Legislature(1997 - 1998)
02/17/1998 08:12 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 312 - PUBLIC FACILITIES FINANCING CORP Number 0050 CHAIR JAMES announced the first order of business is HB 312, "An Act relating to the Public Facilities Financing Corporation; authorizing an advisory vote on whether the legislature should appropriate $1,500,000,000 from the constitutional budget reserve fund to capitalize the build Alaska fund; and providing for an effective date," sponsored by the Deferred Maintenance Task Force. DENNIS DEWITT, Legislative Assistant to Representative Eldon Mulder, Alaska State Legislature came forward to testify. He said the changes in proposed committee substitute LS1243\L, Cook, 2/13/98 (page 4, lines 8, 9, and 15), allow the supreme court to (indisc. - paper shuffling) there is a maintenance management plan in place for the court and board of regents to certify that the university has a maintenance plan in place. Line 15 allows again the court and the board of regents to certify for their facilities that the projects will e designed to the energy performance standards. (2) the commissioner of administration, or the supreme court for a court facility, or the Board of Regents for a University of Alaska facility, has certified that a computerized maintenance management plan, cardex system, or formal systematic means of tracking the timing and costs associated with planned and completed maintenance activities, including scheduled preventive maintenance, is in place for the facility; and (3) the commissioner of transportation and public facilities, or the supreme court for a court facility, or the Board of Regents for a University of Alaska facility, has determined that a project or element of a project will be designed in accordance with the energy performance standards adopted under AS 44.42.020(a). MR. DEWITT explained line 10 expands the maintenance plans that will be acceptable to a cardex system or a formal systematic means of tracking the timing and costs associated with planned and completed maintenance activities, this was at the request of the Department of Education and the Department of Transportation and Public Facilities (DOT/PF). The computerized program was one option, but the other two would also accomplish the goal, that there is an organized maintenance plan. He said what the task force wanted to get away from being notes on a board, and most of it in the head of one or two people who sometimes get things done or don't get things done. MR. DEWITT said line 16 deals with energy standards, DOT/PF suggested using "project or element of a project will be designed in accordance with the energy performance standards adopted under AS 44.42.020(a)." He indicated it gets to the point and is clearly understood. MR. DEWITT referred to the next change, page 10, line 29, which responds to Representative Vezey's concern regarding the timeliness of the annual report. He believes most of the agencies report on December 15, his suggestion was they go ahead with October 1 and as HB 312 moves through the committees it could be made consistent with the other reports that come in in December. Sec. 35.45.130. Annual report. Before October 1 of each year, the corporation shall submit to the governor a comprehensive report describing operations, income, and expenditures for the preceding 12-month period. The corporation shall notify the legislature that the report is available. MR. DEWITT said, finally on page 11, line 17, we expanded the definition of "public facility" to specifically include "airports," this again was at the request of DOT/PF. (3) "public facility" means a building or other structure that serves a public purpose and is constructed or maintained in whole or in part with state money, and includes a highway, an airport, and a facility or vessel of the Alaska marine highway system. Number 0399 CHAIR JAMES said if we don't say what the fiscal year is, then it's the same as the state's, and October 1 is assuming that the fiscal year will then be July 1 to June 30. MR. DEWITT replied right, it defaults to July 1 unless something else is specified. REPRESENTATIVE AL VEZEY noted that they have not adopted the proposed committee substitute. He objected to the changes made on page 4, lines 8 and 9, because he didn't see why they would want to have three entities doing our deferred maintenance planning. He indicated he didn't understand why the legislature ever gave the supreme court the authority to be a facilities manager. He said, "What we're doing here is creating a situation where three government agencies are going to come to the legislature and lobby them for deferred maintenance funding. I think that we are much wiser to limit to one, it doesn't matter which one, ... but it should be one agency coming to the legislature with a plan and not three agencies coming to the legislature completing for plans. Because I guarantee you each one of these agencies will come before the legislature with a plan and take up all of the available money." Number 0527 CHAIR JAMES said her understanding is that the plan doesn't involve money, the plan involves a process, and that the decision by the Deferred Maintenance Task Force in allocating