Legislature(2005 - 2006)BELTZ 211
03/06/2006 01:30 PM Senate COMMUNITY & REGIONAL AFFAIRS
| Audio | Topic |
|---|---|
| Start | |
| SB193 | |
| SB291 | |
| SB246 | |
| SB247 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | SB 193 | TELECONFERENCED | |
| *+ | SB 291 | TELECONFERENCED | |
| += | SB 247 | TELECONFERENCED | |
| += | SB 246 | TELECONFERENCED | |
SB 291-MUNICIPAL HARBOR FACILITY GRANTS
CHAIR BERT STEDMAN announced SB 291 to be up for consideration.
1:51:48 PM
SENATOR GARY STEVENS moved CS for SB 291 [\Y Version].
SENATOR JOHNNY ELLIS objected for explanation purposes.
CHAIR STEDMAN stated that this was the first hearing and there
was no intent to move the bill that day. The proposed CS changes
the bill to align it with the House companion bill. He asked for
latitude to present the bill.
SENATOR ELLIS removed his objection.
CHAIR STEDMAN passed the gavel to Vice-Chair Gary Stevens.
SENATOR STEDMAN, Sponsor of SB 291, explained that the bill
would create a municipal matching grant for harbors so it would
affect all of coastal Alaska.
Starting in the 1930s the state began to build harbors in
coastal areas stretching from Ketchikan to Sand Point. The
state's agreement with the municipalities was that they would do
the major maintenance and the municipalities would run the
harbors and do ongoing administration.
For whatever reason, the maintenance wasn't done and the harbors
fell into disrepair. When the state moved forward to divest
itself of harbor ownership, it assigned applicable dollar values
[for deferred maintenance] to the various harbors. The
municipalities didn't feel that the financial consideration was
near enough to deal with the deferred maintenance and that has
been an unresolved issue.
Over the last several years his office has been working on a
solution to the under funded status. After meeting with the
harbormasters association and the Department of Transportation
and Public Facilities ("DOT"), the solution they decided on was
to establish a 50/50 capital matching grant system. Harbors that
had been transferred would receive priority, but it would also
include new harbors and harbor maintenance issues.
To apply to DOT for the match municipalities would have to have
an enterprise fund established. They would establish and collect
moorage fees that would be at a sufficient level to finance
ongoing administration and major maintenance. Each harbor would
be eligible for just one match grant. The amount to bring the
old harbors up to standard is estimated to be about $100 million
so the state match would be $50 million.
The bill contains language to allow marine fuel tax and the
state portion of the fisheries business tax to be used to fund
the program. The Legislature would fund the program on an annual
basis.
Given the funds available, DOT would have the ability to rank
the applicants. He reiterated that the harbors that were
previously transferred would receive priority. He noted that
pages 2 and 3 of the bill give the ranking process.
He summarized the idea is to come up with a compromise between
the state and coastal municipalities so that old state owned and
operated harbors could be brought up to standard to help
stimulate economic development.
2:00:37 PM
SENATOR ALBERT KOOKESH asked if a harbor project, such as the
one done in Juneau, could be done in phases.
SENATOR STEDMAN explained that Juneau has seven different harbor
entities in its system and the cost of the last project was in
the neighborhood of $6 million. Acknowledging that the cap is an
arbitrary number, he said if a municipality matched the cap for
one harbor that would amount to $10 million. That is a large
harbor when you consider that breakwaters and dredging aren't
included because they can be built with federal help. This
targets floats and electrical and water systems.
SENATOR ELLIS asked where the bill talks about one-time
eligibility and how phase funding squares with the sponsor
statement that talks about one-time eligibility for a harbor.
SENATOR STEDMAN replied the idea is that the granting mechanism
isn't for municipalities to use for catch-up maintenance on
harbors that previously received a capital improvement grant.
This is designed to improve or replace an entire harbor. The
cost of the Juneau Harris Harbor project was about $6 million,
which is well under the $10 million amount allowed under the
50/50 match.
