Legislature(1995 - 1996)
04/12/1996 08:09 AM House RES
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 278 - CREDITS AGAINST FEES AT ST HISTORICAL PKS Number 051 The first order of business was SB 278, "An Act relating to the authority of the Department of Natural Resources to allow credits against fees at state historical parks." JOE AMBROSE, Legislative Assistant to Senator Robin Taylor, came forward and read the sponsor statement in to the record: "Senate Bill 278 was introduced to address concerns raised by the Ketchikan Area State Parks Advisory Board and the Ketchikan Gateway Borough Assembly. "SB 278 would provide a mechanism by which the Division of Parks and Outdoor Recreation could acquire two small parcels of land adjacent to Totem Bight State Historical Park. "The parcels are currently held by Ketchikan Public Utilities (KPU) as the site for a diesel generation plant. KPU plans to vacate the property, which would then revert to the Ketchikan Gateway Borough. "Senate Bill 278 would allow DNR to offer credits against fees paid by commercial tour operators for payments made to a municipality for the projects that will mitigate or alleviate access, congestion and parking problems at historical parks. The Division of Parks and Outdoor Recreation has indicated that use of this provision at any state historical park other than Totem Bight is unlikely. In any event, the authority would sunset on December 31, 2000. The three year window is needed to avoid drawing too quickly against the fees. "Totem Bight is a 12.5 acre state park located north of the City of Ketchikan. It had an estimated 160,000 visitors in 1995, about half of them arriving on commercial tours. In 1977, it was estimated that the park could handle between 636 and 744 people at any one time. That actual use now exceeds 925 people at a time. "The park only has seven parking spaces for buses and often there are 21 busses parked in the lot, on the road shoulders and at a nearby gift shop. Park staff is now advising independent travelers and local park users to pay attention to the cruise ship schedule and to avoid the park when the ships are in town. "To mitigate the overcrowding and congestion, DNR is proposing that the tour operators pay for acquisition of the borough-owned parcels to provide additional parking space and additional attractions such as trails and possibly a carving demonstration area. "The Department of Transportation and Public Facilities has indicated an interest in developing a transportation enhancement project along the road at Totem Bight if this land becomes available. "Totem Bight is a valuable asset. The state has invested more than a million dollars in capital improvements to the facility over the past ten years. By acquiring these two parcels we can spread out the use area, enhance the park and mitigate the problems." MR. AMBROSE said he would answer any questions committee members may have. Number 303 CO-CHAIRMAN BILL WILLIAMS asked, "Do you have an O.K. of acquisition? Do you have any price there?" MR. AMBROSE said the department has indicated that they don't plan to spend more than $150,000 of the fees on this acquisition. Jim Stratton, Director, Division of Parks, has stated that the bill carries a zero fiscal note and they anticipate that the total paid to the state from commercial operators in the summer of 1995 will not decrease this coming summer. Program receipts above the 1995 level is what they plan to use. In 1997, fees at the park will be increased from the current $3 per person for commercial operators to $4 per person. Mr. Ambrose said it won't impact current funding as far a program receipts. Number 553 CO-CHAIRMAN WILLIAMS indicated he is very familiar with the issue and doesn't have anything against it. He said his concern is that the state of Alaska is in direct competition with this. Co- Chairman Williams said, "As you know, Saxman has a tour and over the last ten years we've put in a million dollars, ourselves, into the project in Saxman along with the help of the state of Alaska. Has your office given any thought to that? How we can make them at least so they won't compete with each other?" MR. AMBROSE said he recognizes the problem Co-Chairman Williams has pointed out. There was some lobbying effort, on the part of the tour operators, to try to discourage this increase. The idea is they should be paying more. Mr. Ambrose said as he sees it, with the increased volume of traffic coming through the community, we really need to disburse them to both ends of the road. CO-CHAIRMAN WILLIAMS said he is very concerned about the competition that the state of Alaska is in with the private sector. He said, "A $125,000 this year, or whenever it is, it's just helping traffic go that way. Saxman can't take all of the buses right now, but they're sure not getting 160,000 people out there and they can do that at least, I know. So I would hope that we can work together to make sure that the state of Alaska is not in competition or at least make them pay their fair share." Number 599 CO-CHAIRMAN GREEN asked, "How far apart are they - this location and the park?" MR. AMBROSE said about 15 miles. CO-CHAIRMAN GREEN asked if a package couldn't be involved that would be advisable to show tourists both places. MR. AMBROSE explained the decision as to where to take the people on the buses is made by the tour operators and cruse ship companies. He said price motivates them. Mr. Ambrose noted he doesn't know what Saxman currently receives from tour operators. Number 640 CO-CHAIRMAN WILLIAMS said he had helped build up the Saxman tours and they were charging approximately $35 per passenger. The state, at that time, was charging $1.50. He said, "So our competition there