money, that we would be planning to spend over a six-year period, is that before we're willing to allocate any of that money to anyone, we need to understand that they have a process of ongoing maintenance - that we don't fix up something and then a few years from now it's broken down again. The other issue is to have a special line item in the budget and it will be a planning process for the legislature and the Department of Administration to determine how that money is spread out. MR. DEWITT explained the two sections relate only to actions that have to be taken prior to the corporation allocating dollars for the projects. What this requires these entities to do is to certify to the corporation that they have a maintenance program in place and that they have designed their projects to energy efficient standards prior to the release of dollars. MR. DEWITT said the program for identifying projects is a separate issue and it is held by the legislature. This does not affect that. He pointed out, constitutionally, as he understands it, the court is a separate branch of government, owns it's own facilities, and that is the reason they separated the court out. He also believes there is somewhat of a constitutional issue about the ownership of the university properties. He concluded these two entities plan separately from DOT/PF in how we plan our buildings and how they build their buildings. To have DOT/PF, or the Department of Administration, sign off on those simply enters another level of bureaucracy into the planning and execution process of building. It was not that they deal differently with the legislature. It was who would certify to the Public Facilities Financing Corporation that these items had occurred. REPRESENTATIVE VEZEY indicated Mr. DeWitt confirmed what he said earlier which is we are going to create three planning entities. He said, "I can assure you that the supreme court does not have at this time a confident professional facilities planning of department, or resources. If we put this burden on them, they will come up with that (indisc.) maybe through an RSA (reimbursable services agreement) or something, but they will still come up with it. The Department of Administration is going to have to have one and we're saying that the university, or perhaps for constitutional reason is or is not going to have one and we can question why we have a Department of Public Facilities (DOT/PF) and a university department of planning and projects." He still believes it would behoove the legislature to set up one professional level of reporting and making recommendations. CHAIR JAMES stressed it isn't that we are going to be having that we the legislature whose going to be making these decisions, are going to be depending upon their plan as much as it is that we want them to be sure that they have. She noted we're asking all the school districts, and anyone in the state that gets any money for deferred maintenance to prove to the legislature that they have a plan of ongoing maintenance so they'll never get behind again. They have to do that out of their regular budget, we don't give them extra money for doing their on-going maintenance, we are only giving them extra money for catching up. What they need to show to us, before they even get the catching up money, is to show us that they are going to on-go, keep their maintenance on-going with the existing funds that they have, that's the challenge. Number 0847 REPRESENTATIVE VEZEY said if they are going to have some continuity in this planning, some standard, that it does need to come back to a central authority. CHAIR JAMES stated she tends to agree with him. She said, "The problem we run into, with the school districts and everything, is 'government from on high' again. ... We've discussed that somewhat about having a statewide system of ongoing maintenance but that wasn't an option because we had too many people out there making independent decisions and not wanting the government to be putting something on down on (indisc.) high." REPRESENTATIVE VEZEY, being familiar with the planning process, he indicated the first thing that is going to happen is that the legislature is going to be inundated with a bunch of different formats of how they justify their budget for maintenance and were going to have to weed through it all. It would be foolish if they didn't do it with some sort of uniform standard because we'll get in a situation like we have now where people cut back in their maintenance and claim they don't need it now because they know that in five years when the roof starts leaking that we'll fund the money to fix it. Number 0944 REPRESENTATIVE VEZEY noted the administration is going to rely on feedback from all of the facilities' managers across the state, but the legislature is going to be inundated with different assessments of how to address maintenance needs. He said not that we have to be uniform across the state but the ability of people to give bad information to the legislature is going to be greatly increased. CHAIR JAMES said it would be nice to have an overall plan, but she didn't believe that was possible. Number 0991 MR. DEWITT pointed out both the university and the court system do have their