Legislature(1995 - 1996)

04/26/1995 01:50 PM House FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  HOUSE BILL 315                                                               
                                                                               
       "An  Act  relating to  the  financing of  technological                 
       developments by public  corporations of the state;  and                 
       relating to the financing of the Kodiak launch complex,                 
       the Fairbanks satellite ground station space  park, and                 
       a low-rank coal water fuel technology project."                         
                                                                               
  ARLISS STURGULEWSKI, (TESTIFIED VIA TELECONFERENCE), INTERIM                 
  EXECUTIVE DIRECTOR, ALASKA SCIENCE  & TECHNOLOGY FOUNDATION,                 
  ANCHORAGE, provided  Committee  members  with  a  memorandum                 
  dated 4/26/95 regarding  the "Budget Information Requested".                 
  [Attachment #1].  She  offered to answer questions  from the                 
  Committee.                                                                   
                                                                               
  Representative Navarre  questioned how  the interest  of the                 
  fund  would be  protected.  Representative  Brown referenced                 
  Section #6 and  asked if award  money would result from  the                 
  interest  of  the foundation  or  from the  principle.   Ms.                 
  Sturgulewski explained  that  the coal  water fuel  proposal                 
  would be phased over a three  year period originating from a                 
  grant line.   If  Phase 2 of  the project  is accepted,  the                 
  first payment would be made this fiscal year.                                
                                                                               
  Ms. Sturgulewski referenced Attachment #1, pointing out that                 
  the analysis would remove the University Agriculture Station                 
  and the  Aerospace Development Corporation.   Representative                 
  Brown questioned why  the earnings  listed on Attachment  #1                 
  were  greater   without  the   inclusion  of   coal.     Ms.                 
  Sturgulewski indicated  that those  earning would  amount to                 
  $7.2   million   dollars.     Discussion   followed  between                 
  Representative Brown  and  Ms.  Sturgulewski  regarding  the                 
  estimated earning reserve  payments.  Representative Navarre                 
  recommended  removing  the  agriculture  component and  then                 
  focusing  the  availability  of that  grant  money  to other                 
  projects.                                                                    
                                                                               
  Representative Martin  thought that Business  and Industrial                 
  Development  Corporations and  Organizations (BIDCO)  made a                 
  commitment  to  support  the Alaska  Science  and Technology                 
  Foundation.  Ms. Sturgulewski responded that a BIDCO package                 
  has been submitted.   The return should be available  on May                 
  15th, 1995.                                                                  
  Representative  Martin  asked  how many  projects  would  be                 
  eliminated   with  the   advance  of  aerospace.     Senator                 
  Sturgulewski replied that aerospace would  move forward only                 
  if appropriate funding  was available.  She  emphasized that                 
  this was not  an appropriation bill.   Representative Martin                 
  stressed his  concerns with  future complications  resulting                 
                                                                               
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  from the legislation.                                                        
                                                                               
  Ms.  Sturgulewski responded  that  the foundation  currently                 
  handles many small  grants and that  the board of  directors                 
  will  continue  to  serve  the  needs  of  the  small  grant                 
  community.                                                                   
                                                                               
  Ms. Sturgulewski  explained that  the cold  water fuels  and                 
  royalties  plan bids should arrive soon.  The repayments for                 
  the  Science  and  Tech  Foundation  and the  Department  of                 
  Education will  come from royalties  received on  commercial                 
  sales and  from licensing  of that  technology.   Repayments                 
  will then become  a portion of  the negotiation, which  must                 
  begin in order that Phase 2 can start.                                       
                                                                               
  Representative  Brown  asked  if  satellite  facilities  are                 
  commercially viable.  Ms. Sturgulewski stated that there are                 
  private interests from  business and that it  is anticipated                 
  that  the  operation  would allow  for  significant  private                 
  sector information.   She added  that the investment  of the                 
  project is under  review from Alaska Industrial  Development                 
  Export Authority (AIDEA).   Representative Brown  questioned                 
  if that was the normal sequence of events in obtaining AIDEA                 
  bonding.                                                                     
                                                                               
  H.  PAT   LADNER,  EXECUTIVE   DIRECTOR,  ALASKA   AEROSPACE                 
  DEVELOPMENT  CORPORATION  (AADC), ANCHORAGE,  explained that                 
  was an  appropriate procedure  and noted  that the  proposed                 
  legislation would  provide Alaska  the opportunity to  enter                 
  into a new industry without placing money at risk.                           
                                                                               
  Representative   Martin  MOVED   to   adopt  Amendment   #1.                 
  Representative  Mulder  OBJECTED.     Representative  Martin                 
  stressed that free  enterprise should  "pay" their own  way.                 
  Representative Kelly advised  that the legislation would  be                 
  for the benefit of  the entire State, agreeing that  the 50%                 
  application  would  not  be   appropriate.    Representative                 
  Therriault stated that  fees would be  paid for by the  debt                 
  service, and noted that the  enterprise would be responsible                 
  for more  than 50%.  Representative Mulder  added that there                 
  would be a financial return through AIDEA and said that this                 
  would be a good project.                                                     
                                                                               
  Representative Martin  emphasized  that  the  Kodiak  launch                 
  complex, the Fairbanks  satellite ground space park  and the                 
  low rank  coal  water  fuel technology  should  be  able  to                 
  accumulate the remaining funds through a private match.                      
                                                                               
  Ms.   Sturgulewski   responded  to   Representative  Brown's                 
  questioned  regarding the  coal water  fuel  project stating                 
  that the major  amount of money  would be received from  the                 
  U.S. Department of  Energy and would  not be private  funds.                 
                                                                               