was - they look at Native experience. The tour operators do say -- they don't push the Native experience here in Juneau as they do in Ketchikan. In fact, Sealaska at one time was going to start a Native experience here in Juneau and the tour companies told them `You go and talk to Cape Fox Corporation and see how you can help them with their tour. We can't talk to you about it.'" CO-CHAIRMAN WILLIAMS said when the tour operators aboard ship are selling the tours they say, "This is what you get for a Native experience out in the Totem Bight and this is what you get for $35 for a Native experience.' He said it's very difficult to compete with that type of price difference. Co-Chairman Williams said hopefully, we can work together to at least get them comparable. Number 756 MR. AMBROSE said of the 160,000 visitors in 1995, 70,000 came from the tour operators that pay this fee. There is no charge at the park for walk-in traffic or local traffic. The only people that pay are the commercial tours. CO-CHAIRMAN GREEN asked Co-Chairman Williams if the $35 includes the bus transportation to and from Saxman. CO-CHAIRMAN WILLIAMS said it is made of up three areas. The tour operators gets their cut of the $35, the ship gets their cut and the city of Saxman gets their cut. MR. AMBROSE said the fee that is currently $3 per person and is going to $4 is not what the traveler pays. That is what the company pays the state per person. He noted he doesn't know what the overall fee is when a person gets off the ship and goes in that direction. Mr. Ambrose said it is an entirely different experience and if he were coming to Alaska for the first time on a cruse ship and he had an option of what is offered at Saxman as compared to what's offered at Totem Bight, Saxman is where he would go first. He said he would probably want to see them both. He said he would find out what the total price is that the operators charge for those tours. CO-CHAIRMAN GREEN asked if the time in port is a problem. He asked if there is plenty of time, would they want to go. CO-CHAIRMAN WILLIAMS indicated they have plenty of time. Number 880 REPRESENTATIVE DON LONG said, "I got a question on allowing credits against fees. Isn't that something like getting (indisc.) in funding." MR. AMBROSE said he has been advised that it's not. He said the department uses program receipts from this park and it is the only one that generates this kind of revenue and has for years. Mr. Ambrose said he believes there is a separate account that is set up similar to what is done with the Alaska Marine Highway System. The original proposal on this legislation was brought to Senator Taylor by the Governor's legislative liaison. CO-CHAIRMAN GREEN asked that the record reflect that Representative Davies, Kott, Nicholia have jointed the meeting. Number 933 REPRESENTATIVE JOHN DAVIES questioned how these fees are different than fees that are paid at any other park. MR. AMBROSE explained the bill only applies to historical parks. The only people who pay a fee at the park are people who come in on a commercial tour. He said, "Basically, what they're trying to do is - it's a circular way of acquiring this property. There are two relatively small parcels, but will add tremendously to the accessibility of the facility which is really over burdened right now." CO-CHAIRMAN GREEN said, "My only concern I share with Representative Williams is that I don't think the state should supplement private parks. By the same token, I don't think they should use public funds to compete with themselves. If there were some way you could say that this is a taste and if you want the whole meal, go to Saxman or something like that, I think that would be great, but I know we can't do that as a state. Number 1031 MR. AMBROSE explained he has lived in Ketchikan for almost 22 years and has watched the evolution at Saxman. He said it is real asset to the entire community. Mr. Ambrose said he thinks that we will find out how comparable the rates are. He stated he believes there is a legitimate concern throughout the community. Because of the way Ketchikan is laid out with only one main drag, when you get five of the huge ships in it becomes crowded. The tourists need to be dispersed as widely as possible, but we also need to encourage increased traffic to the Saxman experience. CO-CHAIRMAN GREEN asked if by making this a bus access or parking area, would that blend in with what is currently there. MR. AMBROSE said it would. He noted Ketchikan Public Utilities is, by law, responsible for cleaning up anything that is there as far as if there is any hazardous waste or anything else from the diesel generation plant. Number 1150 BILL GARY, Superintendent, Southeast Area, Division of Parks and Outdoor Recreation, Department of Natural Resources, said he would be happy to answer any questions that he can. He noted Jim Stratton, Director, was connected via teleconference. REPRESENTATIVE SCOTT OGAN asked Mr. Gary if he could explain the language in the bill that says, "mail out credits against fees due to the department." MR. GARY said his understanding is that the language would allow the department to apply additional fees above the existing level of $3 per person. He said they would enter into an acquisition agreement and the borough would give them management authority over the lands over an extended period of time so that the amount of money they make would meet the whatever price is negotiated. That price would be settled hopefully below $150,000, which is the amount that the department estimates that they could make in about three to four years of the additional fees. He noted the additional fees that they have been trying to charge at Totem Bight is a delicate balancing