As far as phasing is concerned, the bill doesn't address mega
harbors. Most communities have six or fewer harbors and this
bill would allow the upgrade of one or two harbors per year. It
isn't designed to allow a municipal entity to split a single
harbor upgrade into a two or more year project.
2:06:01 PM
SENATOR ELLIS asked him to make the distinction between
municipal ports and municipal harbors because the grant program
is to benefit municipal harbors. He also asked if any harbors
are an entity other than municipal harbors.
2:06:33 PM
SENATOR STEDMAN responded to the second question and said yes
there are. The goal is to move away from capital improvement
projects and encourage municipalities to create enterprise
funds. The bill doesn't apply to the various harbors the state
still owns where the users don't pay moorage. At some point the
state will face a policy call on how to deal with small docks
that service a dozen or fewer people when no one wants to assume
financial responsibility, but this bill doesn't address that
issue. The hope is that when the proposed mechanism is
established the boroughs will absorb those harbors.
VICE-CHAIR GARY STEVENS called an at-ease from 2:10:02 PM to
2:10:37 PM to return the gavel to Senator Stedman.
CHAIR STEDMAN asked Mr. MacKinnon to come forward and give the
state perspective.
2:10:53 PM
JOHN MACKINNON, Deputy Commissioner of Transportation for
Highways and Public Facilities, explained that harbors have been
transferred in batches. The most recent was the November 2002
bond issue that included 26 or 27 boat harbors in 10
communities. The figures DOT used to estimate deferred
maintenance were based on a statewide Corps of Engineers study
done in 1992 with adjustments for inflation and additional
deferred maintenance. The rule was to bring the harbors up to "a
Chevrolet standard" for a boat harbor. That standard is below
what most communities want and doesn't include power, water
sewage dump stations and harbor lighting.
The department had a certain amount of money available and it
had no choice but to make the transfers. With that in mind, Mr.
MacKinnon said he views SB 291 as a carrot rather than a stick
in terms of harbor transfer. Furthermore, the funding source
makes sense because there's a connection to harbor users.
SENATOR GARY STEVENS asked if the bill seeks to complete the
transfer process or to upgrade harbors that had been transferred
to the various communities.
MR. MACKINNON responded this bill would deal with harbors that
have been transferred. This year's capital budget has eight more
transfers and last year had harbor transfers in two communities.
Some harbors aren't associated with a municipality so there
isn't an entity to transfer them to.
SENATOR GARY STEVENS recapped saying the funds in SB 291 are for
communities that already own their harbors and not for
communities that have harbors that are still under state
ownership.
MR. MACKINNON clarified that his understanding is that the bill
would apply to any harbor that has been transferred as well as
future transfers for as long as the program is funded.
SENATOR STEDMAN asked him to address the bond issue.
MR. MACKINNON advised that was a November 2002 statewide G.O.
[general obligation] bond issue for a variety of facility
projects. A little over $100 million in G.O. bonds were issued
and about $30 million went to harbor transfers.
CHAIR STEDMAN opened teleconference testimony.
2:17:40 PM
RAY MAJESKI, Harbormaster in Sitka, said he wanted to make sure
that communities that had already accepted responsibility for
the harbors would be at the head of the line to receive the
funds. He expressed the concern that locals are being priced out
of the harbor by out of state boaters who find Alaska harbor
rates comparatively reasonable.
CHAIR STEDMAN asked him to comment on the challenge of bringing
harbors up to an appropriate standard in relation to the amount
of money that the state allocated for the transfer.
MR. MAJESKI responded Sitka is faced with borrowing $4.5 million
for the $7 million Thompson Harbor project. The community is
fortunate in that the assembly sends the lion's share of the
fish tax to the harbors, but even so moorage rates are going up
at an alarming rate. Add to that the fact that money must be set
aside for future construction because everything currently in
the water will need major maintenance or complete replacement in
the next 40 to 50 years. Taking inflation into account, the
current harbor system is valued at about $37 million and within
40 years that will be $121 million so it's imperative that money
be set aside. SB 291 will help Sitka move in the right
direction.
