Legislature(2003 - 2004)
05/13/2003 08:09 AM House STA
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* first hearing in first committee of referral
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+ teleconferenced
= bill was previously heard/scheduled
HB 312-SEAFOOD AND FOOD SAFETY LABORATORY CHAIR WEYHRAUCH announced that the next order of business would be HOUSE BILL NO. 312, "An Act giving notice of and approving the entry into and the issuance of certificates of participation for a lease-purchase agreement for a seafood and food safety laboratory facility; relating to the use of certain investment income for certain construction costs; and providing for an effective date." Number 1925 REPRESENTATIVE SEATON moved to adopt CSHB 312, Version 23- GH1134\D, Bannister, 5/12/03, as the working document. There being no objection, Version D was before the committee. Number 1950 ERNESTA BALLARD, Commissioner, Department of Environmental Conservation (DEC), explained that Version D merely provides clarity in the title to make it clear that the laboratory would be operated by the department. Ms. Ballard paraphrased from the following written testimony [original punctuation provided]: Imagine it is 5:00 p.m. on Friday, you are a dairy processor and your pasteurization equipment breaks down. The scenario is not uncommon. To fulfill your school and military contracts, FDA requires that a State lab certify your equipment is operating correctly again and test the product to make sure. Milk can't wait until Monday morning. The Seafood and Food Safety Laboratory staff are there to make sure your product is safe for consumption and makes it to market while it's fresh. Ours is the only lab certified in Alaska to test dairy products to ensure successful pasteurization so they can be sold to the military and schools. HB 312 provides the funding mechanism to build a new Seafood and Food Safety Lab. The expense is already in our proposed capital budget. The facility we have leased for 34 years will not be available after 2006. It is overcrowded and not fully compliant with safety codes and laboratory design standards. It was developed in Palmer when the principal lab business was agriculture and dairy. In recent years entrepreneurs in coastal Alaska have developed a wide variety of value added seafood products adding a significant and time sensitive testing responsibility for our lab. Our proposed new lab will be in Anchorage where valuable hours can be saved between sample collection and test results for raw and live seafood industries. A core function of government is protection of human health and the environment. Government must be prepared to respond to unanticipated outbreaks of disease or the presence of contamination in food, water and animals. The Alaska seafood and food safety laboratory fulfills these functions. We analyze raw, finished, and value-added food products for bacteria, chemicals, and toxic contaminants. The laboratory protects Alaskans by monitoring animals for zoonotic diseases--transferred from animals to humans-such as Brucellosis. Lab technicians test food products for Botulism, Salmonella, Listeria and fecal coliforms and also test public drinking water for Giardia, a common contaminant found in surface water, and Cryptosporidium. The laboratory supports the seafood, dairy and shellfish industries. To successfully market Alaska's high quality shellfish and seafood, the public must be assured they are safe. Federal requirements for shellfish are very strict because the health risks are great. Through monitoring and testing the lab assures the safety of Alaska's growing shellfish industry, including geoducks, mussels and oysters. Through new PSP sampling and testing procedures, live geoduck sales have begun to enable the industry to ship approximately 50-60 percent of its geoduck quota live, increasing its value from three fold. When the industry reaches its goal of 85 percent live shipment, the industry's value will be worth approximately $2.5 million. A perfect example of how this lab has and will continue to help Alaska's economy grow is the farmed oyster industry. As I'm sure you all know, Alaskan oysters are top quality and easily merit their good wholesale price. In the recent past, this industry did not exist. DEC lab staff are some of the experts who helped oyster farmers get started. With our assistance, farmers set up operations that met National Shellfish Sanitation standards which must be met to sell raw product. Those standards require that DEC sample the growing water to ensure it is free from contamination. As the industry grew, it became more difficult for our staff to travel to remote locations for the collection of water samples. We developed a method for harvesters to collect their own water samples thereby increasing the opportunity for growing areas to be approved. The laboratory is also providing proof that Alaska's commercial fish species are of the highest quality and free of contaminants by monitoring commercially caught species for pollutants. Over 600 samples were collected last year and the results will be available next