facility management units. Without these proposed changes they would then have to report to DOT/PF and the Department of Administration prior to the Public Facilities Commission releasing dollars for their projects. They already have the ability and capacity to do this, the question is do they go through administration to have administration then sign off that they've done it, because they're separate units of government. He indicated the concern with having DOT/PF, at least from Representative Mulder's perspective, is when you go DOT/PF to have them do anything it just runs the dollars up outrageously, that was one of the Task Force's concerns is trying to make sure that it's not overly expensive and that we're getting the certification that they have a maintenance program in place and that the projects they design are consistent with energy efficient standards. REPRESENTATIVE VEZEY said if your statement is true that DOT/PF is so inefficient, maybe we should dissolve them and turn it over to the court system. These agencies all point their fingers and talk about who is efficient and who's not, and they all have different problems, but the point is that what you have done is lopped off the top of the pyramid and stuck the legislature on there. He said I guarantee you, we're the least competent of all of them. CHAIR JAMES asked if there were other changes. MR. DEWITT replied no. Number 1129 REPRESENTATIVE KIM ELTON referenced line 3, page 4. and renovation of public facilities or school facilities that are projects approved under AS 14.11.015(a). REPRESENTATIVE ELTON suggested an amendment may be necessary saying "or school facilities that are projects eligible for approval." He indicated there was discussion and expected the proposed committee substitute would reflect that change. MR. DEWITT replied the current language accomplishes what Representative Elton articulated. The suggestion that was made at the last meeting was that we allow them to fund projects for schools whether or not they were eligible. He indicated, "And the committee did not seem receptive to that particular change." What Representative Elton is articulating is what was in the bill. We didn't need to change the draft to accomplish that. REPRESENTATIVE ELTON reiterated there is no difference between "approved under" or "eligible for approval." Number 1196 MICHAEL MORGAN, Manager, Facilities Section, Department of Education came before the committee. He said there is a small difference in the bill and the only difference is in timing. If the committee wanted to make that change, it would allow for a timing change on when the projects would be eligible for funding. REPRESENTATIVE BERKOWITZ asked what is a computerized maintenance management plan and what is a cardex system. MR. DEWITT responded there are programs that work off of a computer and you input your entire inventory and the maintenance regiment and it gives you reports back on the timing of when particular things need to be done. The cardex system, as he understands it, works very similarly to that except it's a manual system. The DOT/PF, in terms of brushing and cleaning culverts have a process where the folks at the district level, substation level, will put together their proposal of what needs to be done. It's a formal system that works up through the chain so that they can keep track of what needs to be done. Number 1280 REPRESENTATIVE BERKOWITZ asked if it's fair to say they are formal systematic means of tracking the timing and costs associated with planned and completed maintenance activities. MR. DEWITT replied it would be his understanding. REPRESENTATIVE BERKOWITZ said this is stylistic, he tends to believe they should avoid using jargon inside statute. And if they have a description that adequately covers the functions of the computerized maintenance management plan and the cardex system they should use that general description rather than possibly limit or confuse with the jargon. CHAIR JAMES responded she understands his concern because neither is defined. She said she believes the operative word is "for": "for" formal systematic means of tracking the timing and costs associated with planned and completed maintenance activities CHAIR JAMES continued, this is actually the goal. She said, "I'd personally like to have the computerized maintenance management (indisc.) plan because it's a thought invoker. Number one, to understand we're going in the technology age now that most everyone, who is in business, understands that computers have lots of advantage, I think it's suggestive. And then the cardex system is a reaction to that ... 