act. He said the department is very sensitive to the idea of competing with Saxman. Mr. Gary said since he has been with the department, his number one problem has been trying to raise the fees. The tour companies, of course, want to keep them down. He indicated that the department's position has been that Saxman is a much different experience and they have been trying to work with the cruse ship companies to describe that in their information on the ships, which is where everything really happens in sales. He said they have been pretty successful with that. Mr. Gary referred to raising the price to $4 in 1997 and said it is approaching what he feels is a comparable amount of value for the service. He noted he doesn't know the actual dollar value that Saxman receives per person. Number 1308 CO-CHAIRMAN WILLIAMS said, "We've been talking about this issue for quite some time and we keep getting the same answer saying, `We're trying to get it up there,' then we put another million dollars into the project and we're out at the other end of town struggling just to keep it going. Can I get an answer from you? I mean forget about what the tour companies are gunna do. You know they can drop that portion and they have done that to us in Saxman and we tried to charge em a dollar a head to come across our land and they just dropped us and it took us five years to get em back to us. So you know without -- lets say that we do something to make you -- what can we do to make you at least get the prices comparable?" MR. GARY said, "All I can say is we have been make it comparable. It has gotten better and the price that we receive is negotiated and we try to get it up every year. And I think we've given them the notice that in 97 it will go to $4. The indications I get from talking to Saxman tour operators is that it is getting to parity in the value received and the issue is really more the information they get on board ships and so what I've been more concerned about is how the information on board ship compares the two experiences so that people can make a better choice. As far as figuring out the pricing...." CO-CHAIRMAN WILLIAMS asked Mr. Gary when he thinks we'll get a return on that million dollars. He said they just redid the whole thing over the last year and a half. They rebuilt the house, replaced a couple of the poles, built walkways, made different trails and now we're going to make a bigger parking area. He again asked Mr. Gary when he thinks we'll get return on the million dollars. Number 1490 JIM STRATTON, Director, Division of Parks and Outdoor Recreation Department of Natural Resources, testified via teleconference from Anchorage. He referred to Co-Chairman Williams' question about seeking a return on the investment in the parks and said he thinks there is a fundamental difference between the purposes of Totem Bight and the operation in Saxman. He said what we have in Totem Bight is a state historical park and the main purpose of the park is not to generate fees, but to provide information about the original culture in the Ketchikan area. When we start looking at parks solely as a way to get a return on investment, we're missing the purposes for which the parks were established. He said that he thinks that in order to maintain the Totem Bight facility for not only the residents of Ketchikan and non-tour visitors, but also the tour visitors, we need to generate some income from the commercial operators to pay for that facility. The fundamental purposes, other than the indigenous culture education of the two facilities, are different and that is something we need to keep in mind. Number 1555 CO-CHAIRMAN GREEN said this is not the first time that the problem of competition between state owned facilities and private facilities has come up. He asked Mr. Stratton if he feels that by following what the bill would provide would increase competition or detract from people wanting to go to the Saxman facility. MR. STRATTON said he doesn't think so. He said he thinks that the purpose of the bill is to free up the existing parking. The tour operators will continue to go to Totem Bight filling up the parking lot and the private parking adjacent to Totem Bight. The people who are really getting squeezed out are the people in Ketchikan and the independent travelers that aren't on a bus tour. They come by Totem Bight and they can't find a place to park. The real winners in the bill and with this acquisition are going to be the non-tour visitors to the park because they are having a hard time getting in there. He said Mr. Ambrose has indicated when he has visitors in town and the cruse ships are in town, he doesn't even bother to attempt to visit the area. Number 1620 REPRESENTATIVE ALAN AUSTERMAN asked Representative Williams if his point is that the state parks needs to raise their fees so they're competitive. CO-CHAIRMAN WILLIAMS said he has been asking this for some time. They're in direct competition with Saxman. He indicated this discussion has happened almost every year for the last three years and all he hears is "We're trying, we have to take care of the tour companies, they're gunna be very upset with us." He said they have raised the fee every year a little at a time and the argument is that we can't raise it because we'll drive away the bus companies. Co-Chairman Williams said you can bring so many buses into the park. He said they tell the bus companies "These are how many buses you'll have at this time, per hour." He said they can't take 22 buses at one time. Co-Chairman Williams said at Saxman, we've had to build and expand that parking lot. They have taken their ball field out of that area and put it into another area. He said they have had to pay the state back for