Legislature(1997 - 1998)

02/06/1997 08:00 AM House STA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HJR 18 - DEDICATED FUNDS: RATE MAY BE CHANGED                               
 The first order of business to come before the House State Affairs            
 Standing Committee was HJR 18, Proposing an amendment to the                  
 Constitution of the State of Alaska relating to changing the rate             
 of a tax or license that supports a dedication of its proceeds.               
 CHAIR JAMES called on Representative Ivan Ivan, sponsor of the                
 bill, to present the amendment.                                               
 Number 0127                                                                   
 REPRESENTATIVE IVAN IVAN explained the intent of the amendment was            
 to try to meet the effective date of CSHB 1(STA) that passed out of           
 the House State Affairs Standing Committee this week.                         
 REPRESENTATIVE IVAN called on Thomas W. Wright, Legislative                   
 Assistant to Representative Ivan Ivan, to explain the amendment               
 Number 0181                                                                   
 THOMAS W. WRIGHT, Legislative Assistant to Representative Ivan                
 Ivan, stated the amendment was the result of a suggestion made by             
 James Baldwin, Assistant Attorney General, Department of Law.  The            
 amendment made the resolution retroactive to October 1, 1997 to               
 coincide with the effective date of CSHB 1(STA).  The amendment               
 ensured there would not be a gap between the raised revenues from             
 the tobacco tax and the school fund.                                          
 Number 0251                                                                   
 REPRESENTATIVE IVAN moved that the amendment be adopted by the                
 committee.  There was no objection.                                           
 Number 0294                                                                   
 REPRESENTATIVE IVAN moved that CSHJR 18(STA) move from the                    
 committee with individual recommendations and attached fiscal                 
 Number 0308                                                                   
 REPRESENTATIVE VEZEY objected.  He was opposed to the resolution              
 and objected on the grounds that a fiscal note was not attached.              
 CHAIR JAMES asked Mr. Wright if the resolution had a fiscal note?             
 Number 0346                                                                   
 MR. WRIGHT replied, "Yes."  A $3,000 fiscal note was attached, and            
 according to the Division of Elections, the note could go as high             
 as $56,000, depending on the number of issues on the ballot.                  
 Number 0434                                                                   
 CHAIR JAMES asked Representative Vezey if his objection was                   
 REPRESENTATIVE VEZEY replied, "Yes."                                          
 CHAIR JAMES called for a roll call vote.  Representatives James,              
 Berkowitz and Ivan voted in favor of the motion.  Representative              
 Elton, Hodgins and Vezey voted against the motion.  The CSHJR
 18(STA) failed to move from the House State Affairs Standing                  
 OVERVIEW:  Department of Transportation and Public Facilities               
 The next order of business to come before the House State Affairs             
 Standing Committee was an overview presentation by the Department             
 of Transportation and Public Facilities.                                      
 Number 0458                                                                   
 ROD WILSON, Staff Architect, Office of the Commissioner, Department           
 of Transportation and Public Facilities, (DOT&PF), explained the              
 presentation would cover an overview of the state's public                    
 facilities, and the issues affecting their usability.  The DOT&PF             
 asked that the Department of Administration also address the                  
 committee members today regarding the issue of lease space.                   
 MR. WILSON cited the state currently had 1,430 facilities statewide           
 that were occupied and maintained, excluding the university system.           
 The number increased to 1,805 when the university system was                  
 included.  The total square footage was 7.5 million square feet,              
 excluding the university system.  The number increased to 12                  
 million square feet when the university system was included.  The             
 age of the facilities ranged from new to 50 years old.  The oldest            
 facility was built in 1912.  The replacement value in 1995 dollars            
 exceeded $1.5 billion, excluding the university system.  The number           
 increased to $2.3 billion when the university system was included.            
 The average value was $200 per square foot.  The size of the                  
 facilities ranged from 100 square feet-a cold storage building-to             
 200,000 square feet-the State Office Building in Juneau.  And, the            
 activities of the facilities ranged from maintenance shops to                 
 airport terminals.  The facilities were located throughout the                
 state and often they were the most significant facility in the                
 MR. WILSON addressed the issue of deferred maintenance.  The                  
 department conservatively estimated that the magnitude was $100               
 million for executive branch agencies, and as high as $250 million            
 statewide, including the university system.  These figures were               
 based on a report from 1993.  He cited the following areas of                 
 deferred maintenance as examples:  roof deterioration problems,               
 structural problems, electrical problems, and interior finishes.              
