Legislature(2021 - 2022)BARNES 124
03/03/2022 01:00 PM House TRANSPORTATION
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| Audio | Topic |
|---|---|
| Start | |
| HB366 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| *+ | HB 366 | TELECONFERENCED | |
LEG. APPROVAL: AK RAILROAD REVENUE BONDS
1:07:32 PM
CHAIR HOPKINS announced that the only order of business would be
HOUSE BILL NO. 366, "An Act authorizing the Alaska Railroad
Corporation to issue revenue bonds to finance the replacement of
the Alaska Railroad Corporation's passenger dock and related
terminal facility in Seward, Alaska; and providing for an
effective date."
1:08:09 PM
JOE HARDENBROOK, Staff, Representative Grier Hopkins, Alaska
State Legislature, presented HB 366 on behalf of the House
Transportation Standing Committee, sponsor by request, chaired
by Representative Hopkins. He explained that HB 366 would allow
the Alaska Railroad Corporation (ARRC) to issue bonds for
replacement of a well-used asset nearing the end of its useful
life. Once completed, this project would provide the funding
for repayment of the bonds as well as continuing to underpin the
financial success and stability of the railroad and the
communities it serves.
MR. HARDENBROOK paraphrased from the sponsor statement [included
in the committee packet], which read as follows [original
punctuation provided]:
The Alaska Railroad Corporation (ARRC) is seeking
authority from the Alaska State Legislature, as per AS
42.40.285, to issue bonds of no more than $60 million
to fund the construction of a new passenger dock and
terminal passenger facility in Seward, Alaska. While
ARRC must seek authority from the state to issue
bonds, under AS 42.40.690 the State of Alaska is not
liable for the debts of ARRC.
The Alaska Railroad has maintained facilities for
passengers arriving in and departing from Seward for
more than 100 years. In 1966, the existing passenger
dock was constructed after the destruction of the
dock, along with most of the City of Seward, in the
1964 Great Alaska Earthquake. The dock's pile
foundation has experienced significant corrosion over
its half-century lifespan, which limits the dock's
remaining useful life and has resulted in weight
restrictions being implemented. While safe to use, the
dock is clearly nearing the end of its useful life.
Due to the dock's deteriorating condition and to
accommodate larger class ships that are expected to
make the cross-gulf trip to Seward, the new dock must
be completed in time for the 2024 cruise ship season.
As such, the new passenger dock will be designed to
accommodate anticipated cruise traffic for the next
fifty years, be capable of simultaneously mooring two
ships measuring up to 1,080 feet long and provide for
offseason mooring of freight vessels.
Critically important is that all construction must
avoid interruption to cruise or rail passenger service
between May and September of 2022 and 2023. Total
anticipated cost for construction of the new passenger
dock and terminal, as well as demolition of the
existing dock and terminal, is $79 million. In
addition to the existing $12 Seward dock passenger
fee, ARRC has implemented a $15 per cruise ship
passenger Dock Improvement Fee starting in 2022. This
funding, along with other dock revenues and $1 million
in other ARRC funds, will be used to provide an
estimated $19 million for dock and terminal
construction. ARRC will seek an additional $60 million
by issuing bonds to fund the remainder of the cost of
construction. The debt service on this $60 million
will be paid entirely from dock revenues. In order to
meet the 2024 need for the new dock, it is imperative
that ARRC coordinate public debt funding by mid-2022.
MR. HARDENBROOK noted the invited testifiers available online.
1:11:37 PM
CLARK HOPP, Chief Operations Officer, Alaska Railroad
Corporation, gave a PowerPoint presentation, titled "AKRR Seward
Dock Bonding Presentation." He began on slide 1, "Seward
Passenger Dock," which pictures a freight dock, passenger dock,
and coal dock. The passenger dock was built in 1966, starting
out as a freight dock. He noted there is a 26,000 square foot
terminal building for passenger processing. The dock is nearing
the end of its useful life, he remarked. He reminded members
that the dock serves the railroad and the Southcentral Interior
visitor industry. Nearly one-quarter of a million passengers
"came over this dock in 2019." Those passengers go on to ride
the train, rent cars, and visit other parts of Alaska. He
commented on the possibility for growth.