2:22:32 PM
MARTY OLUM, Kodiak Harbormaster, reasoned that it's important to
modernize and maintain harbors because they are the economic
foundation upon which other businesses in town depend and grow.
He observed that commercial fishermen upgraded their vessels to
stay competitive in the global seafood market, but harbors
haven't kept pace. Kodiak is creating an enterprise fund and the
50/50 matching program proposed in SB 291 will be of tremendous
help.
2:26:36 PM
ALLAN SORUM, Harbormaster for the City of Valdez, stated that
when he was president of the Alaska Association of Harbormasters
and Port Administrators he became very involved in the issue of
deferred maintenance and harbor transfers. He expressed support
for SB 291.
2:28:39 PM
GARY HENNICK, City Manager of King Cove, testified in support of
SB 291. He explained that the community has a modest economic
base due to its location adjacent to the rich fishing grounds of
the Gulf of Alaska and the Bering Sea. King Cove was the third
local government to accept ownership of the state harbor in the
early 1990s. At that time it seemed as though the $350,000
maintenance allocation was a reasonable sum. However, the
current estimate for bringing the harbor up to standard is about
$4.5 million and the changes in fisheries issues, taxation, and
government revenue sharing in the last ten years have made it
clear that even with an enterprise fund, the community needs
help. He echoed the testimony from other harbormasters and
encouraged the committee to pass SB 291.
In closing he brought up two issues. First he questioned whether
in-kind service might be allowed for part of the local
contribution so that local labor could be used to every extent
possible. Second he suggested that consideration be given to
facility size and demand, the percentage of watercraft and raw
fish taxes that are generated in a particular community, and the
inequity in the amount that a community received when it assumed
ownership of its harbors ten years ago. .
CHAIR STEDMAN acknowledged that when the harbor transfers were
analyzed, the King Cove discrepancy stuck out and that warrants
consideration. With regard to in-kind contribution, he said it's
important to avoid previous pitfalls. Experience indicates that
when communities have a 50 percent equity position in a harbor,
it receives better maintenance.
MR. HENNICK responded the last ten years has shown the issue to
be larger than anticipated.
2:35:56 PM
CHAIR STEDMAN asked John Stone to come forward.
JOHN STONE, President of the Alaska Association of Harbormasters
and Port Administrators, stated that the association has worked
on this issue for several years. It strongly supports a matching
grant program and believes it is a good approach to address the
current dilemma. Many harbors were at the end of their useful
lives at the time that the time of state transfers and everyone
has been scrambling to recapitalize the infrastructure. Through
that process it's become clear that the funding that was
provided is from one-third to one-fourth short of what is needed
to replace the infrastructure.
Communities have been working on ways to raise revenue on a
local level and this has often meant large increases in fees.
However, the general conclusion is that increased fees alone
won't do the trick, which is why SB 193 is so welcome.
He provided the committee with written comments and said it's
encouraging that DOT is supportive of the bill. In conclusion he
mentioned that the cap might become problematic if the program
lasts a number of years. He described the Corps of Engineers
breakwater program that has a $4 million cap. Although that
amount was adequate when it was established, now when the Corps
does a breakwater project a specific Congressional authorization
must be made. He suggested that indexing to the Anchorage CPI
might be preferable.
CHAIR STEDMAN agreed that the last suggestion merits
consideration.
2:40:53 PM
WAYNE STEVENS, President of the Alaska State Chamber of
Commerce, stated support for making funding available to repair
and improve existing facilities to serviceable standards
consistent with DOT regulations as a part of the mandated
transfer of harbors to various communities.
Noting that harbormasters have identified more than $100 million
in needed repairs he said it's important to maintain this
important infrastructure for the economies of these coastal
communities.
CHAIR STEDMAN closed public testimony and announced he would
hold SB 291 in committee.
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