 He announced the DOT&PF had requested through the Office of                   
 Management and Budget, $2 million for funding for the deferred                
 maintenance of five buildings.  These buildings were in dire need             
 of maintenance.  It would be up to the legislature to appropriate             
 that money.                                                                   
 MR. WILSON further addressed the issues surrounding the Americans             
 with Disabilities Act (ADA).  He explained there were 1,200                   
 buildings that did not comply with the requirements of the act,               
 according to a 1993 audit.  The assessment was $8 million, of                 
 which, the legislature funded in the fiscal years 1994 and 1995.              
 He explained 50 of the 1,200 facilities had been updated to meet              
 the act and were met with great approval from the disabled                    
 community.  He reminded the committee members that the act required           
 all building to meet the compliance requirements by July 1, 1995.             
 Therefore, the state was open to litigation.  The state had made a            
 good effort to comply which was probably why it had not heard too             
 much from the disabled community.  He speculated that the state               
 would probably hear more from them in the future, however.                    
 Number 1082                                                                   
 CHAIR JAMES stated the figures Mr. Wilson mentioned were startling.           
 She believed that the state should consider selling the facilities            
 that it could not maintain.  It should consider entering into a               
 lease arrangement so that the maintenance would be included.  She             
 asked Mr. Wilson to respond.                                                  
 Number 1114                                                                   
 MR. WILSON replied that issue was lease oriented rather than                  
 ownership oriented.  He was more in favor of owning a facility than           
 of leasing a facility.  He suggested that Mr. Dugan Petty,                    
 Department of Administration, could add more to the conversation              
 surrounding the issue of the cost of leasing.                                 
 Number 1148                                                                   
 CHAIR JAMES expressed her concerns of the schools that were part of           
 the list that Mr. Wilson referred to earlier.  She was distressed             
 because the House State Affairs Standing Committee just turned down           
 an opportunity to guarantee money for schools by not passing CSHJR
 18 (STA) out of the committee.  She asked Mr. Wilson what could the           
 legislators do to convey to the people that this was a serious                
 Number 1195                                                                   
 MR. WILSON replied media exposure would be helpful.  He would not             
 like to see exposure surrounding tragedies such as a roof                     
 collapsing, however.                                                          
 Number 1245                                                                   
 CHAIR JAMES expressed her disgust of this issue.  She was pleased             
 that the camera was here today to help inform the public of the               
 seriousness of this issue.  A $2.3 billion replacement figure was             
 a big investment for the state.                                               
 Number 1284                                                                   
 MR. WILSON clarified that the $2.3 billion replacement figure did             
 not include the rural schools.  The value of the schools was                  
 between $3 billion to $4 billion statewide.                                   
 Number 1310                                                                   
 CHAIR JAMES stated in 1993 she knew the numbers of the rural                  
 schools.  Most of the schools were in need of code upgrades due to            
 health, life and safety issues.  And, some of the schools had been            
 on a list for seven years to eight years.  The figure was roughly             
 $120 million and that included the schools in the organized                   
 boroughs that the state had assumed responsibility for their                  
 maintenance costs.                                                            
 Number 1349                                                                   
 REPRESENTATIVE MARK HODGINS asked Mr. Wilson how many of these                
 buildings were actually needed?                                               
 Number 1357                                                                   
 MR. WILSON replied the department had not done an assessment of               
 occupancy in each facility.  He estimated that the state could                
 reduce the square footage about 5 percent.  Every facility was                
 occupied and used.  He did not know the efficiency of the                     
 occupancy, however.                                                           
 Number 1380                                                                   
 REPRESENTATIVE HODGINS asked Mr. Wilson if the cost he referred to            
 earlier included passed-through grants that had gone to buildings             
 that the state funded, but had a quasi ownership to?                          
 Number 1391                                                                   
 MR. WILSON replied, "No."  These were facilities that the state               
 owned out right.  The monies that had passed through to other                 
 organizations and municipalities were not included in these                   
 Number 1402                                                                   
 REPRESENTATIVE HODGINS asked Mr. Wilson if there were certain areas           
 of the state that had more of a deferred maintenance problem?                 
