideboards on the corporation's ability to issue debt. He asked
him to discuss better ways or worse ways to do so. He referred
to the 2008-2009 crash and recalled parking and development
authorities throughout the country had their own ability to
bond. When the economy took a dip, those development authorities
went bankrupt and defaulted. He acknowledged that it was
problematic for an entity such as AMHC to get legislative
approval every time it wanted to borrow.
MR. WILLIAMS responded that an issuance cap is one of the most
common forms of limitations. He said he also works with the
Alaska Municipal Bond Bank Authority (AMBBA), which has a total
issuance cap of $1.7925 billion, with some sub-segments inside
the cap, such as regional health organizations that have a cap.
He suggested that having an overall cap would provide a ceiling,
which would have some understanding of the underlying
corporation's revenue for operations. He stated that other
limitations would identify who could partner with the
corporation. He said AMBBA partners with political subdivisions,
including communities throughout Alaska, the University of
Alaska, Regional Health Organizations, Joint Action Agencies,
and Joint Insurance Associations.
2:38:51 PM
SENATOR MICCICHE related his understanding that Alaska Housing
Finance Corporation (AHFC) is the only public corporation that
does not need legislative approval for bonding. He asked whether
AHFC has issued bonds.
MR. WILLIAMS answered that AHFC had issued Veterans Mortgage
Program Bonds, most recently in 2019. AHFC also issues Capital
Project Bonds. He offered to provide a complete list of recent
issuances by AHFC to the committee.
2:39:55 PM
SENATOR MICCICHE asked whether the state has bonded for Alaska
Marine Highway capital projects in the past.
MR. WILLIAMS answered no, not to his knowledge.
2:40:16 PM
SENATOR KIEHL asked whether the state issued Grant Anticipation
Revenue Vehicle (GARVEE) Bonds for the Chenega fast ferry.
2:40:39 PM
MR. CARPENTER deferred to Captain Falvey.
2:40:54 PM
CAPTAIN FALVEY responded that he does not recall if the fast
ferries were bonded. He offered to check and report to the
committee.
2:41:12 PM
SENATOR MICCICHE said he is uncomfortable leaving issuance of
bonds wide open, particularly for a new corporation. He noted
that only the Aerospace Corporation and AIDEA were capable of
issuing bonds. He expressed an interest in knowing more about
their limits and whether these limits were based on a proportion
of their annual budgets or some other basis, and any logic
behind that limit.
2:42:11 PM
SENATOR KIEHL related his understanding that the Alaska
Commission on Postsecondary Education had the authority to issue
bonds without legislative approval. He recalled that it had been
some time since they had done so. He expressed an interest in
their bonding.
2:42:39 PM
SENATOR MICCICHE expressed an interest in having the [list
entitled "SB 170. Establishment of the Alaska Marine Highway
Corporation"] updated and adding a column for the history of
bonding utilization, so the committee could better understand
the bonding.
2:43:14 PM
CHAIR MYERS stated that the state has 15-17 corporations. He
said he did not want to overwhelm the committee with
information, so he limited the document to the most relevant
corporations, including Alaska Aerospace Corporation, AHFC,
AIDEA, and the Alaska Railroad Corporation. He offered to expand
the list to include other corporations.
2:44:18 PM
CHAIR MYERS held SB 170 in committee.
| Document Name | Date/Time | Subjects |
|---|---|---|
| S TRA - AMHS Overview (03-22-2022).pdf |
STRA 3/22/2022 1:30:00 PM |
SB 170 |
| SB 170 - Quick Review of Bonding Authority and Alaska Public Corporations.pdf |
STRA 3/22/2022 1:30:00 PM |
SB 170 |
| SB 170_Research_AMHS Construction Contracting Fact Sheet.pdf |
STRA 3/22/2022 1:30:00 PM |
SB 170 |
| SB 170_Research_AMHS Procurement Fact Sheet.pdf |
STRA 3/22/2022 1:30:00 PM |
SB 170 |
| SB 170_Research_AMHS Annual Financial Report 2021.pdf |
STRA 3/22/2022 1:30:00 PM |
SB 170 |