1:15:39 PM
REPRESENTATIVE STUTES asked whether this was the same dock that
was utilized by the Alaska Marine Highway System (AMHS) when a
ferry was going into Seward.
MR. HOPP responded yes.
REPRESENTATIVE STUTES asked, if the ferries go back into Seward,
whether they will have the ability to tie up to this dock.
MR. HOPP responded, if this were the desire, there would have to
be some design considerations.
1:16:35 PM
REPRESENTATIVE MCCABE questioned the design consideration and
its costs. He asked whether it would be better [to design for
the ferries] on the frontend of construction or wait until later
to have to modify [the dock].
MR. HOPP responded that the next six months would be the time to
have this discussion.
1:17:22 PM
REPRESENTATIVE HANNAN asked whether this new dock would be able
to accommodate only mega ships or whether the dock would still
have two sides, one built to accommodate smaller ships if they
are not all Panamax vessels.
MR. HOPP responded that the freight dock will have the
flexibility to accommodate many different sizes of ships
including cruise ships and ferries.
REPRESENTATIVE HANNAN asked whether ARRC is looking at
modifications to the coal dock.
MR. HOPP responded that there are currently no modifications
planned for the coal dock. He added that the coal industry has
been stagnant for several years. The design of the coal dock
would take a lot of retro fitting to handle cruise ships, but
the freight dock can accommodate additional overflow.
1:20:28 PM
REPRESENTATIVE MCCABE asked about the reverse. He asked whether
the dock would have the ability to accommodate a freighter for
anything other than passenger services. For example, if Alaska
had an issue with food sustainability.
MR. HOPP responded that in Southeast Alaska, there are floating
docks, which are passenger oriented. The current plan would be
to accommodate a robust winter season of freight activity so it
would have quite a bit of flexibility. The answer to the
question is yes.
1:21:46 PM
REPRESENTATIVE DRUMMOND asked about off-season mooring. She
asked for clarification whether it would be an operational dock
for loading and unloading freight.
MR. HOPP responded by pointing out the picture of the primary
freight dock on slide 1, stating that it is available for this
type of activity.
REPRESENTATIVE DRUMMOND asked about the kind of freighters that
come into the Port of Alaska in anchorage, and whether these are
part of the plan, as they do not appear to be.
MR. HOPP confirmed that is correct. This passenger dock would
not be able to accommodate this kind of activity. In response
to a follow-up question, he stated that the freight dock could
accommodate the freighters which currently dock at the Port of
Alaska Anchorage.
1:24:06 PM
MR. HOPP proceeded to slide 2, titled "ARRC Seward Passenger
Dock." He reiterated that because of the condition of the
passenger dock, the ARRC has embarked on the project to rebuild
the pier and terminal building on the dock for modernization.
Project funding details are shown on the slide, and ARCC will
continue to look for options for grants and other financing.
1:25:41 PM
REPRESENTATIVE MCCABE pointed out that ARRC has $19 million and
asked whether the budget was sufficient funds to cover the
project. He had also heard that because of the COVID-19
pandemic the railroad was struggling.
MR. HOPP responded yes, ARRC can afford the $19 million. He
acknowledged that the COVID-19 Pandemic resulted in a financial
struggle; however, there will be more money left over after this
project. He deferred to the CFO of ARRC for further response.
1:26:49 PM
BARBARA AMY, Chief Financial Officer, Alaska Railroad
Corporation, responded that the cash flows from the dock and the
revenue bonds will be sufficient to cover the cost of the
project.
REPRESENTATIVE MCCABE questioned the available federal grants
for large construction projects, and which grants ARRC is
considering.