 Number 1407                                                                   
 MR. WILSON replied, "No."  The problem was spread across the entire           
 state.  There were facilities that received additional care, but              
 even that care was not at an adequate level to keep them                      
 Number 1420                                                                   
 REPRESENTATIVE HODGINS asked Mr. Wilson if the department had a               
 five-year plan?  Do you know how many new building were needed?               
 Number 1440                                                                   
 MR. WILSON replied the department did not have an organized process           
 as to what new buildings were brought onto line.  He explained each           
 agency campaigned for its own needs.  The DOT&PF assisted other               
 departments to determine the cost and other issues, but it was the            
 responsibility of each agency to bring the matter forward to the              
 Number 1487                                                                   
 REPRESENTATIVE ETHAN BERKOWITZ asked Mr. Wilson who the department            
 worked with in the ADA community?                                             
 Number 1493                                                                   
 MR. WILSON replied the department dealt directly with the                     
 Governor's Council for Employment of People with Disabilities.  The           
 council assisted the department prioritize its list of 1,200                  
 facilities.  In addition, the department had contact within local             
 Number 1525                                                                   
 REPRESENTATIVE BERKOWITZ stated he would like a copy of the ADA               
 priority list Mr. Wilson referred to.  He asked Mr. Wilson what was           
 generally needed when there was a failure to comply with the ADA?             
 He wondered if the deficiency was the lack of a ramp, for example.            
 Number 1545                                                                   
 MR. WILSON replied entrances to facilities was the top priority.              
 Nearly every building, he explained, had problems with rest rooms             
 because they were built tightly.  And, some buildings did not have            
 an elevator so access was limited to the upper floors.  He                    
 reiterated, probably the major one issue was entrances including              
 MR. WILSON further stated agencies conducted program remedies for             
 the ADA requirements.  The act actually said the programs and the             
 services must be available to the disabled individual.  Therefore,            
 provisions were made to have a representative of a service meet an            
 individual on the ground floor of an office building with no                  
 elevator, for example.  That was a suitable, temporary solution.              
 The department preferred to have a facility be in full compliance             
 so that the agencies had a wide variety of how they would use the             
 space within the facility.                                                    
 Number 1633                                                                   
 REPRESENTATIVE HODGINS asked Mr. Wilson what percentage of office             
 space was leased versus owner occupied?                                       
 Number 1646                                                                   
 MR. WILSON replied it was a 50/50 split right now.                            
 Number 1650                                                                   
 REPRESENTATIVE HODGINS asked Mr. Wilson if there was a situation              
 where the state was a landlord to a third party?                              
 MR. WILSON replied, "Yes, I believe so."                                      
 Number 1663                                                                   
 REPRESENTATIVE HODGINS asked Mr. Wilson if they would be practical            
 candidates to divest the assets to sell to the occupant?                      
 Number 1670                                                                   
 MR. WILSON responded Mr. Dugan Petty, Department of Administration,           
 could answer that question better.                                            
 Number 1676                                                                   
 CHAIR JAMES asked Mr. Wilson how long had he worked in this                   
 MR. WILSON replied he had been with the department since 1985.                
 Number 1682                                                                   
 CHAIR JAMES asked Mr. Wilson if he had a suggestion for a systemic            
 solution to the deferred maintenance problem?                                 
 Number 1717                                                                   
 MR. WILSON explained Mr. Keith Gerken, Department of                          
 Administration, would address her concerns later in the overview.             
 The department did have some thoughts surrounding that issue.  It             
 could identify the problems, but it did not have a solution.  The             
 solutions, he believed, would come from the Alaska State                      
 Legislature because they were primarily budget issues.                        
 Number 1749                                                                   
 CHAIR JAMES stated one solution was to have every state agency that           
 occupied a state owned building pay the rent.  She believed, if               
 that was a requirement, an agency would not occupy as much space.             
 Number 1766                                                                   
 MR. WILSON replied he also believed there would be a reduction.               