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  The Alaska Science &  Technology Foundation will  contribute                 
  $3.7  million  dollars  and the  Department  of  Energy will                 
  contribute $17 million dollars for  the demonstration of the                 
  project.  She pointed out that the language of the amendment                 
  would make receiving that contribution difficult.                            
                                                                               
  Representative Brown referenced  a letter from Mr.  Snell at                 
  AIDEA dated  3/7/95 explaining the anticipated $10.2 million                 
  to be received from the federal government and $8 million to                 
  be received from  the consortium members  in order to  begin                 
  Phase 2.   The intention would  be for the $4  million state                 
  dollars  to  be  spent  up-front  in  order to  provide  the                 
  preliminary  study  before  the  other participants  provide                 
  their money.   Ms. Sturgulewski  stated that all  phases are                 
  being worked on  together, while indicating that  her agency                 
  has clarified that the pay back  project would need to occur                 
  in  the first  three  years.   Ms. Sturgulewski  stated that                 
  Phase  1 has been  completed.  Phase 2  has not been entered                 
  into yet.  Representative  Brown advised that Representative                 
  Martin's  amendment would not conflict with the foundation's                 
  intention.  Ms. Sturgulewski disagreed stating that it would                 
  conflict with the amount of money originating from the grant                 
  and the Department of Energy.                                                
                                                                               
  Representative Brown  asked if the  legislation would affect                 
  the Healy  Claim Coal  Project.   Ms. Sturgulewski  remarked                 
  that  the   legislation  would   affect   the  tide   waters                 
  demonstration project on the  beach.  There are a  number of                 
  ownerships involved with the coal fields and she added, that                 
  group  was  interested  and would  be  participating  in the                 
  project.                                                                     
                                                                               
  A roll call was taken on the MOTION.                                         
                                                                               
       IN FAVOR:      Brown, Martin                                            
       OPPOSED:       Grussendorf,  Kelly,   Kohring,  Mulder,                 
                      Navarre, Therriault, Hanley, Foster                      
                                                                               
  Representative Parnell was not present for the vote.                         
                                                                               
  The MOTION FAILED (2-8).                                                     
                                                                               
  Representative Navarre explained Amendment  #2.  [Attachment                 
  of Alaska to  participate in the challenger  learning center                 
  feasibility  study.   This  study  would provide  a computer                 
  program  and would  establish a  learning center  addressing                 
  interests in space industry technology.  He pointed out that                 
  Kenai had been listed because the  Mayor of Kenai offered to                 
  donate the land for that purpose.   He agreed that Anchorage                 
  would be a more accessible area.                                             
                                                                               
                                                                               
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  Co-Chair Hanley asked  if there was  a cost associated  with                 
  the  feasibility study.    Representative Navarre  commented                 
  that  a  cost  had  not  yet  been established  although  he                 
  recommended  providing  a cap  limit  to those  costs.   Mr.                 
  Ladner elaborated  that he had spoken to AIDEA regarding the                 
  feasibility study and  that a capital budget  submission has                 
  been completed between Alaska Aerospace and AIDEA.                           
                                                                               
  (Tape Change, HFC 95-100, Side 1).                                           
                                                                               
  Ms.  Ladner reiterated  that this  would be  a good  program                 
  resulting in positive impacts on children who use the center                 
  in the  math and science  areas.  Mr.  Ladner noted  that he                 
  supported Amendment #2.  He added that the cost to engage in                 
  the proposal would be $700 thousand  dollars and would be an                 
  on-going  cost.   Representative  Mulder  asked the  cost to                 
  provide  the feasibility study.  Mr.  Ladner replied that it                 
  had  not yet  been submitted  and  that to  date determining                 
  those  costs  had  been  an   explorative  exercise  of  the                 
  corporation.                                                                 
                                                                               
  Co-Chair Hanley suggested including a regional consideration                 
  on the amendment.  Representative Navarre agreed to amending                 
  the amendment to include  "other locations".  Representative                 
  Navarre  recommended  changing  the  language  in  the lower                 
  section  of the  bill deleting  "one-quarter" and  inserting                 
  "one-half".                                                                  
                                                                               
  Representative  Navarre amended  the amendment  to  Line 17,                 
  changing  the language to  read "(1) one-half  by the Alaska                 
  Aerospace  Development  Corporation  and  AIDEA".   Co-Chair                 
  Hanley  added  a "friendly"  amendment  to the  amendment by                 
  deleting the language on Line 15 "Kenai and".                                
                                                                               
  Representative Navarre MOVED to adopt  the amended Amendment                 
                                                                               
  Representative Mulder MOVED to report CS HB 315 (FIN) out of                 
  Committee  with  individual  recommendations  and  with  the                 
  accompanying fiscal note.  Representative Martin OBJECTED.                   
                                                                               
  A roll call was taken on the MOTION.                                         
                                                                               
       IN FAVOR:      Grussendorf,  Kelly,   Kohring,  Mulder,                 
                      Navarre,  Parnell,  Therriault,  Foster,                 
                      Hanley                                                   
       OPPOSED:       Martin                                                   
                                                                               
  Representative Brown was not present for the vote.                           
                                                                               
  The MOTION PASSED (9-1).                                                     
                                                                               
                                                                               
                                6                                              
                                                                               
                                                                               
  CS  HB  315   (FIN)  was  reported  out  of  Committee  with                 
  "individual recommendations" and with a  zero fiscal note by                 
  the Department  of Commerce  and Economic  Development dated                 
  4/20/95.                                                                     

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