1:27:48 PM
MR. HOPP responded that most of the grants which fall within the
range are typically grants related to passenger movement through
the Federal Transit Administration. He stated that grants have
also been received through the Federal Railroad Administration,
and different opportunities are still being explored. He
expressed the opinion that the slow motion of most grants is not
suited for pairing up with ARRC's aggressive construction.
REPRESENTATIVE MCCABE questioned ARRC's level of confidence that
the railroad could be finished with the money and timeframe
available.
MR. HOPP responded that ARRC has been working on the project for
nearly three years and has much experience in the project arena.
For example, the corporation constructed a bridge that was
delivered on time and under budget. He expressed the opinion
that there is quite a lot of expertise, but ARRC is not a dock
expert. He offered that there are a fair number of great
resources, and there are contractors in Alaska who have
experience with these types of projects.
1:30:46 PM
REPRESENTATIVE DRUMMOND, so that passengers disembarking can
access various shore excursions, inquired about the proximity of
the railroad to the dock.
MR. HOPP responded that ARRC runs a charter business called The
Alaska Railroad Cruise Train with an over 500-passenger
capacity. The passengers are moved by all different modes of
transportation.
1:32:39 PM
REPRESENTATIVE CRONK asked about the source of the $180 million
grant to build a bridge near Salcha, Alaska, and whether the
project progressed, or was it a "bridge to nowhere."
MR. HOPP responded that the funding for this project was close
to $110 billion from the U.S. Department of Defense monies, and
the remainder was the state's monies. He said that the bridge
was the first critical piece. The reason the bridge was built
first was so Eielson Air Force Base and Fort Wainwright could
access training.
1:34:49 PM
MR. HOPP proceeded on slide 2. He stated that per ARRC
statutes, issuance of public bids requires legislative authority
in addition to its usual approval by the board of directors.
REPRESENTATIVE STUTES asked whether the board of directors has
approved this.
MR. HOPP responded yes.
1:35:48 PM
MR. HOPP, continuing with slide 2, explained the time sensitive
nature. He stated that ARRC needs to be in the market no later
than the third quarter of this year to meet the project demands.
REPRESENTATIVE STUTES asked when the board approved the project.
MR. HOPP responded that the board approved the project at its
February 2022 meeting.
1:36:44 PM
REPRESENTATIVE HANNAN asked why the project had not been
requested for last year.
MR. HOPP responded that ARRC began to move the project forward
nearly 24 months ago. He said that the first direction the
corporation went was a public/private partnership; however, in
late 2021 one of the partners in the consortium decided to
pursue other opportunities.
1:38:16 PM
REPRESENTATIVE MCCABE asked about the 2022 report to the state,
which is a 5-year capital plan published December 1, 2021. He
said that he doesn't see anything about the Seward dock
rehabilitation.
MS. AMY responded that the report to the state came from ARRC's
5-year plan. The plan goes through the board in the budget
meeting in the middle of November. At that time, ARRC was still
in a public/private partnership. It was not until later ARCC
started running the project itself; therefore, the document
would not reflect the project as ARRC's "capital project."
CHAIR HOPKINS questioned whether it would still be in the 5-year
plan.
MS. AMY responded no, because the way the partnership was
structured, it would not have required a capital outlay.
REPRESENTATIVE MCCABE commented that even though it was a public
partnership, it would have been in the report somewhere.
MR. HOPP responded that the partnership had been an agreement
for the private group to finance, construct, and operate the
dock facility while paying a concessionaire fee to the ARRC. He
explained that this is why it is not seen in the capital
program.
1:41:45 PM
REPRESENTATIVE HANNAN questioned whether ARRC is in development
with other capital projects which are not part of the state,
such as hotels, or extensions of rail lines which are private
partnerships.
MR. HOPP responded that none come to mind.
