Legislature(1995 - 1996)

03/18/1996 03:12 PM L&C

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HB 533 - ALASKA AEROSPACE DEVELOPMENT CORP. BOARD                           
 Number 2061                                                                   
 CHAIRMAN KOTT announced the committee would address HB 533, "An Act           
 relating to the board of directors of the Alaska Aerospace                    
 Development Corporation."                                                     
 CLIFF STONE, Legislative Assistant to Representative Alan                     
 Austerman, sponsor of HB 533, read the following statement into the           
 "The Alaska Aerospace Development Corporation (AADC) is a young               
 organization that has energetically pursued its charge to bring a             
 new industry and new opportunities to Alaska.  Its first task was             
 to bring talented people with significant experience in the                   
 aerospace industry to Alaska as employees and consultants.  It has            
 done that.  Through their efforts, the AADC has won federal                   
 contracts, generated significant industrial interest, and brought             
 Alaska international recognition as a potential center for a major            
 growth industry.  The probability for success is extremely high and           
 the prospects for Alaska's economy are exceptional.                           
 "AADC's focus has been on two projects.  The development of a                 
 rocket launch complex in Kodiak and the location of satellite                 
 ground stations in the Fairbanks area.  AADC has also pursued                 
 educational opportunities throughout the state and global                     
 warehousing and manufacturing possibilities in Anchorage.                     
 "The present board of directors of the AADC has served the state of           
 Alaska extremely well, in directing the purposes of the                       
 corporation.  The professional, technical and scientific expertise            
 provided by the University of Alaska members of the board, have               
 guided the start up phase of this endeavor.                                   
 "As we move into the construction phase of this operation and                 
 beyond, it is imperative that the board be restructured to include            
 specific members of the business community.  These individuals                
 should have experience in and an understanding of economic                    
 development and marketing analysis, based on their existing or                
 previous participation in private enterprise.                                 
 "Additionally, the CS and new comparison charts that you have                 
 before you would allow two more individuals who have or currently             
 hold positions in the commercial space industry to serve on the               
 MR. STONE said as an ex officio member, Representative Austerman              
 feels this would lend credence to the space industry and puts more            
 expertise on the board as we move into the operational phase of               
 this project.                                                                 
 Number 2270                                                                   
 REPRESENTATIVE ROKEBERG asked if the legislative ex officio is                
 already included in the statute.                                              
 MR. STONE said he believes that is in statute, under the education            
 section, 14.40.830, subsection (d), "In addition to the members of            
 the board or directors described in (a) of this section, two                  
 members of the legislature shall serve as ex officio nonvoting                
 members..."  He said the Speaker of the House made a decision to              
 appoint Representatives Austerman and Therriault.  Senator Frank              
 was appointed as the nonvoting member.                                        
 Number 2355                                                                   
 REPRESENTATIVE SANDERS made a motion to adopt CSHB 533, work draft            
 CHAIRMAN KOTT asked if there was an objection.  Hearing none, the             
 committee substitute was adopted.                                             
 Number 2403                                                                   
 REPRESENTATIVE PORTER indicated concern regarding a board having an           
 even amount of members.                                                       
 MR. STONE said the addition of the tenth member is a nonvoting                
 member.  He said Mr. Ladner with Alaska Aerospace felt that it                
 would be a good addition to the board to have an international                
 member so there would be connections to the Pacific Rim and beyond.           
 He said the board would be a nine voting member board.  [END OF               
 TAPE 96-24, SIDE A                                                            
 Number 037                                                                    
 MR. STONE noted Representative Austerman would like the committee             
 to consider three amendments.                                                 
 Number 051                                                                    
 REPRESENTATIVE ROKEBERG moved Amendment 1, which follows:                     
      Page 2, line 1 and 2, following "(4)":                                   
           Delete "the executive director of the Alaska Science and            
           Technology Foundation;"                                             
      Renumber the following subsections on page 2:                            
            Line 3; (5) becomes (4)                                            
            Line 5; (6) becomes (5)                                            
            Line 12; (7) becomes (6).                                          
 Number 070                                                                    
 CHAIRMAN KOTT objected for the purpose of hearing Representative              
 Rokeberg describe the amendment.                                              
 REPRESENTATIVE ROKEBERG said the amendment would delete director of           
 the Alaska Science and Technology Foundation (ASTF).  He said he              
 would defer to Mr. Stone.                                                     
 Number 106                                                                    
 MR. STONE said it was felt that because of HB 315, which passed               
 last year, ASTF now has the authority to grant Alaska Aerospace up            
 to $5 million to get the project off the ground.  Although legal              
 counsel says there is no conflict of interest with the executive              
 director of that entity sitting on the board, Representative                  
 Austerman felt it might be in the best interest to delete the                 
 executive director of ASTF and allow some more expertise from                 
 either the business world or from the commercial space industry.              
