Legislature(1997 - 1998)
02/17/1998 08:15 AM Senate FIN
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
SENATE BILL NO. 261
"An Act relating to the Special Olympics World Winter
Games to be held in Anchorage in the year 2001;
establishing a reserve fund for the games; providing
certain duties and authority for the Alaska Industrial
Development and Export Authority regarding financing
for those games; and providing for an effective date."
Mary Gore, aide to Senator Mike Miller and Area Director for
the Juneau Special Olympics, was invited to join the
committee. The legislation before the committee was the
result of hard work by a variety of different people to
guarantee Anchorage would be awarded the Special Olympics
World Winter Games in the year 2001. She recited a brief
history for the committee. A couple of years ago the
executive director of Special Olympics Alaska decided this
would be a wonderful thing to do for Alaska and enlisted the
aid of U.S. Senator Ted Stevens. Last summer the Anchorage
organizing committee was told by Special Olympics
International that in order to be awarded the bid the State
would need to be the financial guarantor for the games.
Special Olympics International would not go in the hole as a
result of any location being awarded the bid. She explained
that the result of several conversations between Special
Olympics International and the Governor's Office was that
the money did not need to be appropriated prior to the bid
being awarded, however, the State would have to show that it
was behind the organizing committee's efforts. Last fall
letters were sent from the Governor's office, Speaker Gail
Phillips and President Mike Miller stating they were behind
the program and they would work toward resolution of the
funding once session started. It was determined that the
cash did not need to be appropriated and held in an account
for the games. However, the State just needed to be on
record if private resources could not raise the money. This
legislation would morally obligate the State up to four
million dollars if the organizing committee did not raise
the funds. However, the likelihood of that was minimal.
Total budget for the games was eight million dollars; four
million in hard cash and four million in contributions.
Thus far, she said about one million dollars in cash had
been raised and the organizing committee had three years
left to raise the remaining three million dollars. Checks
and balances would be through AIDEA who would oversee the
fundraising of the organizing committee and report to the
Legislature every January 2 as to the status of the
organizing committee's efforts. In the event the committee
was falling behind a gentle push from the Legislature would
put them back on track. In the year 2001 the Legislature
would need to appropriate and then approve spending of those
dollars during a legislative session if for some reason that
was required.
She said the organizing committee had already started
raising money. Full page ads have been running in
newspapers around the State and financial help as well as in
kind help was going to be needed for hosting the games.
Approximately two thousand athletes were expected with each
two athletes requiring one chaperone. About seven thousand
people would be visiting Anchorage, generating about
seventeen million dollars during the ten day period the
games will be held.
Co-chair Pearce noted for the record that she is on the
board of the Alaska Governing Board of the Special Olympics.
Senator Phillips asked how many venues would be hosted. Ms.
Gore indicated that there would be downhill, cross-country,
snowboarding as an exhibition, snowshoeing and iceskating
with a total of approximately eight venues.
Senator Parnell voiced concern that it was being represented
to the Legislature they were taking on the obligation as
guarantor, however it was looking like they were a lendor or
grant giver as well. He referred to page three, line
eleven, section four, paragraph one. He felt the wording
was very loose in comparison to what was being represented.
Ms. Gore indicated that Keith Laufer from AIDEA was on
teleconference and asked that he be allowed to explain since
he worked through the legislation for the committee.
Senator Torgerson asked Ms. Gore if any building were being
built? Ms. Gore said no there were not. Senator Torgerson
asked about checks and balances on the operational costs.
Ms. Gore said there was an organizing committee overseeing
everything to date. Most individuals from the private
sector have been working through their own budget and the
work being done has been free. She further advised that BP
was paying for ads and not out of the eight million dollars
budget. Senator Torgerson said his biggest concern was the
opportunity to spend and not have any checks and balances.
He asked if AIDEA would have a chance to reject the plan if
the organization did not stay within the means of the
financial plans submitted to them?
Keith Laufer, Alaska Industrial and Export Authority
testified via teleconference from Anchorage. He said AIDEA
supported the bill. It would create a new fund with AIDEA
that would not be capitalized initially but could be
capitalized in the event that come the year 2001 the games
would require an additional amount of money they had not
been able to raise. Further, the bill did not anticipate
the State would finance any portion, but merely act as a
guarantor. He said the reference to section 4, State
financial assistance, had to be read in context with the
rest of the bill. The assistance would be in the form of
the Legislature appropriating up to four million dollars to
the Special Olympics fund created in the bill, which would
occur in the year 2001. He said there was no other vehicle
for State financial assistance in the bill, other than
references that the local organizing committee had to do
everything to reduce any State participation, including that
appropriation. He felt there was nothing to anticipate any
financing other than the four million dollar back-up
guarantee. With regards to the Authority's role, the bill
required the local organization to submit a finance plan to
the authority within six months of the bill being passed and
then every six months thereafter. The finance plan would
have to be approved by the Authority and they could go to
the Legislature and suggest they appropriate money later.
He explained this was a protection.
Senator Parnell said he understood the purpose of the
guarantee in the event there would be insufficient funds.