 Number 1770                                                                   
 REPRESENTATIVE KIM ELTON asked Mr. Wilson if there was a dramatic             
 difference between leased space and state owned space in deferred             
 maintenance?  Was there a market incentive that meant the leased              
 space would be better maintained to meet the requirements of the              
 ADA, for example?                                                             
 Number 1812                                                                   
 MR. WILSON replied he could only address that question from the               
 leased space he worked at-3132 Channel Drive, Juneau, Alaska.  He             
 explained, the care and the maintenance that went into the building           
 was much superior than what the state could put into in a                     
 comparable building.  It was also ADA accessible.  It was a newer             
 building so it would be easier to modify for the ADA requirements             
 compared to an older building, however.                                       
 Number 1850                                                                   
 REPRESENTATIVE ELTON asked Mr. Wilson if the state would be better            
 off not buying old buildings to house state functions or state                
 people than constructing new buildings, for example?                          
 Number 1870                                                                   
 MR. WILSON stated in some cases he believed it would be more                  
 advantageous to the state to level an old building and either re-             
 build it or find space else where.  The state had some buildings              
 that were clearly not cost effective to keep them open.  There was            
 no other alternative at this point in time, however.                          
 Number 1893                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Wilson if the state leased any             
 facility from the Permanent Fund Corporation?                                 
 Number 1905                                                                   
 MR. WILSON replied he had no idea.  He asked the committee members            
 to hold all lease questions for Mr. Dugan Petty, Department of                
 Number 1915                                                                   
 REPRESENTATIVE VEZEY announced that the state of Alaska led the               
 nation in ADA compliance.  It was a huge nationwide problem, and              
 Alaska was ahead of the rest.  And, the legislature was remiss by             
 not addressing the state's Congressional delegation with a                    
 resolution asking that the goals be moved forward so that there               
 were no frivolous lawsuits.  He further suggested changes were                
 needed in the ADA.  He cited a building that was built in 1912                
 could not be economically renovated to meet ADA compliance.  There            
 were other ways, he declared, of allowing for handicap access, but            
 they were not allowed by the ADA.  He cited a common meeting place,           
 as an example.  Furthermore, he agreed it was cheaper to level a              
 building and build a new one than it was to upgrade the codes.  In            
 addition, the legislature made the codes by law.  He had never seen           
 an effort to address the law to recognize the inherent value in the           
 infrastructure that already existed.  Maybe, it was not necessary             
 to bring every building up to the same standard.                              
 Number 2032                                                                   
 MR. WILSON stated that was one of the things that he tried to                 
 address to Representative Berkowitz.  There was a program                     
 alternative.  A community could create a building that was totally            
 ADA accessible that contained 15 meeting rooms for various                    
 agencies, for example.  He reiterated the act said that the                   
 "programs and services" needed to be accessible.  The problem,                
 however, was diffusing the staff within an agency.  It would create           
 supervisory problems.  He believed this program would word best in            
 the rural communities.  This option was not being pursued by the              
 department, however, because there was no way it could pull the               
 agencies into a single unit.                                                  
 Number 2092                                                                   
 REPRESENTATIVE VEZEY stated Mr. Wilson was just addressing the                
 current ADA.  He believed changes were needed to the act to                   
 encourage and make more options available.  Moreover, he cited in             
 1974 the state of Alaska adopted the building code that made every            
 facility in the state built prior to 1974 obsolete.  And, every               
 three years there were upgrades.  The requirements in the building            
 code were not designed for arctic conditions, and the state was               
 being straddled with the expenses.  He did not see how the state              
 could even afford to have public buildings much longer.  The                  
 operating costs of mandatory air changes in the arctic environment,           
 for example, would create prohibitive operating costs.                        
 Number 2131                                                                   
 MR. WILSON replied he had testified on standards for air quality in           
 the past.  He was sympathetic to what Representative Vezey stated.            
 The air quality changes were not only difficult to do in the                  
 arctic, but energy consumption also increased dramatically.  The              
 codes that Representative Vezey referred to were adopted through              
 the Department of Public Safety and the Department of Labor, not              
 the DOT&PF.  The Department of Transportation and Public Facilities           
 was only responsible for the ADA.                                             
 Number 2161                                                                   
 REPRESENTATIVE VEZEY stated the codes he referred to were actually            
 adopted by the legislature.  The legislature recently gave the                
 agencies the authority to adopt the electrical code.                          
