Legislature(2005 - 2006)HOUSE FINANCE 519
02/14/2005 01:30 PM FINANCE
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HOUSE BILL NO. 115 An Act relating to charges paid or collected by users or occupants of an airport facility owned or controlled by the state. JOSH APPLEBEE, STAFF, REPRESENTATIVE TOM ANDERSON, noted that HB 115 would provide a mechanism for customer facility charges or Consumer Finance Charges (CFC) to improve airport facilities without the expenditures of State funds. The most common projects that CFC's are used to fund are car rental facilities. The bill provides a revenue stream to maintain and operate the facilities, without requiring an increase in the airport-operating budget, as the cost of maintenance would be paid for by the related customer facility maintenance charges. He reiterated that HB 115 would implement a valuable private market tool to construct improvements to Alaska airports, without the expenditure of public funds. It would help to improve amenities provided to the traveling public, both Alaskan and non-Alaskan. Mr. Applebee advised that this would be a private industry initiated project, sponsored by local airport car rental companies. He stated that they are in the process of undertaking a similar project at Ted Stevens International Airport in Anchorage. The project was delayed by 9-11 events and is now moving ahead. During negotiations with the State over the implementation of the project, bond counsel identified certain issues with language set forth in Ch. 99, SLA 2001. That language needs to be clarified to ensure that the bonds are marketable. Mr. Applebee continued, issues revolve around clarifying a new revenue stream generated by the CFC, which would not be considered revenue for the State. The bond is a private initiative and ensures that the bond trustee, not the State, take custody for those funds. Without that clarification, the 2001 language does not adequately clarify that the CFC's are not revenues for the State to use for making the determination of whether they would are subject to pre- existing airport bonds. The definition of what bond related purposes that the CFCs can be applied to, would also clarify inclusion of debt reserve funds and other bond underwriter requirements. Mr. Applebee pointed out that HB 115 offers: · New jobs, · Efficiency and innovation in the car rental market, · Partnership with private enterprise, · Modernization to compete with airports nationally, and · Enhanced convenience. Vice-Chair Stoltze pointed out that the Attorney General alluded to technical changes. Mr. Applebee advised that they were working with that office; those changes are not substantive enough to hold the bill up. 2:28:08 PM Vice-Chair Stoltze asked where in the legislative process would those considerations be addressed. Mr. Applebee stated that until the changes are "flushed out" under the current title, they will be addressed by the time the bill passes out of the House to the Senate. 2:29:03 PM Representative Weyhrauch questioned the statement regarding "without public funds". Mr. Applebee stated that the mechanism described in statute, the customer facility charges, passed on to the consumer in addition to the public maintenance charges, are the funds that would be used to construct and maintain that facility without public funds. Representative Weyhrauch asked where in the bill was that language located. Mr. Applebee explained that the language refers to the customer facility charges and that there are not public funds. Representative Weyrauch asked if the sponsor would object to including that language. Mr. Applebee did not think it would be appropriate within the drafting language. He thought that the sponsor would know. Representative Weyrauch requested to incorporate that intent into the bill. Co-Chair Meyer requested that language be held until full testimony had been taken. Representative Hawker pointed out that the answer to that concern was included on Page 3, Line 6, "if the State on behalf of the department did not incur the indebtedness". 2:31:09 PM Vice-Chair Stoltze asked if it was intended that the legislation only apply to international airports. Mr. Applebee responded that the intent was to provide it to any area that has a market that could be sustained through their customer activity, to build and maintain a facility. Vice-Chair Stoltze inquired if it would be problematic to limit it to that and not including rural airports. Mr. Applebee replied that the sponsor would not object to that, however it would limit them in any future circumstance and the possibility of that area developing a market that could sustain it. Vice-Chair Stoltze pointed out that the airport in his district, is the only rural airport that makes money in the State. He acknowledged that he wanted to protect the small business owners. 