 REPRESENTATIVE ELTON said the ASTF executive director would be                
 deleted and substituted with an additional person from a commercial           
 space industry.                                                               
 MR. STONE explained the executive director of ASTF would be                   
 deleted, then two corporate officers would be added to the top of             
 the list.  He noted that is in the proposed Amendment 2.                      
 Number 277                                                                    
 CHAIRMAN KOTT withdrew his objection to Amendment 1.                          
 Number 296                                                                    
 REPRESENTATIVE ROKEBERG moved that Amendment 2 be adopted which               
      Page 1, line 8 and 9, following "(1)":                                   
           Delete "one state resident who have recently held or who            
           are currently holding positions in a private corporation            
           as a president, "                                                   
           Insert "two state residents who have recently held or who           
           are currently holding positions in a private corporation            
           as a president,"                                                    
      Renumber the following:                                                  
           Page 2, line 20, following "in":                                    
                Delete "(a)(1), (6), and (7)"                                
                Insert "(a)(1), (5), and (6)"                                
           Page 2, lines 23 and 24, following "in":                            
                Delete "(a)(1), (6), and (7)"                                
                Insert "(a)(1), (5), and (6)"                                
 CHAIRMAN KOTT said hearing no further objection to Amendment 1, it            
 has been adopted.  He said there has been a motion to adopt                   
 Amendment 2, and asked if there was objection.                                
 REPRESENTATIVE ELTON objected for the purpose of a question.  He              
 said this means we now would have two state residents who probably            
 won't have any expertise at all in the field.  He asked for an                
 explanation.  He referred to a University of Alaska facility member           
 that is involved in research and asked why that wouldn't be just as           
 valuable a second corporate officer.                                          
 MR. STONE said in his mind, it certainly is.  The person who sits             
 on the existing board has been a valuable asset to the Aerospace              
 Board.  When his rotation came up, it was felt that going into the            
 construction and then the eventual operational phase of the launch            
 facility and the satellite down link, people with the business                
 sense - marketing analysis, economic development expertise, could             
 better guide us to bring in the customers to further the mission of           
 the corporation.                                                              
 Number 408                                                                    
 REPRESENTATIVE ELTON said he would lift his objection with the                
 observation that 50 percent of the people that direct private                 
 corporations are in the lower half of their field.  He noted he is            
 not sure that he is totally comfortable with the notion that one is           
 better than the other.                                                        
 REPRESENTATIVE ROKEBERG asked if perhaps the addition of the word             
 "chairman" or "president" may be appropriate.                                 
 MR. STONE said it goes on to say, "private corporation as                     
 president, vice-president, corporate officer, financial officer..."           
 It is broad and lists four or five individuals.  He said to address           
 Representative Elton's concerns, the thinking was that at least               
 people in those positions should have a good working knowledge of             
 what it takes to run a corporation.                                           
 Number 511                                                                    
 REPRESENTATIVE ELTON reiterated his intent to withdraw his                    
 CHAIRMAN KOTT said there being no further objection, Amendment 2              
 was adopted.                                                                  
 Number 552                                                                    
 REPRESENTATIVE ROKEBERG moved Amendment 3, which follows:                     
      Page 2, following line 25:                                               
           Insert "Sec. 4.  AS 14.40.831 is amended to read:"                  
           Chair and vice-chair.  [THE PRESIDENT OF THE UNIVERSITY             
           board of directors of the corporation shall select a                
           chair and vice-chair from among all voting members of the           
           board of directors of the corporation.                              
      Renumber the following section on Page 2:                                
           Change "Sec. 4. TRANSITIONAL PROVISION. to Sec. 5.                  
           TRANSITIONAL PROVISION."                                            
 CHAIRMAN KOTT asked if there was an objection to the adoption of              
 Amendment 3.                                                                  
 REPRESENTATIVE ELTON said, "I hate to object because it sounds like           
 that's what I really am."  He referred to Amendment 3 and said he             
 doesn't understand the "Chair and vice-chair."  Representative                
 Elton said he doesn't see how the language would fit.                         
 Number 643                                                                    
 MR. STONE said Section 4 is almost the statute in total.  He noted            
 he should have provided a copy of the statute to the committee                
 members.  The president of the University of Alaska or the designee           
 of the president shall be the chair of the board of directors of              
 the corporation.  The commissioner of Commerce and Economic                   
 Development or the designee of the commissioner shall be vice-chair           
 of the board of directors of the corporation.  Mr. Stone indicated            
 that there is one more sentence that he can't bring to mind.  He              
 said the feeling was if you lost president Jerome Komisar to one              
 event or anther, somebody else coming in could be from out-of-state           
 or could be an in-state person.  Representative Austerman's feeling           
 was that in discussions with Mr. Ladner, the board of directors of            
 the corporation could then, amongst themselves, pick the best                 
 qualified individual.                                                         
 Number 711                                                                    
 REPRESENTATIVE ELTON withdrew his objection to Amendment 3.                   
