Legislature(1993 - 1994)

02/11/1993 05:00 PM TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
                                                                               
                                                                               
             HOUSE TRANSPORTATION STANDING COMMITTEE                           
                        February 11, 1993                                      
                            5:00 p.m.                                          
                                                                               
                                                                               
  MEMBERS PRESENT                                                              
                                                                               
  Representative Gary Davis, Vice-Chair                                        
  Representative Al Vezey                                                      
  Representative Curt Menard                                                   
  Representative Bill Hudson                                                   
  Representative Eldon Mulder                                                  
  Representative Jerry Mackie                                                  
                                                                               
  MEMBERS ABSENT                                                               
                                                                               
  Representative Richard Foster, Chair                                         
                                                                               
  COMMITTEE CALENDAR                                                           
                                                                               
  *HB 26:   "An Act relating to the control of outdoor                         
            advertising."                                                      
                                                                               
            HELD OVER FOR FURTHER CONSIDERATION                                
                                                                               
  *HB 23:   "An Act mandating the sale of the Alaska Railroad;                 
            and providing for an effective date."                              
                                                                               
            HEARD AND HELD OVER; WORK SESSION ONLY FOR                         
            INFORMATIONAL PURPOSES                                             
                                                                               
                                                                               
  WITNESS REGISTER                                                             
                                                                               
  REPRESENTATIVE CURT MENARD                                                   
  Alaska State Legislature                                                     
  State Capitol                                                                
  Juneau, Alaska  99801-1182                                                   
  465-2679                                                                     
  Position Statement:  Prime Sponsor of HB 26                                  
                                                                               
  JEFF OTTESEN                                                                 
  Department of Transportation and Public Facilities                           
  3132 Channel Drive                                                           
  Juneau, Alaska  99801                                                        
  465-6954                                                                     
  Position Statement:  Testified on HB 26                                      
                                                                               
  TED SMITH                                                                    
  P.O. Box 1026                                                                
  Willow, Alaska  99687                                                        
  495-6637                                                                     
  Position Statement:  Constituent of Rep. Menard's - spoke                    
                       via teleconference in favor of HB 26.                   
                                                                               
  GARY WILSON                                                                  
  Federal Highway System                                                       
  P.O. Box 021648                                                              
  Juneau, Alaska  99802                                                        
  789-9615                                                                     
  Position Statement:  Testified on HB 26                                      
                                                                               
  REPRESENTATIVE TERRY MARTIN                                                  
  Alaska State Legislature                                                     
  State Capitol                                                                
  Juneau, Alaska  99801-1182                                                   
  465-3783                                                                     
  Position Statement:  Prime Sponsor of HB 23                                  
                                                                               
  ROBERT S. HATFIELD, JR., President                                           
  Alaska Railroad Corporation                                                  
  421 W. First Ave.                                                            
  Anchorage, Alaska  99510                                                     
  265-2403                                                                     
  Position Statement:  Spoke against HB 26                                     
                                                                               
  HARRY McDONALD, President                                                    
  Carlile Enterprises, Inc.                                                    
  1524 Ship Avenue                                                             
  Anchorage, Alaska  99501                                                     
  276-7797                                                                     
  Position Statement:  Testified via teleconference in favor                   
                       of selling the railroad                                 
                                                                               
  BOB RUBY                                                                     
  Federal Highway Administration                                               
  P.O. Box 021648                                                              
  Juneau, Alaska  99802                                                        
  586-7180                                                                     
  Position Statement:  Available to testify on HB 26                           
                                                                               
  MARK HICKEY                                                                  
  Hickey and Associates                                                        
  9091 Sheiye Way                                                              
  Juneau, Alaska  99801                                                        
  586-2263                                                                     
  Position Statement:  Lobbyist for Alaska Railroad,                           
                       available to testify on HB 23                           
                                                                               
  JAMES B. BLASINGAME                                                          
  Director of Administration                                                   
  Alaska Railroad Corporation                                                  
  421 W. First Ave.                                                            
  Anchorage, Alaska  99510                                                     
  265-2680                                                                     
  Position Statement:  Available to testify against HB 26                      
                                                                               
  PREVIOUS ACTION                                                              
                                                                               
  BILL:  HB  26                                                                
  SHORT TITLE: PROHIBITED HIGHWAY ADVERTISING                                  
  BILL VERSION:                                                                
  SPONSOR(S): REPRESENTATIVE(S) MENARD                                         
  TITLE: "An Act relating to the control of outdoor                            
  advertising."                                                                
                                                                               
  JRN-DATE    JRN-PG                     ACTION                                
  01/04/93        31    (H)   PREFILE RELEASED                                 
  01/11/93        31    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/11/93        31    (H)   TRANSPORTATION,CRA,JUDICIARY,                    
                              FINANCE                                          
  02/11/93              (H)   TRA AT 05:00 PM CAPITOL 17                       
                                                                               
