Legislature(2001 - 2002)
03/23/2001 01:47 PM House FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE BILL NO. 51
An Act giving notice of and approving the entry into,
and the issuance of certificates of participation for,
a lease-purchase agreement for a seafood and food
safety laboratory facility; and providing for an
effective date.
JANICE ADAIR, DIRECTOR, DIVISION OF ENVIRONMENTAL HEALTH,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION, explained that the
legislation would address the following concerns:
· Noted that the lease expired in December of last
year, and could only be extended on a short-term
basis. AS 36.30.083 allows the Division of
General Services to extend a lease under two
conditions: 1) A 1% lease reduction can be
achieved or 2) A 10% reduction could be achieved
and the American with Disabilities Act (ADA)
requirements met. In the case of the current
facility, the lease rate is $1.03/square foot and
complies with ADA. She stated that the owners are
not interested in a 15% reduction in their lease
rate. Additionally, the building is up for sale.
· Indicated that one way or the other, the lab will
have to move. With money previously appropriated
by the Legislature to look at the most cost-
effective way to replace the lab, a private
consultant was hired to do an economic evaluation.
He determined that "hands down", the most cost-
effective means would be a state-owned facility.
In fact, leasing a laboratory rather than owning
would cost the State 56% more over the 20-year
term of the bond repayment.
· Added that the functions of such a site are
required regulatory functions for the sale of
shellfish and diary products in national and
international commerce markets. No other
laboratories in the State perform the functions,
nor could they under federal rules.
· The laboratory also certifies private, commercial
laboratories to conduct tests required under the
Safe Drinking Water Act (SDWA) for public water
systems. Unless a private laboratory is
certified, Environmental Protection Agency (EPA)
will not accept their test results. Since Alaska
is a primary State for the drinking water program,
we could not accept them either.
Ms. Adair noted that the laboratory is currently located in
Palmer, and the plan includes relocating it to Anchorage.
She enumerated the reasons for the move:
· Anchorage is a central location that could receive
shellfish samples as quickly as possible from many
areas of the State.
· The site needs to be on a public sewer system, as
many chemicals are used.
· A site is needed where there is no excessive
vibrations, dust or electron-magnetic interference
for the performance of the analytical equipment.
· The lot size should be between 4-6 acres to
accommodate the building, parking and snow machine
storage.
· The land should be State owned to keep the price
as low as possible.
Ms. Adair concluded that the location in Anchorage would
significantly benefit the shellfish industry. That location
would reduce the costs slightly, but most importantly it
would speed up the delivery of the time-sensitive sample to
the laboratory for testing.
Co-Chair Mulder inquired what the anticipated size of the
facility would be. Ms. Adair replied it would be 20,530
square feet. The current space is 10,000 square feet, which
is extremely inadequate and has unsafe conditions. She
noted that eleven employees would be moved to Anchorage and
that two offices, one in Homer and one in Wasilla would be
combined. She commented that fourteen employees would
remain in Palmer. In response to Co-Chair Mulder, she noted
that there is food testing only in these laboratories, not
agricultural testing. Ms. Adair discussed the functions,
which would remain outside of Anchorage.
Co-Chair Mulder asked the number of employees in the future
expected to be using the new facility. Ms. Adair replied
that the Department is not planning any growth in the
laboratory staff in the near future.
Co-Chair Mulder noted that in an analysis provided by the
Department, it was indicated that without the bill, they
would be forced to go out and get a request for proposal
(RFP) this summer. Ms. Adair emphasized that the lease
cannot be extended at the current location. By December 31,
2002, the last of the extensions will be over. A long-term
extension cannot be done in that spot, consequently no RFP
for a long-term lease.
Co-Chair Mulder questioned that reasoning. He stated that
there were provisions in current statute that allowed for
the extension, however, the current landlord would have to
agree to a certain amount of reductions. Ms. Adair replied
that the current landlord is not interested in a 15%
reduction. Co-Chair Mulder asked if there was documentation
supporting that statement. Ms. Adair stated that there was
nothing in writing as all the conversations had taken place
on the phone. She offered to check into it.