 CHAIRMAN KOTT said hearing no further objection, Amendment 3 has              
 been adopted.                                                                 
 Number 750                                                                    
 JEFF BUSH, Deputy Commissioner, Department of Commerce and Economic           
 Development, said the Administration generally and basically                  
 supports the concept behind the bill.  He stated the department               
 generally concurs with the approach taken and the amendments that             
 were just adopted.  He noted they were amendments outlined in his             
 proposed testimony.  Mr. Bush said the board and the department               
 foresaw they would have the commissioner of Commerce and Economic             
 Development, the president of the university or his designee.  The            
 department then would recommend that there be seven public members            
 appointed.  Of those seven members, the department would recommend            
 that at least three would have space expertise.  The language in              
 the committee substitute is fine except he would recommend one                
 change, and that is the removal of the word, "commercial" in the              
 phrase "commercial space industry."  He said it concerns them only            
 because there may be people with expertise in the space industry              
 but not necessarily in the commercial space industry who may be               
 qualified to be on the board.  Mr. Bush said they would recommend             
 it be changed to the number of at least three.                                
 MR. BUSH said another change would be the removal of the director             
 of the Geophysical Institute of the University of Alaska, and make            
 that another public appointee as well.  He said the board would be            
 seven public appointees, at least three of which would have space             
 expertise and two of which would have expertise on financial                  
 matters.  Mr. Bush said that would leave two positions that are not           
 specifically designated at this point in time.  The reason is the             
 Governor has indicated he would like to appoint someone from the              
 local community that is most affected by the project so that there            
 is local interest.                                                            
 Number 987                                                                    
 PAT LADNER, Executive Director, Alaska Aerospace Development                  
 Corporation, testified via teleconference from Anchorage.  He said            
 his board should be congratulated for the fine work it has done.              
 Mr. Ladner said the launch site was originally supposed to be at              
 Poker Flat, but due to flight safety considerations, they had to do           
 an evaluation and find another site.  Originally, the board had a             
 large contingency from the university and rightfully                          
 so.  He said they are now moving into the next phase and he thinks            
 they now need more corporate input.  Mr. Ladner said his chairman             
 believes that there are two options.  You can leave the board the             
 way it is because of all the things that are going on right now.              
 You could ask the board to come up with a recommended change                  
 structure or you can change the board.                                        
 MR. LADNER said if it is the determination of the legislature to              
 change the board, then the board should be changed and have a                 
 quantum leap upgrade from the outstanding people that currently               
 serve.  To do that, a good portion of the people need to have                 
 commercial space experience.  He said he thinks the commercial                
 space area is what they need as they are doing commercial ground              
 stations in Fairbanks.  They are looking at a vast majority of the            
 launches and Kodiak is (indisc.) commercial space and not military.           
 Mr. Ladner said by bringing the people from the commercial space              
 industry on to the board, they would bring a lot of expertise and             
 recognizable credibility to what they are doing.  Also, some of the           
 people they were working with to create partnerships and possibly             
 equity financial investments, you'd want to have a position on the            
 board for those people.                                                       
 REPRESENTATIVE ROKEBERG said Mr. Ladner had indicated the                     
 "commercial" space industry and said there had been concerns about            
 the "commercial" space industry.  He said the existing statute has            
 the words, "experience understanding the aerospace or commercial              
 space industry."  He asked if there are enough commercial space               
 industry companies in operation that they could draw from.                    
 Representative Rokeberg asked if there isn't also the potentiality            
 of some competitive advantages or disadvantages if these people               
 were on the board.                                                            
 Number 1197                                                                   
 MR. LADNER said it could be that way but there are a lot of real              
 notable aerospace or commercial space people.  He said you would              
 have people like Tom Stafford, who was on Apollo 14 and 15, and is            
 very well respected, but is not associated with any one company.              
 He is recognized throughout the world and would bring extreme                 
 credibility to any organization he is associated with.  He said he            
 thinks the option should be made.  Mr. Ladner said if somebody came           
 in and said, "Hey, I'll put in $15 million but I want a seat on the           
 board," the right answer would be, "You have a seat on the board."            
