04/21/2006 08:30 AM House FINANCE

SENATE BILL NO. 308                                                                                                           
                                                                                                                                
     "An Act  authorizing the Alaska Railroad  Corporation to                                                                   
     issue  revenue  bonds  to  finance  rail  transportation                                                                   
     projects    that   qualify    for   federal    financial                                                                   
     participation; and providing for an effective date."                                                                       
                                                                                                                                
PATRICK   GAMBLE,   PRESIDENT   AND  CEO,   ALASKA   RAILROAD                                                                   
CORPORATION,  conveyed  information  about  the  bill,  which                                                                   
calls  for legislative  approval  for  the Railroad  to  sell                                                                   
bonds not  to exceed  $165 million for  an acceleration  of a                                                                   
track refurbishment.   He provided  background on  the Alaska                                                                   
Railroad.    In 1996  the  Alaska  Railroad realized  it  was                                                                   
entitled to certain federal subsidies  for passenger carrying                                                                   
railroads.   Some of the  money was earmarked  for rebuilding                                                                   
the mainline, which  had been rebuilt in the  1950's after WW                                                                   
II.                                                                                                                             
                                                                                                                                
Mr.  Gamble  reported  that  receiving  annual  funding  from                                                                   
SAFETEA-LU provided  an opportunity  to accelerate  the track                                                                   
refurbishment program  by issuing  bonds.  It  also shortened                                                                   
the project  by as  much as 10  years.   This provides  for a                                                                   
more reliable, safer  railroad.  The bond debt  service would                                                                   
be repaid  by the entitlements  coming in each year,  and the                                                                   
amount of  those entitlements would  not equal 50  percent of                                                                   
the total federal capital input.                                                                                                
                                                                                                                                
9:44:32 AM                                                                                                                    
                                                                                                                                
Mr. Gamble reported that the bond  debt service would be paid                                                                   
for  by asking  the  legislature  for  approval to  sell  the                                                                   
bonds.  He reported  that $225 million has been  put into the                                                                   
line so  far.  This project  will not exceed $165  million in                                                                   
tax-exempt  bonds,  and will  allow  for re-financing.    The                                                                   
length of the  program would be a function  of three separate                                                                   
issuances.                                                                                                                      
                                                                                                                                
Mr. Gamble referred  to the trend line of derailments  in the                                                                   
Alaska Railroad  on page 4  of the handout, "Alaska  Railroad                                                                   
Corporation  -  Legislative  Request  for  Bonding  Approval"                                                                   
(copy on file.)  He reported on  train accident rates on page                                                                   
5.  The recent work has made an  impact on the downward trend                                                                   
of accident rates.                                                                                                              
                                                                                                                                
9:47:51 AM                                                                                                                    
                                                                                                                                
Mr.  Gamble referred  to  page  6, project  information:  100                                                                   
percent CWR  from Anchorage to  Fairbanks, all  concrete ties                                                                   
on curves less than 6 degrees,  wooden ties all upgraded to a                                                                   
35-year  cycle,  all  ballast  reset,  complimented  by  ARRC                                                                   
Bridge Program, and complimented  by ARRC Collision Avoidance                                                                   
program.  The project is worthwhile and affordable.                                                                             
                                                                                                                                
9:50:43 AM                                                                                                                    
                                                                                                                                
Mr. Gamble  addressed why  the project is  timely on  pages 7                                                                   
and 8.   He spoke to  the proposed funding  on page 9.   ARRC                                                                   
Board approval is required for each project and bond sale.                                                                      
                                                                                                                                
Mr. Gamble  referred to  the debt service  graph on  page 10.                                                                   
He pointed out  the information on joint elimination  on page                                                                   
12.                                                                                                                             
                                                                                                                                
Representative  Stoltze  asked if  any of  the  money is  for                                                                   
realigning  curves.   Mr. Gamble  said  it will  be used  for                                                                   
putting  joints  in  curves,   but  not  straightening  them.                                                                   
Representative Stoltze asked about  the northern route in his                                                                   
district.  He asked about naming  mileposts.  Mr. Gamble said                                                                   
there are proposals to name more posts after past workers.                                                                      
                                                                                                                                
9:55:43 AM                                                                                                                    
                                                                                                                                
Representative Holm  mentioned that the low  sulfur fuels are                                                                   
no longer  going to be produced  in Flint Hills.   Mr. Gamble                                                                   
said  this project  will  not  be affected  by  that loss  of                                                                   
revenue, but others  would.  Representative Holm  asked about                                                                   
crushed rock  vs. round rock.   Mr. Gamble reported  that all                                                                   
remaining round rock would be replaced by crushed granite.                                                                      
                                                                                                                                
9:57:33 AM                                                                                                                    
                                                                                                                                
Representative  Stoltze asked about  Hatcher Pass  Mine rock.                                                                   
Mr. Gamble  said he  has no  awareness of  that project.   He                                                                   
said  his   company  is   always  looking   for  good   rock.                                                                   
Representative Stoltze  asked for the status  of negotiations                                                                   
at the Eklutna  Quarry.  Mr.  Gamble spoke to a  new proposal                                                                   
to settle  a cultural  issue regarding  Eklutna.   A memo  of                                                                   
agreement was adopted and great progress is being made.                                                                         
                                                                                                                                
Co-Chair Meyer stated  intent to hold the bill  for amendment                                                                   
purposes.                                                                                                                       
                                                                                                                                
SB  308  was   heard  and  HELD  in  Committee   for  further                                                                   
consideration.