  BILL:  HB  23                                                                
  SHORT TITLE: MANDATE SALE OF ALASKA RAILROAD                                 
  BILL VERSION:                                                                
  SPONSOR(S): REPRESENTATIVE(S) MARTIN                                         
  TITLE: "An Act mandating the sale of the Alaska Railroad;                    
  and providing for an effective date."                                        
                                                                               
  JRN-DATE    JRN-PG                     ACTION                                
  01/04/93        30    (H)   PREFILE RELEASED                                 
  01/11/93        30    (H)   READ THE FIRST TIME/REFERRAL(S)                  
  01/11/93        30    (H)   TRANSPORTATION,STATE AFFAIRS,                    
                              FINANCE                                          
  02/11/93              (H)   TRA AT 05:00 PM CAPITOL 17                       
                                                                               
                                                                               
  ACTION NARRATIVE                                                             
  TAPE 93-4, SIDE A                                                            
  Number 015                                                                   
                                                                               
  VICE-CHAIR GARY DAVIS called the meeting to order at                         
  5:10 p.m., and requested that REPRESENTATIVE KURT MENARD,                    
  PRIME SPONSOR OF HB 26, begin his testimony.                                 
                                                                               
  HB 26:   PROHIBITED HIGHWAY ADVERTISING                                      
                                                                               
  REPRESENTATIVE MENARD stated that HB 26 was introduced to                    
  address concerns in relation to stepped up efforts by the                    
  Department of Transportation (DOT) advertising regulations                   
  which remove many illegal signs encroaching in the right-of-                 
  way and in the zone beyond the right-of-way along the Parks                  
  Highway and other primary roads.  Rep. Menard said it was                    
  his understanding that the DOT is required to remove the                     
  signs in relation to the new Intermodal Surface                              
  Transportation Efficiency Act (ISTEA) which mandates removal                 
  of the illegal signs or face reduction of 10 percent of                      
  federal funding.                                                             
                                                                               
  REPRESENTATIVE MENARD addressed his concerns regarding many                  
  small businesses, lodges, gas stations and gift shops along                  
  the highway which have had signs for 15 to 20 years.  He                     
  said this has caused problems for many constituents.  Rep.                   
  Menard noted that the DOT has considered the hardship that                   
  removal of the encroachment causes and has worked with the                   
  federal highway administration to develop an airspace                        
  leasing program.  A program was implemented without any                      
  public participation and has not been well received by the                   
  public.  The program allows for signs encroaching in the                     
  right-of-way after someone applies, but the alternative is                   
  that the DOT will remove the encroaching sign since ISTEA                    
  money is in jeopardy for noncompliance.  He said the DOT                     
  says it will cost $750.00 to process each lease under the                    
  airspace leasing program.  Under the airspace leasing                        
  program they are charging $400.00 to the consumer; $100.00                   
  goes to the application fee and $200.00 for the issuance                     
  fee, plus the fair market lease, which in the Rep. Menard's                  
  district costs $100.00 per year.                                             
                                                                               
  REPRESENTATIVE MENARD stated that federal law and state law                  
  are similar and there are several exemptions under federal                   
  law that could apply to Alaska.  The federal law allows for                  
  exemptions which are zoned for industrial or commercial, and                 
  allows for agreement between the state and the federal for                   
  areas that are not zoned commercial.  In discussions with                    
  the DOT, Rep. Menard felt that there were some areas along                   
  the Parks Highway which were commercial in nature.  These                    
  included Willow, Houston and other areas.  He noted that an                  
  agreement could allow local government to decide the sign                    
  law and allow for off-premise signs.                                         
                                                                               
  REPRESENTATIVE MENARD indicated this could help many                         
  constituents.  This bill would provide the mechanism for                     
  less restrictive signage in commercially zoned or unzoned                    
  areas which have commercial characteristics.  He stated                      
  local government has the authority to make zoning decisions                  
  and could work with residents to decide the signage controls                 
  in their area.  The DOT could work to establish agreements                   
  with the federal highway system.                                             
                                                                               
  Number 0135                                                                  
                                                                               
  VICE-CHAIR DAVIS asked if there were any questions from                      
  committee members or from witnesses.                                         
                                                                               
  JEFF OTTESEN, from the DEPARTMENT OF TRANSPORTATION AND                      
  PUBLIC FACILITIES, introduced himself for the record and                     
  explained what HB 26 would accomplish compared to what was                   
  currently allowed.  He said current Alaska laws in relation                  
  to outdoor advertising that is not directly related to the                   
  premises is generally disallowed.  This bill would relax                     
  Alaska's law to be in line with federal law and it would                     
  allow these signs in parts of the highway system but not all                 
  parts.                                                                       
                                                                               
  Number 0180                                                                  
                                                                               
  REPRESENTATIVE MACKIE noted that in relation to the position                 
  paper, the DOT indicated it was neutral towards HB 26 and it                 
  would bring both relief and additional work to the crews                     
  with little net change.                                                      
                                                                               