'I can do the same thing on a cardex system.' I think it's suggestive and because the 'or' is in there and defines actually what the goal of it is, I feel comfortable having those in there." REPRESENTATIVE BERKOWITZ said a computerized maintenance management plan, or in the disjunctive, computerized maintenance management plan need not be formal systematic means of tracking time and in costs. It doesn't have to be that way, it could be just a computer plan, something on a computer. If you wanted to describe what a computerized maintenance management plan is, he would suggest they define it. Otherwise he would go with the general term. CHAIR JAMES asked for a motion to adopt the proposed committee substitute. REPRESENTATIVE MARK HODGINS made the motion to adopt CSHB 312(STA), Version 1243\L, 2/13/98. Hearing no objection, CSHB 312(STA) was before the committee. REPRESENTATIVE HODGINS referred to page 10, line 18: (c) Money in the build Alaska fund may be used only in accordance with an appropriation. Money may be appropriated from the fund REPRESENTATIVE HODGINS next referred to line 22: (2) for acquisition, construction, repair, major maintenance, or renovation of public facilities or school facilities that are projects approved under AS 14.11.015(a). REPRESENTATIVE HODGINS asked if this money could be spent for buying facilities rather than deferred maintenance fixing the facilities and why would that be in there if that's not the case. He indicated it sounds like they can actually purchase buildings instead of deferred maintenance. MR. DEWITT responded that language is on the advice of the bond council that the legislature needs to be able to, through the legislative process, use the build Alaska fund at its discretion. And it has to do with complying with tax codes in order to make sure that the bonds remain tax-free. To answer Representative Hodgins question, he said there is that latitude within that section. Number 1474 REPRESENTATIVE BERKOWITZ indicated he had an amendment prepared on that point because that language also occurs on page 4, line 2: funds for acquisition, construction, repair, major maintenance, and renovation of public REPRESENTATIVE BERKOWITZ said the amendment deletes "acquisition, construction." And inserts "replacement". (This language is also found on page 10, line 25). REPRESENTATIVE HODGINS objected to proposed Amendment 1. He referred to Mr. DeWitt's comment that it might be possible that they might have a long-term lease or something and it might be more preferable for use to purchase as to not. He didn't see a problem with it as long as the legislature would be the ones that would make that decision. He mentioned he just wanted to get clarification on why acquisitions was in there, Representative Hodgins said he didn't believe it was necessary to remove it. Number 1568 CHAIR JAMES made it perfectly clear that she is not interested in purchasing more buildings, she wishes they would sell some of the ones that they have. Chair James pointed out the problem she has with this amendment is it refers to replacement as opposed to acquisition or construction and does not include "new schools." CHAIR JAMES said it appears the goal of the build Alaska fund is to have it be a perpetual fund. Once it is set up for the purpose of doing the deferred maintenance, and also because we were going to take six years to do the deferred maintenance, we have to admit that there will be some new construction or replacement construction that will be coming - maybe having just as much need as the deferred maintenance during this period of time. Therefore, we needed to expand the Deferred Maintenance Task Force finance planning to also slot in any new construction, including new schools. She mentioned there might be a need for a new school particularly in the Mat-Su (Matanuska-Susitna Borough), Anchorage or Fairbanks areas where we have a growing population and growing needs. Number 1627 CHAIR JAMES said she does not want to take out the word "construction," she does not have a problem with inserting the word "replacement." She indicated she has a problem with taking the word "acquisition" out because of the need for the tax-exempt status on all the other things that we have -- to need to have this be broad. She concluded saying anything that is done with this money cannot be done without legislative approval. REPRESENTATIVE HODGINS mentioned he flies in the Bush area often. For example, there are some Native villages that have airports located on rivers, a flood could wipe it out, and they might have to replace it at a higher elevation. He said he also agreed with Chair James analogy on the schools. CHAIR JAMES announced she is turning the meeting over to Vice Chairman Ivan. Number 1704 REPRESENTATIVE BERKOWITZ said he didn't initially intend to have "replacement" as part of his amendment. Representative Berkowitz stressed he wants to delete "acquisition, construction," and would take a friendly amendment to remove "replacement." REPRESENTATIVE BERKOWITZ said he believed what they are doing, by deleting acquisition, construction, is preventing us from acquiring and constructing a pork barrel. Because if they are putting together the build Alaska fund, in order to maintain facilities, and we're expanding its scope so they also can acquire and construct facilities, then we're going outside the intent of this fund. He stated, "And as soon as we do that, if we're not putting the proper parameters to it, it's a pork barrel." REPRESENTATIVE ELTON said he is not in favor of the friendly amendment because he thinks it is legitimate to replace an airport or a school, if a school burns down. He indicated he does not have a problem with inserting replacement. Number 1749 REPRESENTATIVE ELTON noted, "I do think that if we're going to take a discrete fix - I think