month. The laboratory supports Alaska's private labs by certifying them to conduct drinking water analysis. We train 190 private lab staff a year on how to test drinking water according to EPA standards, and assist private laboratories in obtaining certification and approval to perform federally regulated tests. We cannot depend on private laboratories to maintain testing and analytical capabilities for situations when there is no profit margin. When private markets develop, our laboratories get out of the business. For example, the Seafood and Food Safety Laboratory does not test drinking water for fecal coliform because private labs are capable of conducting those tests. The DEC laboratory only conducts tests that are federally required to be done by a State lab or are not provided elsewhere in the state. The health of Alaskans and the success of Alaska's seafood, shellfish, and dairy industries are contingent upon the smooth and continued operation of the seafood and food safety laboratory. Through our testing, monitoring, and technical support, the laboratory assures the health of Alaskans and our environment, and supports the development of our abundant resources. CHAIR WEYHRAUCH asked if the estimated lease total lease payments of $20,862,400 includes the lease-purchase payments, construction, acquisition, and other costs. Number 2400 DEVEN MITCHELL, Debt Manager, Treasury Division, Department of Revenue, specified that the $20,862,400 is an estimate of the total principal and interest that would be repaid on the Certificates of Participation (COP). The COP is subject to appropriation and backed obligation by the state. Mr. Mitchell, in response to Chair Weyhrauch, said that the lease-purchase agreement will include the cost of construction, acquisition, and equipment. In further response to Chair Weyhrauch, Mr. Mitchell specified that the $20,862,400 is just the lease payment. When the legislation was drafted the anticipated lease payments were about $1,391,000 annually. The $140,000 is the investment earnings on the proceeds of the money borrowed and it will be used for the facility itself. Therefore, the total construction cost is $14,285,000. He confirmed that this is not a private activity bond rather it's for a governmental purpose. Number 2525 REPRESENTATIVE GRUENBERG directed attention to page 2, line 5, refers to "lease-purchase". However, the intent language isn't limited to lease-purchase. He questioned whether there needs to be a bit more flexibility. MR. MITCHELL explained that folks have tried to be as conservative as possible with the structuring of the financing for this project. The technique in which [the department] tries to anticipate investment earnings is called net funding rather than gross funding in which the department could've requested authorization for the full amount anticipated for the project and any earnings could provide additional flexibility. In today's budget circumstances, there has been a concerted effort to [be fiscally conservative], and therefore any unanticipated costs will require coming to the legislature for additional approval. REPRESENTATIVE GRUENBERG asked if the additional approval would have to be done through additional authorizing legislation or can it be done through the appropriations process. MR. MITCHELL answered that if there were funds available, it could be done through the appropriations process. If there weren't additional investment earnings or there was a desire not to use general fund, some additional borrowing authorization would be required. However, he said that it would have to be a very catastrophic event that would result in this project needing more fiscal authorization. COMMISSIONER BALLARD informed the committee that the project has reached a design stage in which the drawings are referred to as 70 percent complete drawings. The site already has a building pad with utilities stubbed to it. Therefore, some of the construction risk has already been absorbed in the design phase of this project, which has been underway for seven years now. Commissioner Ballard specified that the site is next to the Public Health laboratory that was constructed a few years; the Public Health laboratory used COPs as its financing method as well. REPRESENTATIVE SEATON noted his support of this legislation and the cost containment that has been utilized with the project. He asked if the Water Quality laboratory in Homer will have the capability to perform water quality sampling for the [aquaculture] in Kachemak Bay. Number 2700 KRISTIN RYAN, Acting Director, Division of Environmental Health, Department of Environmental Conservation, replied no and explained that laboratory has to be certified by the Food and Drug Administration (FDA) to test the growing waters for the oysters and shellfish. REPRESENTATIVE SEATON noted that grants have been received for the Water Quality laboratory in Homer. When the laboratory is running, is there a plan to have it certified, he asked. MS. RYAN said that the [division] hasn't been approached regarding interest in certification. Upon such an expression of interest, the division