 MR. WILSON stated the Department of Public Safety and the                     
 Department of Labor were the two agencies that typically came to              
 the legislature with recommendations.                                         
 REPRESENTATIVE VEZEY stated, "quite frankly, the Department of                
 Labor administers most of them, and they know the least about it of           
 anybody in the state."  There had not been an engine pushing from             
 the engineering or the architectural communities to address the               
 Alaskan modifications to the building code.                                   
 Number 2187                                                                   
 MR. WILSON stated a group of design professionals pushed for some             
 time for changes to the plumbing code.  The plumbing code still               
 worked off the 1974 requirements that called for cast iron piping             
 in commercial buildings.                                                      
 REPRESENTATIVE VEZEY stated that was changed last year.  The                  
 Department of Labor fought against plastic piping for 12 years.               
 MR. WILSON said that was a classic example of expenses that did not           
 need to be incurred.                                                          
 Number 2213                                                                   
 REPRESENTATIVE VEZEY commented the studies he had read indicated              
 that maintenance and renovation were far cheaper than new                     
 construction because of reduced overhead.                                     
 Number 2250                                                                   
 MR. WILSON stated he agreed 100 percent with Representative Vezey.            
 It was more cost effective to maintain a building than it was to              
 let a building go un-maintained for a number of years then rebuild            
 Number 2259                                                                   
 REPRESENTATIVE VEZEY stated mechanical systems could not be put               
 together in piecemeal.  At times, they had to be replaced.  Under             
 the code, however, sometimes it was necessary to bring the entire             
 building up to code.  That was when the economics was lost.                   
 Number 2271                                                                   
 MR. WILSON replied under most of the maintenance activities he did            
 not believe that was the case because of the 25 percent of the                
 building value provision.                                                     
 REPRESENTATIVE VEZEY said he brought this issue up to acknowledge             
 that the legislature as a body was responsible for adopting a lot             
 of the codes, and there was a lack of interest in this subject.  He           
 had seen bills go through the body when he was the only person that           
 knew what was being voted on.  "But, we don't let that slow us                
 Number 2319                                                                   
 REPRESENTATIVE BERKOWITZ stated with ADA funds there was a lot of             
 money being spent putting in gold plated bathrooms and not enough             
 money being spent throwing down plywood ramps.  He asked Mr. Wilson           
 what was being done to make better wheelchairs?  Individuals were             
 only looking at engineering solutions.                                        
 Number 2341                                                                   
 MR. WILSON stated that was one of the original questions asked of             
 the federal government in 1990.  The response from the federal                
 government was that it was more concerned about making facilities             
 accessible than dictating how to build a better wheelchair.  He was           
 not convinced, however, that somebody out there could not build a             
 wheelchair to climb a set of stairs.  How accessible would that               
 wheelchair be? he wondered.  It became a question of affordability.           
 Number 2395                                                                   
 DUGAN PETTY, Director, Division of General Services, Department of            
 Administration, was the first person to present an overview of the            
 Division of General Services.  He explained the department allotted           
 space in state buildings, acquired and managed leased office space.           
 He cited the state had 1.6 million square feet of office space                
 under lease.  The three major office locations were-Anchorage,                
 Fairbanks and Juneau.  He cited 770,000 square feet of office space           
 in Anchorage and 41 leases.  That was the largest.  The average               
 cost was $1.56 per square foot.  He cited 135,676 square feet of              
 office space in Fairbanks and 31 leases.  The average cost was                
 $1.45 per square foot.  He cited 397,00 square feet of office space           
 in Juneau and 68 leases.  The average cost was $1.89 per square               
 TAPE 97-8, SIDE B                                                             
 Number 0001                                                                   
 MR. PETTY further explained the department's ADA requirements were            
 more stringent in its lease acquisitions.  The department must                
 comply with Title 2 of the act and treat it as if the state owned             
 it.  Moreover, the department worked with a space standard.  It               
 used an invitation to bid formula to acquire office space that took           
 into consideration the monthly cost.  It did not consider other               
 costs such as moving.  An average lease was five years with a                 
 renewable option.  The department discovered, however, that it was            
 moving every five years due to better prices from competition.                