Co-Chair Mulder questioned the opposition to privatizing the
services. Ms. Adair explained that there is information
available from the Food and Drug Administration (FDA)
regarding that concern. They technically have a program
doing that, but there is no staff or funding. There is no
state in the United States that does not provide this
service through a state laboratory. Co-Chair Mulder
requested that further information be forwarded to him.
Representative Croft referenced the "owning" versus the
"leasing" language. He asked why it would be better to own
the lab by the State. Ms. Adair explained that the
functions of the laboratory would be needed on a long-term
basis. She pointed out that the shellfish industry is
growing and at this time, there is no private lab in the
State that provides these services. She enumerated the
reasons indicating why the State should own their own
facility. It is important that the lab can be configured so
that it would provide more advantages over time. Ms. Adair
indicated that General Services Division had assisted in
developing the plan.
Representative Hudson inquired how much had been invested in
the proposal to date. Ms. Adair stated that in FY99, $145.7
thousand general fund dollars had been allocated, and that
last year, an additional $240 thousand general fund dollars
had been invested into the project, which to date, has
almost been used up.
Representative Hudson asked if the lease purchase would be
used over a 20-year period of time. Ms. Adair acknowledged
that was correct and that it would cost approximately $1.2
million dollars per year. Present lease costs are run
annually at $115 thousand dollars.
Representative Hudson questioned when the Department would
be able to occupy the facility. Ms. Adair replied that it
would take 2.5 to 3 years to build. The current lease
expires in December 2002. She stated that there would need
to be some lease extension if the facility was to be built.
Representative Hudson asked about the RFP and if a private
company could build the facility for less money. Ms. Adair
replied that the Department had not prepared an RFP because
the laboratory specifics would be very complex and that the
Department does not have the expertise to outline that type
of detail.
Representative Lancaster voiced concern that the General
Services Division had not contracted an RFP. Ms. Adair
agreed that they could do that but that would require
funding which is not available for hiring those people.
Representative Lancaster thought that the square footage
price being requested seemed excessive. Ms. Adair replied
that laboratory areas need more space for equipment and
ventilation systems. Representative Lancaster reiterated
that $5 dollars a square foot was excessive; he noted that
it is double what "Class A" office space would cost.
Vice-Chair Bunde commented that there currently is a lot of
space available in Anchorage. Ms. Adair replied that there
is no laboratory space available at this time and that any
space would need tremendous remodeling costs. To renovate
any existing space would cost more than to build a new space
for the specifics required. She stressed that it would not
be good to have to move twice. The Lab is hoping to extend
the current lease until the new building is finished.
Representative Harris pointed out that there is strong
opposition to the move in the Palmer area. He questioned
how such concerns should be addressed. Ms. Adair agreed
that the solution presents a dilemma in such a large state.
The Department always tries to balance the needs of the
industry and the size of the State. She added that the
Department is trying to be responsive to those who use the
facility and stated that only those employees directly
associated with these concerns would be moved and that most
of the employees would remain in Palmer.
In response to Representative Harris concern, Ms. Adair
reiterated that there is no suitable space available in
Anchorage at this time.
Co-Chair Mulder referenced the Certificates-of-Participation
(COP), and noted that they were generally issued when there
was a private contractor building the facility. He asked if
that was still the anticipated arrangement. Ms. Adair
stated that it was and asked the Devon Mitchell be called on
to testify regarding that concern. Co-Chair Mulder
reiterated his concerns with the cost being $666 dollars per
square foot. He pointed out that the lease cost was
equivalent to $60 dollars per square foot.
Representative Croft emphasized that this lab must not be
compared to office space rental. He requested material on
cost comparisons of laboratory space throughout the country.