would be happy to work the laboratory to try to have the certification set up. Number 2757 DAVID WETZEL, Laboratory Manager, Analytica Alaska, explained that Analytica Alaska is a small laboratory in Southeast Alaska. Mr. Wetzel related that in general Analytica Alaska is supportive of the construction of this laboratory. Mr. Wetzel informed the committee that certification of drinking water testing and chemical testing provided by the Food and Safety laboratory in Palmer and the Chemistry laboratory in Juneau impact Analytica Alaska tremendously. He explained that there is concern with regard to the transfer of that service to the laboratory in Palmer. These certifications, including underground storage tank and contaminated site testing, are critical for Analytica Alaska to continue its business. Mr. Wetzel pointed out that currently the microbiology certification officer is housed in the Food and Safety laboratory in Palmer while the chemistry certification officer is housed in the chemistry laboratory in Juneau. With the possible closure of the Juneau laboratory, Analytica Alaska is concerned with the continuation of the certification service and the location of its staff. MS. RYAN assured Mr. Wetzel that [the division] will continue to certify private laboratories to test drinking water for microbiology and chemical analysis of public water supplies. The microbiologist will continue to be housed in the new seafood and food safety laboratory. The chemical certification officer will remain in the Juneau area. Number 2827 MR. WETZEL said he was happy to hear Commissioner Ballard say that the state will not compete with private laboratories. He asked if any of the actual testing services will be moved to the new facility in Palmer or will some of those testing services be doled out to the private sector. MS. RYAN specified that the services provided at the chemistry laboratory won't move to the Palmer facility or the microbiology laboratory either. The services provided at the [state's] current chemistry laboratory are already provided by private laboratories such as Mr. Wetzel's. There are no plans to move any testing [from the state's chemistry laboratory] to the proposed laboratory. REPRESENTATIVE HOLM asked if there is any predicted increase in employment due to this change or is this merely a consolidation. [Not on tape, but reconstructed from the committee secretary's log notes, was the following: MS. RYAN said that she didn't foresee any increases.] TAPE 03-61, SIDE B MR. WETZEL remarked that this proposed laboratory is a needed facility that supports some of the needs [Analytica Alaska] can't. Number 2958 JULIE DECKER, Executive Director, Southeast Alaska Regional Dive Fisheries Association SARDFA, testified in support of HB 312. She noted that she had submitted written testimony, and therefore would touch on a couple of the main reasons SARDFA supports the proposed laboratory. Firstly, the proposed laboratory is closer which is critical for the time-sensitive water samples out of Southeast Alaska. Furthermore, increasing the value of the geoduck fishery hinges upon the paralytic shellfish poison (PSP) testing of the animal and thus this proposed laboratory would be a critical component to increasing the value of this resource. Ms. Decker concluded by saying that the Palmer laboratory staff that will now be relocated to Anchorage have been an excellent and efficient group. Number 2883 RODGER PAINTER, Vice President, Alaska Shellfish Growers Association, announced the association's strong support for the construction of the proposed laboratory. Mr. Painter reviewed the difficulties in using the present facility. For example, there is a 30-hour window from the time the sample is taken to the time it needs to be delivered to the laboratory. The time it takes to move packages from the Anchorage airport to Palmer and Wasilla is lacking and that last leg of the journey is critical. Having the laboratory located in Anchorage would alleviate the difficulties that have manifested with transporting packages from the Anchorage airport to Palmer. Additionally, Mr. Painter informed the committee that he has been a purchaser of geoducks and the timely testing of the product is extremely critical because the product has a very short self-life. He echoed the earlier comments that the value of the product triples when it's shipped live. Mr. Painter invited any member who doubted the need for a new laboratory to come to the Palmer laboratory, which he characterized as hopelessly outdated 15 years ago when he visited the laboratory. CHAIR WEYHRAUCH, upon determining that no one else had signed up to testify, announced that public testimony would be closed. MS. RYAN, in response Representative Gruenberg, informed the committee that the current facility closes in 2006, which is the deadline. If this legislation proceeds quickly, ground could be broken next year. CHAIR WEYHRAUCH informed the committee that he has a question about HB 312 in to the governor's office, and therefore he announced that HB 312 would be held over.
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