everybody at the beginning of this process and everybody at the end of this process acknowledged that one of the problems that we have is we're not focusing on, not just deferred maintenance, we're not focusing on ongoing maintenance that keeps us from having deferred maintenance. And I agree with the maker of this amendment that what we're encouraging, by using the words 'acquisition, construction,' is we're encouraging people to look at the $1.5 billion fund as an opportunity to build new buildings rather than an opportunity to use this money for what its original purpose was. I'm absolutely in favor of the amendment and to go one step further, I'm in favor of the amendment as written and not deleting the word replacement because I think replacement is a legitimate function in a deferred maintenance scheme." REPRESENTATIVE VEZEY asked someone to get him a copy of the IRS (Internal Revenue Service) regulation that would exclude this type of a development corporation from being able to take advantage of IRS regulations if construction and acquisition were not an option. He pointed out that they are talking about a legitimate public purpose, and repair and maintenance of public facilities is certainly a legitimate public purpose. MR. DEWITT said he wanted to clarify what he meant to say. REPRESENTATIVE VEZEY said he wasn't accusing Mr. DeWitt of trying to be an expert on IRS regulations. He asked Mr. DeWitt to go back to his sources and get a copy of the IRS rules, regulations or case law that says we'd be in jeopardy of not qualifying under IRS regulations for a community development corporation if it didn't include construction acquisition. He stated he doesn't have any objection to putting it in there. He indicated he just gets tired of having smoke blown in his face. Number 1861 MR. DEWITT responded he apologized for having done that. The question he tried to answer was where did the language come from and why was it there. He indicated he was trying to answer the general flexibility, and noted he did state, "Yes, it would allow acquisition." Mr. DeWitt said he was not under the impression that deletion of construction or acquisition, in those terms, would jeopardize the tax status of the corporation with the broad flexibility. Certainly you could put parameters on how flexible you want to be. The bond council indicated the more flexible the better. It's not his understanding that the exclusion of those two terms would cause particular problems. He said he would run that by bond council, but his expectation (in the conversations he's had with them), is that those would not be problems, however, he does have some strong feelings about the importance of those words and how it does help the mission of this corporation and the deferred maintenance program. REPRESENTATIVE VEZEY acknowledged they recognize, in many cases, it is cheaper to tear-down and rebuild than it is to bring up to standard, or just make repairs. Representative Berkowitz comments that we're opening this up to a pork barrel, which goes without saying. This is an opportunity to hand out pork. He indicated if we don't have the option of reconstruction, as opposed to fixing- up, we'll end up spending more money fixing-up antiquated facilities than we would replacing them with new. Number 1944 REPRESENTATIVE BERKOWITZ conveyed what he is concerned about is that the build Alaska fund is somehow going to be used in lieu of presenting capital budgets to some degree. He stated he is not as familiar with the process, since he hasn't been around as long as anyone else at the table with the exception of Representative Hodgins. Representative Berkowitz stressed he didn't want the build Alaska fund taking the place of the capital budget. He said, "If that's the intent of the build Alaska fund, in any degree, it seems to me we ought to give it a much more formal review than we're doing right now." REPRESENTATIVE HODGINS offered a friendly amendment to the amendment presented by Representative Berkowitz. Representative Hodgins' amendment would correct line 4 of his amendment, he has page 10, line 25, that should be page 10, line 22. REPRESENTATIVE BERKOWITZ replied that's a different version. VICE CHAIRMAN IVAN asked Representative Hodgins' if he was offering that amendment. REPRESENTATIVE HODGINS responded yes, just to change the apparent typo [typographical error] from line 25 to line 22. UNIDENTIFIED SPEAKER objected. Number 1997 VICE CHAIRMAN IVAN stated he respects the intent and understands some of the concerns, but believes these will be forwarded to the corporation for their consideration and the final decision to allocate funds rests with the legislature. MR. DEWITT reiterated the purpose of the Public Facilities Financing Corporation is to make bonding available in a relatively efficient process so that essentially debt financing can be used by the state. He said we've selected to propose to use it for those projects that have been identified by the Deferred Maintenance Task Force which have been forwarded to the legislature. The legislature will make consideration of whether or not those projects are appropriate and the governor will approve it or he will not. MR. DEWITT continued, when you remove