2:33:21 PM Representative Weyhrauch understood that only the Anchorage airport would be affected. Mr. Applebee replied that currently, the only market studies and planned projects are in Anchorage. Representative Weyhrauch asked how many airport facilities in Alaska are owned and controlled by the State of Alaska. Mr. Applebee did not know and offered to provide that information to Committee members. Representative Weyhrauch asked why the legislation would exempt the entire process of the Administrative Procedures Act in terms of notice and the opportunity to comment. He pointed out that the public will be paying these fees and the increases associated with them. Representative Weyhrauch asked why the 501-C-3's would be exempt from paying rent and would the public be deprived of equal use of the airport. He emphasized that one entity would be paying and another would not and how could that be equal. Mr. Applebee did not know. Representative Weyhrauch pointed out that the Department's Commissioner periodically adjusts the fees to pay the debt. He asked what "periodically" means. Mr. Applebee responded that would depend on the Commissioner; the bill provides some latitude. 2:35:42 PM MARK PFEFFER, CO-OWNER, VENTURE DEVELOPMENT GROUP, ANCHORAGE, noted that his company has contracted individually with the operations of 7 rental car companies that operate at the Anchorage International Airport. The project started in 2000 and was put on hold during the 9-11 events. He stated that the rental car companies have worked closely with the airport in Anchorage to come up with a solution to address the congestion and rental car problems at that location. The project provides for a facility outside the Anchorage International Airport to be connected to a rail depot tunnel. It would allow for passengers to come through the tunnel and be out of the weather into a rental car lobby. He spoke to the intended process, which could eliminate traffic and trips to and from remote sites. The facility would be paid for by a customer facility charge and there would be no obligation on the part of the State. Funds would be generated by revenue bonds. Mr. Pfeffer stated that the intent is to begin construction by this spring. Language needs to be clarified for the bond issuance in April 2005, whereby allowing construction. He offered to answer questions of the Committee. 2:39:04 PM Representative Weyhrauch asked if the proposal was for a garage for parked cars. Mr. Pfeffer replied that it was initially called a garage but now it is called a terminal and it would park 1,400 cars. Representative Weyrauch clarified that it will be a rental car facility. Representative Weyhrauch inquired if there would be a lounge. Mr. Pfeffer understood that the lounge would remain in the airport terminal. Representative Weyhrauch asked where that language was located in the bill. Mr. Pfeffer replied that was language in existing legislation and that certain sections would be amended addressing customer facility charges. Representative Weyhrauch asked if the same language was in existing statute, which exempts the notice for the comment period for the public. Mr. Pfeffer did not know referencing Page 3, Lines 21-22, that the Department "shall provide a public notice". He stated that because of timing issues, that will not happen. Representative Weyhrauch clarified that since it is going to be revenue bonds, essentially, the rental car companies will have a surcharge on the cars that they rent, a facility charge, and that the revenue for that would be used for the bonding purposes. Mr. Pfeffer responded that the car rental companies will collect a charge from the customer, which would be remitted to a third party trustee that would pay back the bondholders. That money will never become funds for the State. The anticipated cost of the project is $42 million dollars and will be built all at one time, not in phases. In response to Representative Weyhrauch, Mr. Pfeffer explained that bonds sold would be in the amount of $42 million dollars and that the facility would be earthquake proof and have a bomb blast test. 2:42:25 PM Representative Hawker asked if the finance community drove the need for the legislative change. He believed that the change was needed so that a bond trustee could directly receive the funds. Mr. Pfeffer acknowledged that was correct and that the State could impose the charge. In this case, the industry said to the State that they did not like the State's plan and wanted to submit their own proposal. 2:44:25 PM Representative Weyhrauch asked if the title would prohibit the Fairbanks and/or Juneau area. 2:45:49 PM Representative Kelly asked where the clean up would be occurring. Mr. Pfeffer responded that the bond insurers and underwriters are working to clarify the language in order to get the best bond rates; that work is not quite complete. Language changes are run through the airport attorney, Mr. John Steiner who works with the Department of Law. He has provided some stylistic changes. Mr. Steiner offered to draft language for the Senate Transportation Committee. Those changes will be submitted at that time so that they can be dealt within a transportation committee. 2:48:09 PM Vice-Chair Stoltze believed that there would be a through look into the legislation in the Senate. 2:48:49 PM Representative Hawker MOVED to report CS HB 115 (TRS) out of Committee with individual recommendations and with the accompanying fiscal note. There being NO OBJECTION, it was so ordered. CS HB 115 (TRS) was reported out of Committee with a "do pass" recommendation and with a zero note #1 by the Department of Transportation & Public Facilities.