 REPRESENTATIVE ROKEBERG asked if it is his intention to try to use            
 the board seats as marketing tools.                                           
 MR. LADNER said absolutely not.  He pointed out there are currently           
 people on the board who are not connected with any major space                
 industry but they bring a lot to the board.  Mr. Ladner said they             
 need more of those types of people on the board, along with the               
 corporate people, the financial officers, and chief executive                 
 REPRESENTATIVE ROKEBERG asked Mr. Ladner if he has seen the                   
 committee substitute.                                                         
 MR. LADNER indicated he didn't have the committee substitute or the           
 REPRESENTATIVE ROKEBERG said rather than delete "commercial space             
 industry" it should read "aerospace or commercial space industry."            
 MR. LADNER indicated that would be fine with him.  Mr. Ladner                 
 explained on February 29, they held their final design review for             
 the Kodiak launch complex in Washington, D.C.  He said over 105               
 people attended from the aerospace industry, and government people            
 from the Air Force and NASA.  Mr. Ladner noted there was a midway             
 point design review September, a year ago.  At the most recent                
 design review Senator Stevens gave the welcoming and opening                  
 remarks, followed by Senator Murkowski.  Representative Young's               
 chief of staff provided some comments.  The Governor provided an              
 excellent VHS video that welcomed everyone to the meeting and                 
 expressed his support and willingness to work with the industry.              
 MR. LADNER referred to the satellite ground stations in Fairbanks             
 and said one company has purchased or leased land on Chena Hot                
 Springs road called "Earth watch" and they should be starting their           
 ground station shortly.  Space Imaging International is in the                
 process of finalizing their lease agreement on the Richardson                 
 Highway.  Mr. Ladner said they are also working with Orvil (Sp.?)             
 Science - Orv Image, for another ground station in the Fairbanks              
 area.  The Air Force has also identified a place in Fairbanks.  He            
 referred to the cottage industry possibilities and said they are              
 really good.  Space Imaging could employ anywhere from 10 to 30               
 people depending on what type of operation they establish.                    
 MR. LADNER said a lot of this is the remote sensing which they                
 would have access to within the state to satisfy a lot of our                 
 natural resources mapping and planning for governmental agencies.             
 MR. LADNER referred to the Kodiak launch complex and said they are            
 putting together the construction request for proposals package.              
 They are also finishing up the environmental process.  Hopefully,             
 construction will start before the end of the construction season.            
 Number 1515                                                                   
 There being no further questions or testimony, CHAIRMAN KOTT closed           
 public testimony on HB 533.                                                   
 REPRESENTATIVE ROKEBERG moved Amendment 4.  He explained the                  
 amendment would be on page 2, line 5, add the words "aerospace or".           
 It would then read, "four members who have held or currently hold             
 positions in the aerospace or commercial space industry..."                   
 CHAIRMAN KOTT asked if there was an objection to the amendment.               
 Hearing none, Amendment 4 was adopted.                                        
 Number 1559                                                                   
 REPRESENTATIVE ROKEBERG made a motion to move CSHB 533(L&C), as               
 amended, Version C, with individual recommendations and a zero                
 fiscal note, out of committee.                                                
 REPRESENTATIVE ELTON objected.  He asked which committee the bill             
 would go to next.                                                             
 CHAIRMAN KOTT indicated Labor and Commerce is the last committee of           
 Number 1593                                                                   
 REPRESENTATIVE ELTON said the committee dealt with a bill earlier             
 which reduces state costs by eliminating state positions.  Now                
 there is a bill before the committee where they could also reduce             
 costs.  With the adoption of Amendment 4, on page 2, line 12, we              
 provide for one nonvoting member who has recognized prominence and            
 influence within the international aerospace industry.  He said he            
 doesn't feel strongly about this because he thinks that sometimes             
 cost is initially (indisc.).  Now that people can be added from the           
 noncommercial part of the aerospace industry, why not just add four           
 people, provided that one is a person who has recognized prominence           
 and influence within the international aerospace industry.  That              
 way nine people would be brought to the board meetings rather than            
 ten and that person, with that stated area of expertise, would be             
 allowed to vote.  He said the person could be someone we're                   
 bringing in from Great Britain, Germany or Seattle.  We don't know            
 who or where, but why fly somebody from some place down south for             
 these meetings when they don't get a chance to vote.                          
 CHAIRMAN KOTT asked Representative Elton if he still maintains his            
 REPRESENTATIVE ELTON said he will maintain his objection.  He                 
 indicated he will think about this and maybe bring an amendment to            
 the floor.                                                                    
 CHAIRMAN KOTT asked Representative Rokeberg to withdraw his motion.           
 He then asked Representative Elton to think about it over the next            
 two days and bring something back to the committee at the next                
 REPRESENTATIVE ELTON said he would draft an amendment for the                 
 committee's consideration.                                                    
 CHAIRMAN KOTT said the bill would be held over until the following            
 REPRESENTATIVE ROKEBERG suggested that the committee might want to            
 consider if the Kodiak public member also....                                 

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