 But, when the cost of moving was factored in, it was actually                 
 costing the state more money.  Therefore, the formula was modified            
 to factor in the other expenses.                                              
 MR. PETTY explained lease acquisitions were relatively long-six               
 months.  The department was required under AS Sec. 36.30.080,                 
 "Leases," to bring a lease replacement to the legislature if the              
 value exceeded $2,500,000, for approval.  In addition, other issues           
 surrounding leasing involved moving costs for agencies, for                   
 example.  An office space today required heating and electrical               
 sophistication to meet technology.  The ADA requirements also                 
 remained an issue.  When the state renewed a lease it required from           
 the leaser to meet the needs of Title 2 of the act.  That was not             
 a problem, it were the longer leases that had not moved towards               
 compliance that were a problem.  In addition, space was also an               
 issue for agencies when their programs expanded.                              
 Number 0377                                                                   
 MR. PETTY further explained in Anchorage it was a renters market.             
 In Juneau the prices were higher due to less competition.  For the            
 last ten years, funding had been an issue because the department              
 had received less money than it requested.  The biggest issue now             
 facing the department was the renewal of the Department of Natural            
 Resources building in Anchorage.  The department was also                     
 considering buying the National Bank of Alaska building in                    
 Anchorage.  That was contingent on the approval of the legislature,           
 Number 0536                                                                   
 REPRESENTATIVE HODGINS asked Mr. Petty what the average square foot           
 cost was in the rural areas?  He mentioned earlier the average                
 square foot cost in Anchorage, Fairbanks and Juneau.                          
 Number 0553                                                                   
 MR. PETTY replied he did not have that figure with him now.  It was           
 an odd number.  The range was dramatic.  He explained it depended             
 on the location.  In Kenai the range was $1 to $1.35.  Whereas, in            
 Barrow, the department would be happy if the cost was $6.                     
 Number 0590                                                                   
 REPRESENTATIVE HODGINS asked Mr. Petty what the restraints and                
 requirements were before the state invested in lease-hold                     
 improvements?  And, how much of the budget would that be?                     
 Number 0600                                                                   
 MR. PETTY replied tenant improvements were generally rolled into              
 the acquisition cost and amortized over the life of the lease.  He            
 cited the cost for office space was $10 to $15 per square foot in             
 Anchorage.  There was freezer space in the epidemiology department            
 in Anchorage, for example, that was fairly expensive.  There was a            
 lab lease in Juneau that required special vent hoods that was also            
 fairly expensive.                                                             
 Number 0684                                                                   
 REPRESENTATIVE HODGINS asked Mr. Petty if the trend in lease-space            
 acquisition had grown?  Does the state own more buildings than what           
 was being leased 10 years ago, for example?                                   
 Number 0695                                                                   
 MR. PETTY replied the state had not seen an addition to the                   
 inventory in terms of big buildings or spaces.  It had seen some              
 incremental growth then decline.  In the late 1970's and 1980's               
 there were new programs that defaulted to existing space because              
 the state was not buying buildings nor building them.  The state              
 had only built very specialized building, such as, the crime lab in           
 Anchorage.  The lease-space portfolio had not changed either over             
 the last ten years.                                                           
 Number 0749                                                                   
 REPRESENTATIVE HODGINS asked Mr. Petty if there were any                      
 constraints placed on departments or divisions when they requested            
 lease space?                                                                  
 Number 0759                                                                   
 MR. PETTY replied the department worked with them and held them               
 accountable to the space standards formula.  If specialized needs             
 were necessary, the department looked to them to pay for that.                
 Once it was part of the leasing budget, there was not a lot of                
 incentive for agencies to look to save space, however.                        
 Number 0826                                                                   
 REPRESENTATIVE HODGINS asked Mr. Petty if the department had a                
 priority basi                                                                 
 s?  And, was it suggested to the agencies when they requested                 
 Number 0842                                                                   
 MR. PETTY replied the department did that on a continual basis.               
 The department was obligated to get what the agencies needed in               
 terms of space to get their job done.  It had to be in accordance             
 with the space standard formula, and the price needed to be                   
 Number 0886                                                                   
 REPRESENTATIVE VEZEY asked Mr. Petty how the department evaluated             
 the value of leasing versus owning to the state?                              