the ball field that they received money for. Co-Chairman Williams stated he supports the bill and would like to see it move, but he would like the department to be a little bit more stronger in trying to be competitive with what is being done out there. Number 1738 CO-CHAIRMAN GREEN said, "Representative Williams, what sort of number -- do you have a feel for what sort of a magnitude of number we'd need here if that were going to be case that they would somewhat come to a parity?" CO-CHAIRMAN WILLIAMS indicated he didn't know exactly what the number is. He referred to the $35 amount and explained the bus company was getting an amount of money. The shipping company received the biggest amount and then the bus company got their amount and then we got whatever. He said we were always having to negotiate. Number 1798 MR. AMBROSE said what we need to find out is what the cruse line is charging the passenger for that full package. He asked if the overall package is $35. CO-CHAIRMAN WILLIAMS said it was five years ago. MR. AMBROSE said if it is going to take an increase in the fee at Totem Bight to bring them into comparable levels, he is sure Senator Taylor will do everything he can to influence the division to do that. He said he agrees with Co-Chairman Williams in that we constantly hear from cruse lines that "If you do this, then we are going to pull out," and yet traffic seems to increase every year. He said as a region, we're starting to realize that while one community doesn't dare put on a head tax, if we did it as a region he doesn't think they'll all turn around and head for the Mediterranean. Number 1854 CO-CHAIRMAN GREEN said Co-Chairman Williams indicated that a fairly large amount of that $35 stays with the shipping company or the tour company. That sounds like they would want to then advertise or make available the knowledge that there is this trip to Saxman. He asked if $3 or $4 versus $35 is what scares people off. MR. AMBROSE said he doesn't believe that the cruse lines are charging their passengers $3 for the Totem Bight trip. It is probably $25 or $30 to get on the bus to go out there. That is what the operator pays the state. He said we need to find out how they're similar. Number 1895 REPRESENTATIVE DAVIES said if we're going to do an apples and apples comparison, there has to be a comparison between what the underlying value and what the experience is. If one is simply the ability to walk among some totem poles and the other is an active demonstration of things -- if one is a big production and the other is just a passive walk through a small park, those are different experiences and they ought to have a different value. Number 1936 REPRESENTATIVE LONG referred to his earlier question regarding credits against fees and said it was mentioned that the Division of Parks collects fees for parks. He asked what is done with the fees. He said it sounds like the division has the ability to use the fees they collect. MR. STRATTON said they currently collect approximately $2 million in fees. That is within the division's program receipt authorization within the operating budget. Currently, the fees they collect are authorized to go back into park authorizations for the most part, system wide. Number 1985 REPRESENTATIVE OGAN asked if this is essentially a funding mechanism for capital improvements. He said he never really got a clear answer on the question of allowing credits against fees due to mitigate or alleviate access. He asked if they are going to take the money that is being collected and build new parking spaces. MR. STRATTON said that is essentially what it is. It is a funding mechanism for a land acquisition so that federal highway monies can be used to make a parking lot improvement. REPRESENTATIVE OGAN asked if there is any reason why we don't get a capital appropriation through the normal capital appropriation process. MR. STRATTON said the Division of Parks hasn't been successful in recent years in securing very much of the capital budget. The capital budget they do get is focused primarily on deferred maintenance and park repairs. Mr. Stratton explained, "The situation at Totem Bight is a little different in that what we're seeing the fees coming from the operators that would go into this funding mechanism really as a mitigation payment for displacing the parking, you know, the independent traveler and the Ketchikan resident. We're looking at this as a mitigation fee, you know, more so than a straight capital acquisition. So that's fundamentally what it is. REPRESENTATIVE OGAN asked if the bill has a House Finance Committee referral. MR. AMBROSE responded that there was a Resources and Finance referral. He explained this same discussion was brought up in a Senate Finance Committee meeting. He explained he has a tendency to agree with the co-chair of Senate Finance in that while there is a zero fiscal note, he isn't really sure that is the way it should be done. There obviously is going to be an expenditure of money that would be coming to the state through this circular and the state ends up with an asset. The end result is the state owns this property, but he doesn't know that a zero fiscal note is truly reflective. He referred to the explanation of "We're going to be spending from the increased fee," and said there is still money changing hands somewhere. Mr. Ambrose stated he doesn't know how accurate a zero fiscal note is. Number 2117 REPRESENTATIVE DAVIES said, "Well on that point, clearly what this would be is equivalent to the other cases we've had of designated program receipts where a program receipt comes in but it is restricted to a particular purpose and it ought to be, you know, in the same sense as the North Star pipeline permitting