things like acquisition -- there are a number of rural schools that we visited some of which will need to be replaced, renovated, remodeled on separate pieces of ground. If you remove the term acquisition then this corporation cannot be a party to acquiring the property to move that school. He stated there has been a great deal of consideration about whether or not the high school in Juneau ought to be remodeled or replaced. If ultimately the structural integrity of that facility indicated that it ought to be replaced, it would be likely a new piece of ground would be needed. One of the problems at the high school is that the property is too small for the facility. He said, "If you remove the term acquisition, I think you're putting yourself in a box whether you believe this is a good program where there ought to be a real tight program just for deferred maintenance and ongoing maintenance, or whether you believe that the legislature is simply interested in pork. ... Some think that projects are important." MR. DEWITT stressed, "The issue of acquisition is not an issue of whether or not we buy the Bank of America Building, it's an issue of whether or not we have the ability or we have limited ourselves to whether or not - for example the Griffin Building in Kodiak, which under the deferred maintenance Task Force report, the option was taken to replace that as opposed to spending almost 80 percent of what it would cost to replace it - to renovate it and then not have a very good building." MR. DEWITT concluded, "I don't know at this juncture whether or not they decided on a new location or not. But if you remove acquisition from this particular bill, then certainly the decision is made that it will have to be torn down, replaced on that particular sight, because you don't have the option for acquisition." Number 2197 REPRESENTATIVE BERKOWITZ stated the example of the Bank of America Building is very instructive. He asked if it would be possible to acquire the Bank of America Building, or a similar structure, with the language in this bill, it would be possible... MR. DEWITT interjected, as we've seen without the language that's in here. REPRESENTATIVE BERKOWITZ replied that's right. He confirmed, "But we could use the funds that are contained here to do something like purchase that building. My concern is, if we're going to make a purchase like that, it should be done -- we talked about structural integrity, I think there's sort of a legislative integrity at stake here too. I've seen pockets of money shifted around a shell game and AHFC [Alaska Housing Finance Corporation] pays for things, AIDEA [Alaska Industrial Development and Export Authority] pays for things, so we don't want to pay for it out of general funds because that's not just politically opportune." REPRESENTATIVE BERKOWITZ asked if we're going to be acquiring buildings, we should acquire it out of capital projects or other sources. He identified this as a maintenance fund, it's designed to maintain, and fenceposts aren't drawn around acquisition or construction, then he could see a day where we do buy buildings because it advantages the state. But we buy buildings with a maintenance fund and at the same time, for sake our responsibilities in a less political area. He gave the example of buying a building in downtown Anchorage and not doing the proper maintenance on a school in Kivalina. Without fenceposts around this language he is concerned that that's what's going to happen. Number 2240 MR. DEWITT said he understood what Representative Berkowitz was saying and described the legislative process. He reiterated the notion of the Public Facilities Financing Corporation was to give the legislature as much flexibility in using it as it chose over time. It's really a policy call, do you want an opportunity in place that is useful, and the sideboards being placed by the legislative process. He indicated the future legislature can change this as well. He said, "But what you've done is limited the opportunity to do constructively, at least what I understand the task force and deferred maintenance indicated ought to be done." VICE CHAIRMAN IVAN announced said he wanted to hear from Representative Elton before he put the question of the proposed amendment before the committee. REPRESENTATIVE ELTON asked about the word "replacement," would preclude spending that money for design, engineering or land acquisition. MR. DEWITT replied, "If acquisition is appropriate, why is acquisition not appropriate." He indicated he didn't understand what Representative Elton asking. Number 2308 REPRESENTATIVE ELTON explained he would like to know what in the word "replacement" that is going to substitute for acquisition, construction. What in the word "replacement" would preclude the build Alaska fund for being used to buy the land and necessary (indisc. - noise) place. He pointed out what he is trying to do is he's trying to design the fence, that the maker of the amendment is, that would preclude a purchase of the Bank of America Building but would allow land acquisition. He stated he believes land acquisition is allowed under the word replacement in the same way that engineering would be allowed, or the cost of design elements