 Number 0900                                                                   
 MR. PETTY replied the department looked at that on a situational              
 basis.  He stated leasing on a long-term basis was a costly                   
 proposition because the maintenance cost was 50 cents to 60 cents             
 per square foot.  It also paid for profit, overhead, principle on             
 interest, and taxes to the leaser.  Therefore, the state was not              
 getting any thing in return for its investment in a lease                     
 Number 1051                                                                   
 REPRESENTATIVE VEZEY stated testimony indicated the state was $500            
 million behind in its deferred maintenance responsibilities.  The             
 state, therefore, was not putting 50 cents per square foot into               
 building maintenance.                                                         
 Number 1069                                                                   
 MR. PETTY replied he did not disagree with Representative Vezey.              
 If the state did the job it should do with maintenance, in the                
 long-run it would be cheaper to own and preserve its public                   
 Number 1086                                                                   
 REPRESENTATIVE VEZEY stated the leased space better served the                
 users because it was better maintained.                                       
 Number 1094                                                                   
 MR. PETTY replied it was important to look at each situation.                 
 There were many leasers that did a good job maintaining the space.            
 There were problems too.                                                      
 Number 1138                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Petty if he knew if the state              
 leased space from the Permanent Fund Corporation?                             
 Number 1148                                                                   
 MR. PETTY replied the state did not lease directly from the                   
 Permanent Fund Corporation.  He understood the corporation was                
 interested in two buildings-the Goldbelt Building in Juneau and the           
 Frontier Building in Anchorage-that the state currently leased.               
 Number 1175                                                                   
 REPRESENTATIVE BERKOWITZ asked Mr. Petty if he saw any problems or            
 benefits from leasing from the Permanent Fund Corporation?                    
 Number 1181                                                                   
 MR. PETTY replied the department would not have any difficulty if             
 the corporation was in that business.                                         
 Number 1310                                                                   
 KEITH GERKEN, Architect, Facilities (Juneau), Division of General             
 Services, Department of Administration, was the next person to                
 present an overview of the Division of General Services.  There               
 were very few people shocked to find out that the state was not               
 doing a good job maintaining its facilities.  He explained a group            
 of 45 to 50 people in November of 1996 gathered to agree/disagree             
 with a list of 20 indicators presented.  They agreed with all 20              
 and added 20 more.  The ten most important were the following:  a             
 $34 million shortfall in the annual maintenance funding to prevent            
 additional deferred maintenance, a $250 million deferred                      
 maintenance backlog, no overall policy for maintenance and                    
 operation of buildings, no statewide automated maintenance                    
 management system, a lack of a statewide capital improvement                  
 program prioritization process, a lack of criteria for an economic            
 model for decision making, no segregation of operating budget                 
 funding, a lack of funding to provide efficient space planning, no            
 point of responsibility established for the condition of state                
 facilities, and lastly, an inability to respond to changing federal           
 facility requirements.                                                        
 MR. GERKEN further stated that a group was established several                
 years ago to address solutions to the issue.  The group concluded             
 the following:  services should be delivered in a customer driven             
 organization, state agencies should be accountable for their space,           
 space should be allocated equitably, the state should be                      
 accountable for adequate future maintenance and repair, the state             
 should not ignore its public trust to provide stewardship of its              
 assets, the state should be innovative in applying technological              
 solutions and human resources, the state should have a funding                
 mechanism to reduce the deferred maintenance backlog, the state               
 should benchmark its performance, and the state should require a              
 contractual agreement between the customers and the service                   
 Number 1950                                                                   
 MR. GERKEN further stated the short-term objectives were                      
 incremental so that they would not impact the programs within the             
 agencies.  There were five pilot projects that the department was             
 working on now.  He cited the following:  the Nome Pilot Project,             
 expanding the automated management system, changing accounting                
 procedures to see what was really spent on facility maintenance and           
 replacement, creating a rental methodology, and working together              
 for more focus.                                                               
 Number 2062                                                                   
 CHAIR JAMES stated some of the idea Mr. Gerken just mentioned had             
 been around for a long time.  She asked for written information               
 that he could provide to the committee members for further                    
 Number 2169                                                                   
 REPRESENTATIVE VEZEY commented the one question that Mr. Gerken did           
 not address was, "Why couldn't the legislature get public support             
 to bring the building up to a level that met their requirements? "            
 That was the bottom line.                                                     
 Number 2258                                                                   
 CHAIR JAMES gave notice of reconsideration on her vote on CSHJR
 18(STA).  The bill was scheduled to be heard in the House State               
 Affairs Standing Committee again on Tuesday, February 11, 1997.               

Document Name Date/Time Subjects