Representative Croft recommended that the RFP concept not be
the focus. He indicated his surprise with the letter
included in member's packets from Representative Ogen
voicing his opposition to the legislation.
Representative Hudson asked if the current building was for
sale and if so, how much would it cost. He inquired if that
consideration had been made. Ms. Adair replied that the
current building is a reconverted Piggley Wiggley grocery
store. There are many operations that are insufficient for
labatory analysis which cannot be handled in that facility.
She stressed that it would take significant renovation costs
to make that building functionable.
Representative Lancaster inquired if the Food and Drug
Administration (FDA) could help with the design and layout
of a facility. Ms. Adair responded that the FDA does not
provide that service to the State.
Representative Lancaster asked if there currently was a
design available. Ms. Adair replied that the current
crafting would be a design award and then a build award.
Co-Chair Mulder questioned if the size were decreased, what
would be left out of the new project. Ms. Adair replied
that the Department would ponder that concern.
CHERYL SUTTON, SOUTHEAST ALASKA REGIONAL DIVE FISHERIES
ASSOCIATION (SARDFA), JUNEAU, noted the current lab is used
for processing gooey duck clams. SARDFA is developing the
gooey duck clam fishery. Fisheries are often times located
in remote areas throughout the State. When weather is bad,
it is difficult to access the lab services. She noted that
there is a 30-hour limit on water sampling time. The
current lab location is difficult to access. Anchorage
would be a better location for the industry for
accessibility. Ms. Sutton noted that SARDFA has worked with
the Department on these issues. She supported the idea of
satellite labs for better accessibility.
TAPE HFC 01 - 60, Side B
Ms. Sutton stated that any cost streamlining would be
beneficial to the industry. She concluded, advising that
SARDFA supported HB 51.
Representative Hudson asked if the laboratory at the
Anchorage Seafood facility would be sufficient. Ms. Sutton
exclaimed that she had not been in that lab. One of the
difficulties is that the FDA dictates standards and for
paralytic shellfish poisoning (PSP), and those standards are
rigid.
Representative Hudson recommended that a determination be
made to see if that lab would be sufficient.
Representative Lancaster inquired if products were "dumped"
if they did not make the 30-hour test. Ms. Sutton explained
that the 30-hour rule exists for water sampling. For
products, there also is a very time sensitive limit matter.
The Department of Environmental Conservation is currently
working with the industry.
DAVE STANCLIFF, STAFF, REPRESENTATIVE SCOTT OGEN, testified
that both the lease and the options should be reconsidered.
He encouraged the Committee to check out the options of that
lease. He suggested that the space could be modified and
that the owner of the building was willing to make changes.
Mr. Stancliff agreed that the facility is crowded and that
the space is tight, however, the requested square foot
expansion appears to be fairly "liberal". He questioned how
much of the new space was intended to be used for labatory
versus clerical. Mr. Stancliff noted that Representative
Ogan's office would attempt to work with the Department.
Ms. Adair responded to Representative Hudson's concern,
noting that the ASI lab was very small, and acts as a
quality standards lab. If comparing it to the needs of the
Department, it would be an "apples" to "oranges" compromise.
She added that she had met with Representative Ogan's office
and that they had discussed that the new lab would be
laboratory space and not new employee space.
HART HODGES, (TESTIFIED VIA TELECONFERENCE), ANCHORAGE,
offered to answer questions of the Committee.
Representative Davies asked the appropriate industry
standard for the space size needed.
TOM LIVINGSTON, (TESTIFIED VIA TELECONFERENCE), ARCHITECT,
ANCHORAGE, noted that the space consideration had been
technically analyzed and reconsidered. He noted that there
are two specifications, which drive the needs of the lab:
· The first is safety of the staff; and
· The second is the quality of the science. He
added that the laboratory intensive building would
make it very expensive.
Representative Davies requested a comparison of other health
lab costs. Mr. Livingston noted that he would submit that
information to the Committee.
HB 51 was HELD in Committee for further consideration.
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