REPRESENTATIVE HANNAN commented that, from a legislator's
perspective, this is not something the legislature would fund.
She said there are a variety of projects across the state in
reference to railroad extensions, and perhaps the legislature
should encourage them to pursue these avenues through
partnerships.
MR. HOPP responded that he is not aware of any which are not
part of the public record.
1:43:47 PM
MR. HOPP proceeded to slide 3, titled "ARRC Seward Passenger
Dock." He focused on ARRC's partnership with the Royal
Caribbean Group.
REPRESENTATIVE MCCABE expressed the knowledge that ARRC tows
passenger coaches for Princess Cruises to Denali from Seward.
He questioned whether this includes the Royal Caribbean Group as
well.
MR. HOPP responded no; Royal Caribbean Group doesn't own any
passenger coaches. He stated that ARRC moves Royal Caribbean
Group passengers with its own set of rail cars.
1:46:00 PM
CHAIR HOPKINS asked whether he could provide the committee with
other capital projects at a subsequent meeting.
MR. HOPP responded yes, as within the last 24 months there have
been public efforts and requests for proposals for a passenger
dock in Seward. He said that he knew it had been made public,
and there have been discussions.
CHAIR HOPKINS expressed appreciation for further discussion at
the next committee meeting.
MR. HOPP expressed appreciation to be able to speak before the
committee.
1:47:59 PM
CHAIR HOPKINS opened public testimony on HB 366.
1:48:25 PM
JANETTE BOWER, City Manager, City of Seward, testified in
support of HB 366. She said that the project is vital for the
city. Closure of the dock facility would eliminate tourism
dollars for the city and would also affect the marine industry
in Seward. In the off season, when the ships are not docked for
the cruise industry, the docks are used for other events.
Events are held within the terminal. She suggested that
partnerships with ARRC and the Royal Caribbean Group will
benefit Seward and the state for many years to come.
1:50:03 PM
PRESTON CARNAHAN, Director of Destination Development, Royal
Caribbean Group, testified in support of HB 366. He said that
the company has 60 ships globally and carries around 7 million
guests. In 2019, the company had 6 ships in Alaska, and in
2022 it plans to have 10. The company has been in Alaska since
1990 and has been in Seward for over 20 years. Recently, there
have been challenges during the pandemic. Through a great
partnership with ARRC, the company is committed to supporting
the project, the community, and Seward.
1:52:50 PM
TOM TOUGAS, representing self, testified in support of HB 366.
He said he had lived in Seward for over 30 years. He said that
this dock is used on a year-round basis. The vessels are
brought back to Seward in the fall for upkeep and repair. He
expressed the opinion that the dock is important not only to
Seward but to all of Alaska.
1:54:37 PM
CHAIR HOPKINS closed public testimony. He announced that HB 366
was held over.
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 366 - Letters of Support 2.28.2022.pdf |
HTRA 3/3/2022 1:00:00 PM |
HB 366 |
| HB 366 - AKRR Seward Dock Fact Sheet.pdf |
HTRA 3/3/2022 1:00:00 PM |
HB 366 |
| HB 366 - Alaska Railroad White Paper 2.28.2022.pdf |
HTRA 3/3/2022 1:00:00 PM |
HB 366 |
| HB 366 - AKRR Seward Dock Bonding Presentation.pdf |
HTRA 3/3/2022 1:00:00 PM |
HB 366 |
| HB 366 - Fiscal Note version A - 2.28.2022.pdf |
HTRA 3/3/2022 1:00:00 PM |
HB 366 |
| HB 366 - Seward C of C Support.pdf |
HTRA 3/3/2022 1:00:00 PM |
HB 366 |
| HB 366 - Seward City Council Resolution of Support.pdf |
HTRA 3/3/2022 1:00:00 PM |
HB 366 |
| HB 366 - Sponsor Statement - 2.28.2022.pdf |
HTRA 3/3/2022 1:00:00 PM |
HB 366 |