fees that come in from BP (British Petroleum) for that particular purpose. These fees came in -- you know are coming in for a particular purpose and we really do need, I think, to have -- we don't have in our bookkeeping system, right now, an adequate way to deal with designated program receipts. And this is another example of that problem and if we had, then we could showed it because these kinds of receipts do have a zero impact on the fiscal gap. They don't increase or decrease (indisc.), but they are expenditures of funds and ought to be accounted for. So we need to have a mechanism, we don't and that's the dilemma. Having said that, I had one specific question with respect to the fees and I want for Director Stratton -- does -- you indicated the overall fees, I just wondered if you have broken out and do you know if they fees that you collect at Totem Bight cover the operations there?" MR. STRATTON informed the committee members that the fees do cover the operations there. REPRESENTATIVE DAVIES asked Mr. Stratton if he would describe it as kind of a break even thing or a small positive cash flow. MR. STRATTON said it is a positive cash flow. The fees that they are able to generate at Totem Bight fund most of the Ketchikan park operation which includes a couple of other facilities. He noted Mr. Gary might know what the specific numbers are. Mr. Stratton said he knows that they more than pay for Totem Bight with the fees. Number 2201 REPRESENTATIVE AUSTERMAN said it seems to him that there are lots of state parks around this state, some are historical and some are not, that charge fees to use the parks. The objective behind these parks was to put something together that people could use at a price that they could afford and when you get into commercial operators using them, he can understand that you'd want to raise the price a little bit because they're making a profit. He said, "If you continue to raise the fees on these parks, do you want to just turn them over to a private sector or do you want to continue to have the state operating them, and I think that's basically what the problem that Representative Williams is having is that on one end of the road you've got a commercial operator and the other end you've got the state and maybe the state should be a commercial operator and be competing with the other one. I don't know which one was put in first so that would raise a little bit of question on the till. I mean if the state park has been there all along and now Saxman has come along and is trying to compete with them then I think Saxman has got the problem because if they're trying to compete... I don't know but the pressure being put on the state parks to raise their fees - raise their fees to be, you know, competitive with the private sector, I think there is a little bit of fallacy there." Number 2260 CO-CHAIRMAN GREEN said as he understand the problem, if they went private then you'd have a problem with the walk-ins from Ketchikan that aren't associated with this tour business who would go free. If it goes commercial then these people will probably be charged as well. Number 2271 REPRESENTATIVE AUSTERMAN said, "What I'm driving at, Mr. Chairman, is that this discussion that we're having of whether the fee should be raised on this state park to be competitive with the private sector is I don't think it necessarily should be the argument that we should be having at this table. I think the argument that we should be having at this table then is whether that state park should be turned over to concession to be competitive. If that's the kind of discussion we want to get into (indisc.) state parks with the private sector." CO-CHAIRMAN GREEN said he thinks that is a side issue. He said the issue is whether or not we should allow this expansion, and in order to do that - to pay that back we're going to have to increase fees. Number 2297 MR. AMBROSE said he thinks he left the wrong impression. The decision to increase the fee to $4 next year was made quite awhile ago and preceded the bill by quite a ways. This bill is not what is driving the increase. The increase has been something that Representative Williams has been calling to the attention of the division for quite awhile. The increase would more than adequately cover acquisition of the property over this period of time. He noted the bill is not driving the increase. REPRESENTATIVE AUSTERMAN said his point is that the committee spent 45 minutes talking about competition when actually it is separate issue other than the fact Co-Chairman Williams wants to get the point across. CO-CHAIRMAN GREEN said if we enhance or make available more parking space for more buses, does that than work a hardship for a private corporation? In that case, the state is supplementing itself to be in competition. He said he isn't so sure we want to do that. MR. AMBROSE said that is a totally different discussion from what the bill is about. CO-CHAIRMAN GREEN said, "No because that competition would drive whether we want to enhance that park. If we don't want to enhance it then this bill is dead and we have not encouraged a further competition of private industry. Is that a wrong statement?" MR. AMBROSE said they're going out there now despite the fact that we don't have parking. This will get them off the shoulders of the road. He said he believes Representative Davies is correct. We need to compare what is being offered to the traveling public. Number 2401 CO-CHAIRMAN WILLIAMS made a motion to move SB 278 out of committee with individual recommendations. CO-CHAIRMAN GREEN asked if there was an objection. Hearing none, SB 278 was moved out of the House Resources Committee.
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