would be allowed. REPRESENTATIVE HODGINS indicated he could see where replacement would not be construed as acquisition. He referred the example of Juneau [Juneau-Douglas] High School, replacement of the high school, he believes, without acquisition would be on that same site. You would replace the building. You wouldn't replace the land. He said, "I think an acquisition has to stay in there, and the questions that we've brought up I think are all valid..." REPRESENTATIVE ELTON said he believes replacement does allow the purchase of the property necessary to build a replacement building. He indicated he needed someone more familiar with this than members of the committee to tell them that it doesn't. He thinks this is an important point and noted this gets right to the heart of whether they are funding deferred maintenance or whether they're funding a new acquisition of a new building while they're letting others rot in the ground. Number 2375 REPRESENTATIVE HODGINS said, "I would think that replacement would be exactly that, you would replace an item. You would take whatever was there, you would remove it, and you would replace it exactly. I think we need to vote on this amendment and move one." Number 2390 VICE CHAIRMAN IVAN asked for a motion to move the amendment. He emphasized they are trying to arrive at a point to give the corporation as much flexibility to look at the situation as it is. If acquisition is necessary, they'll make that determination. If replacement needs to be done, he's sure they'll look at that situation and make that determination. He said, "We do the final funding as was..." TAPE 98-18, SIDE B Number 0001 VICE CHAIRMAN IVAN asked for a roll call vote (request not on tape). REPRESENTATIVE HODGINS asked, prior to a vote will it take a quorum of the sitting people, or is it a quorum of the entire membership. VICE CHAIRMAN IVAN replied the sitting members. Number 0030 A roll call vote was taken. Representatives Berkowitz and Elton voted for the amendment. Representatives Hodgins, Ivan and Vezey voted against it. Therefore, the Amendment 1 failed by a vote of 2 to 3. REPRESENTATIVE BERKOWITZ stated he has other amendments to offer. VICE CHAIRMAN IVAN asked for an at ease. Number 0050 CHAIR JAMES asked Representative Berkowitz what amendment did he want to address first. Number 0069 REPRESENTATIVE BERKOWITZ offered proposed Amendment H.1 [Amendment 2] which reads: Page 1, line 7, following "for": Delete "deferred" Page 1, line 10, following "financing": Delete "deferred" REPRESENTATIVE BERKOWITZ explained he is removing the term "deferred" in the findings section. He said we don't need to fund deferred maintenance. We have not funded maintenance. That's why there's a need - that's why deferred maintenance has occurred. We're trying to fund maintenance. He clearly said this is going to be a proactive program and not something that just sits still. CHAIR JAMES said she understands his point because she's used that same argument herself. She indicated the word "deferred maintenance" is a misnomer, what it means is we didn't do any. However, there is a term of deferred maintenance and that means that you put it off, you've deferred it, but the need is still there. Number 0116 CHAIR JAMES commented that process of the Deferred Maintenance Task Force, she said we tried to separate out the maintenance that was ongoing and maintenance that was deferred. The legislator's chore is to do the catch up. So, there is a catch up and a keep-up and the focus of this committee was to do the catch up because the maintenance was deferred. That's why she would support leaving deferred in the bill. REPRESENTATIVE VEZEY said Representative Berkowitz is correct. CHAIR JAMES said she agrees, however, she is disagreeing with his amendment. Chair James asked if there were objections to Amendment 1 [deleting the word "deferred"]. REPRESENTATIVE HODGINS objected. Number 0144 CHAIR JAMES asked for a roll call vote. Representatives Berkowitz, Elton and Vezey voted for the amendment. Representatives Hodgins, Ivan and James voted against it. Therefore, Amendment 1 failed by a vote of 3 to 3. Number 0174 REPRESENTATIVE BERKOWITZ offered proposed Amendment H.2 [Amendment 3]. He clarified what he is trying to do, is put some public members on the board of directors, as most of the other quasi- public... He believes the public deserves to be part of the process, if we just leave it with folks who are part of the administration or, part of the problem in a way, then we're lacking the insight necessary from public participation and this opens the process up. The amendment reads as follows: Page 2, line 7, following "of" through page 2, line 10: Delete all material Insert: "directors consisting of the commissioner of revenue the commissioner of transportation and public facilities the commissioner of education the executive director of the Alaska Housing Finance Corporation the executive director of the Alaska Industrial Development and Export Authority two public members appointed by the governor, as follows: (1) one member who has expertise in energy efficient building and weatherization; and (2) one member who is a rural resident of the state and has experience in building or