He said presumably in 2001 they could come back to the
Legislature and ask them to cover the amount. His concern
was there was no specific time limit and felt they could
come back next year and ask for the money if their fund-
raising was not on track for 2001. He did not want the
Legislature to get in the business of being a lender.
Mr. Laufer in response to Senator Parnell referred to page
three, lines seven through nine of the bill. He said AIDEA
would have to determine there was insufficient monies from
all other sources in an amount to not exceed four million
dollars. He said after determining there was no other funds
available then they would turn to the appropriation.
Senator Donley agreed with Senator Parnell and said the
witness was just talking around the issue. The language
made it sound as if it was an invitation to come back and
ask for direct State funding. He suggested it be rewritten
to state that "if, after due diligence there has been a
failure to raise the adequate amount of money and AIDEA
certifies that due diligence has been done".
Co-chair Pearce asked if the language was prescribed by the
contract signed by the International Organization? Mr.
Laufer indicated no. He said they tried to pull language
out of AIDEA statutes that required finance reviews for what
would otherwise be development projects. Those were
combined with moral obligation language that would be used
to support bond issuances, where the Legislature agreed to
use moral obligation but did not wish to actually advance
any funds. He felt that if the committee believed other
more specific language was appropriate it could be
accomplished.
Senator Torgerson also voiced concerns on approving the
operating costs of the operating committee. He wanted to
know if there was anything other than the six months review
by AIDEA. Mr. Laufer said their being required to make sure
they could approve the plan every six months, which would
include sticking with the plan, would insure the plan being
accomplished with no deficit whatsoever. However, everyone
knew that sometimes as one moved forward plans could be
changed.
Senator Torgerson asked if there would be any chance their
agreement with the National Committee would change where it
would affect dollar amounts? Mr. Laufer said his
understanding was that the bill would provide the entire
guarantee the International Committee was looking for.
Nothing else would be required. Ms. Gore concurred. She
said the total budget was eight million dollars. She
further advised that in the first seven months that have
passed they had already raised one million dollars of the
four million dollars they were asking the Legislature to
guarantee. They still had three years to raise the other
three million dollars. She did not feel there would be a
problem.
Co-chair Pearce said she sensed some unease with section 4
and asked that Ms. Gore work with Mr. Laufer from AIDEA to
come up with language that would make the committee feel
more comfortable. She said this could be made available in
the form of a proposed Finance CS.
Senator Phillips referred to page two, lines six through
nine regarding the number of venues. He said he was still
interested in how many venues would be sponsored in
comparison to the Arctic Winter Games or the Winter
Olympics. Co-chair Pearce clarified that the Special
Olympics would be the largest games to be held in the year
2001. She said the Arctic Winter Games were not going to be
held until 2002.
Senator Parnell in concurrence with Senator Donley felt the
language on page three, lines thirteen and fourteen,
essentially said "if the local organization desires State
financial assistance they would prepare a finance plan and
submit that plan to the Authority for approval no later than
ninety days after the effective date of this Act." He said
it sounded like they would submit the finance plan to AIDEA
within ninety days that indicated they were already desiring
State assistance. Ms. Gore said that referred to the plan
they were required to submit every six months so that AIDEA
can oversee what was being done. Senator Parnell reiterated
that it read "State financial assistance". He felt everyone
agreed they wanted to be a guarantor. Ms. Gore said it was
for State financial assistance in the year 2001 if they did
not meet their requirements. She said perhaps the wording
could be changed.
Mr. Laufer explained the requirement for the financial plan
within ninety days and every six months thereafter. If the
organization failed to comply they would no longer be
eligible for financial assistance.
Senator Phillips asked if it was required in other
jurisdictions to have financial moral obligations, how was
it done, and where. Ms. Gore indicated that it was required
in other jurisdictions and believed it was the State of
South Carolina who did the same backing, even though they
had more flexibility through a division that was very
similar to AIDEA. They were able to do an actual bond for
the Olympics. Toronto, two years ago, was also under the
same requirement.
Senator Torgerson asked if the fund would be able to use the
amount generated off the investment as part of the fund?
Mr. Laufer said they had not provided for that because they
had not anticipated any funds ever being appropriated into
the reserve fund until the year 2001. They would only
expect to ask for that appropriation if the money were to be
expended in short order. Senator Torgerson said the
committee just heard there was one million dollars already
collected. Was that not in the fund? Mr. Laufer said the
fund would only be used for the State's contribution when
and if it was required. Meanwhile, the local organizing
committee had their own non-profit corporation holding the
funds they had raised.
Senator Donley asked if this appeared in a temporary section
of the statutes? Mr. Laufer said that was his
understanding.
Senator Parnell asked how long an act stayed in temporary
statutes and was a sunset needed? Mr. Laufer said his
understanding was that once they were passed the time the
fund no longer has any input it did not matter if it was in
the temporary statutes. However, they should confer with
the Attorney General's office.
Co-chair Pearce said she would hold SB 261 in committee
until next Tuesday, 24 March along with SB 25.
(The committee took a short at ease at 9:20 a.m. and
reconvened at 9:30 a.m.)
Co-chair Pearce said the remainder of the meeting was a
continuation of the results based budgeting work session for
Department of Natural Resources, Forestry Program. She
asked Senator Parnell to continue the meeting as chair.
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