maintaining public facilities. REPRESENTATIVE HODGINS objected. Number 0212 REPRESENTATIVE ELTON asked why there would be an objection to including the public as part of the process. CHAIR JAMES replied, "Because it is a legislative body that is being created here, and the legislators are going to be making the decision. You're talking about the directors of this, and this is to be utilizing our existing directors, and not wanting to have a fiscal note, there literally seems to me no purpose of having public members on this board." REPRESENTATIVE VEZEY said he is going to oppose Amendment 3 because we're taking a five-member board and expanding it to seven, all of them are appointed by the governor. He asked what's the point of making a bigger committee. REPRESENTATIVE ELTON spoke in favor of the amendment because anytime you're using $1.5 billion worth of public funds, it's always good to have members of the public involved. And if there is another way of doing this to overcome Representative Vezey's objection about having them all appointed by the governor, If I was the governor, I would be open to (indisc.). REPRESENTATIVE HODGINS said he objected to this, not that he doesn't want to see the public on here, but the process is the legislature will hold meetings that the public can participate in, and the public will have that opportunity. REPRESENTATIVE BERKOWITZ stated the public is already party to the board of directors in some of the other organizations listed here: AHFC and AIDA, they have public participation. He asked why are we drawing a line around the build Alaska fund. He believes this gives the appearance of creating some sort of sacred cow that's outside of public touch. Number 0280 CHAIR JAMES asked for a roll call vote on proposed Amendment 3. Representatives Berkowitz and Elton voted in favor of the amendment. Representatives Hodgins, Ivan, Vezey and James voted against it. Therefore, Amendment 3 failed by a vote of 2 to 4. Number 0311 REPRESENTATIVE BERKOWITZ offered Amendment H.3 as proposed Amendment 4 which reads: Page 2, line 20 through page 2, line 21: Delete all material REPRESENTATIVE BERKOWITZ said, "Forrest Brown testified before us that he did not feel the board of directors needed an executive director and I don't think we do either. I think it saves the public money if we don't employ one." REPRESENTATIVE VEZEY indicated his concern would be that if we don't address it, it would be unsaid and they could hire any number of employees they wanted because they would be a corporation under the laws of the State of Alaska. And hiring people, having employees, is an authorized function of corporations. REPRESENTATIVE BERKOWITZ replied we could solve that problem by saying the corporation may not employ anybody. REPRESENTATIVE VEZEY added that is a different amendment. Number 0372 CHAIR JAMES asked for a roll call vote on proposed Amendment 4. Representatives Berkowitz voted in favor of the amendment. Representatives Elton, Hodgins, Ivan, Vezey and James voted against it. Therefore, Amendment 4 failed by a vote of 1 to 5. Number 0384 REPRESENTATIVE ELTON offered proposed Amendment 5. He referred to page 2, lines 20 and 21, change paragraph (b) to read: The corporation may not employ staff. Delete the second sentence: The executive director is in the exempt service under AS 39.25.110. CHAIR JAMES objected. In summary she said if you created a corporation and you didn't allow the corporation to hire any staff it would be difficult to manage. We have listed under this the people who are the board members - who are already being paid for some other job. You can't have a corporation doing something if there's nobody to do it, a corporation is the same as a person but it doesn't have people except in its board of directors. Chair James stressed it's unrealistic to not have at least one hired person just in the organization. REPRESENTATIVE BERKOWITZ reiterated that an expert in the field, who testified before us, said that they didn't need anybody that they could handle it with the board of directors. He believes that this would unnecessarily add cost to the program. Number 0481 REPRESENTATIVE VEZEY pointed out that the committee rejected his suggestion that this organizational structure comes to a pyramid peak, we don't have one person preparing this information and presenting it to the legislature, we already have people in DOT/PF, the court system, and the university. This is the defacto staff of the corporation, they're going to be the ones coming before us. REPRESENTATIVE VEZEY said if we want the corporation to have an executive director, it would make sense that that person is on top of the pyramid and that person being the one coming to us. Number 0533 CHAIR JAMES asked for a roll call vote on Amendment 5. Representatives Berkowitz, Elton, Hodgins, and Vezey voted for it. Representatives James and Ivan voted against it. Therefore, Amendment 5 passed by a vote of 4 to 2. Number 0552 REPRESENTATIVE HODGINS made a motion to move CSHB 312(STA) with individual recommendations and attached fiscal notes. There being no objection, CSHB 312(STA) moved from the House State Affairs Standing Committee.
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