  REPRESENTATIVE MACKIE wanted to know how it would create                     
  additional work with little net change.                                      
                                                                               
  MR. OTTESEN noted these signs would be placed in the                         
  industrial and commercial categories and still must abide by                 
  a number of rules administered by the DOT and the federal                    
  highway administration.  They are required to annually                       
  report those signs and verify that they meet all the rules.                  
  Many areas of the state are prohibited from outdoor                          
  advertising and the pressure in those areas to install signs                 
  would be the same as today.  There will be more work in some                 
  ways and less work in others, he said, so he did not feel                    
  there would be much impact.                                                  
                                                                               
  Number 0279                                                                  
                                                                               
  REPRESENTATIVE VEZEY asked if there was a reduction in                       
  illegal signs.                                                               
                                                                               
  MR. OTTESEN stated he felt there would be some reduction in                  
  legal signs.                                                                 
                                                                               
  REPRESENTATIVE VEZEY asked if the DOT had requests for signs                 
  in the Fairbanks area.                                                       
                                                                               
  MR. OTTESEN replied that the enforcement had been more lax                   
  in the Mat-Su area; a lot of illegal activity has gone on.                   
  The Interior district has been more forthright for a number                  
  of years, therefore, the pressure is not there.  In                          
  Southeast, there is no any pressure, according to Mr.                        
  Ottesen.  The outcry has come from the areas where there was                 
  less enforcement.                                                            
                                                                               
  REPRESENTATIVE VEZEY stated there had been no problems with                  
  this with his constituents and he noted he was concerned                     
  that if the system was changed that they had become                          
  accustomed to, he might be getting complaints.                               
                                                                               
  MR. OTTESEN stated the other thing he noticed that was the                   
  problem in the Mat-Su and Kenai areas, being south of the                    
  Alaska range, was that they have a heavier forest cover.  A                  
  sign 100 feet from the right-of-way is invisible.  As you                    
  move north, he explained, the vegetation is more sparse.                     
                                                                               
  Number 0338                                                                  
                                                                               
  VICE-CHAIR DAVIS asked if they would be picking up their                     
  enforcement in the Kenai area where he was from.  The                        
  enforcement had been lax, he said, and now that enforcement                  
  has been picked up there have been a lot of complaints.                      
                                                                               
  MR. OTTESEN stated that the history as to how enforcement                    
  got increased needed to be explained.  He said in the past                   
  there had been different levels of enforcement within                        
  different districts or regions of the state.  About three or                 
  four years ago, the types of highways the state started                      
  putting money into and constructing moved from largely urban                 
  routes to rural routes.  As they were doing a project, say                   
  twenty miles along the highway, one of the things they                       
  needed to do before construction was to clear that right-of-                 
  way of illegal signs.  The people twenty miles before and                    
  twenty miles after the section they were working on did not                  
  have to remove their signs.                                                  
                                                                               
  MR. OTTESEN said seeing and hearing about the inequity, the                  
  legislature indicated to the DOT that if they were going to                  
  enforce the rule, they needed to enforce it equally                          
  everywhere.  Shortly after, ISTEA came along and said not                    
  only enforce this rule, but enforce it right now.                            
                                                                               
  Number 0366                                                                  
                                                                               
  TED SMITH, testifying via teleconference from the Mat-Su,                    
  asked Mr. Ottesen why they hadn't used the encroachment                      
  permit process to permit signs other than the lease.                         
                                                                               
  MR. OTTESEN stated that he wasn't real sure of that, but the                 
  DOT requires and allows a third-party into the highway using                 
  that land for an exclusive purpose, such as a sign or                        
  expanded parking.  He noted the DOT does air leases for a                    
  variety of things; in some cases landscaping.  The DOT is                    
  actually required to issue an airspace lease.  That lease                    
  document must be approved by the Federal Highway                             
  Administration and the DOT is required to collect fair                       
  market value rent and turn that rent back into the highway                   
  program.  These are federal regulations and federal statute.                 
                                                                               
  MR. SMITH stated that there is a statute on the books that                   
  authorizes judicial encroachment permits, and in this bill                   
  there is a provision that bus shelters could be a subject of                 
  encroachment permits.  He noted his problem with this was                    
  that a lease seemed like a much more permanent sort of grant                 
  of use, and an airspace lease incurs that there is not                       
  attachment to the land.  He said these things are normally                   
  over turnpikes and things like that where people build a                     
  hotel or a restaurant in an airspace over a highway.  In the                 
  Willow area, according to Mr. Smith, a lot of the right-of-                  
  way is a grant of easement from the original patentees so                    
  there is no airspace lease in the first place.                               
                                                                               
  MR. OTTESEN commented that Mr. Smith was correct, and this                   
  required them to go back and see who owns the underlying                     
  fee. In those cases, the DOT cannot really lease them the                    
  land, but they must permit their activities in their                         
  easement.  That is one place where the encroachment permit                   
  is being used.  The term "airspace lease" is quite confusing                 
  to the public - it is a term that is used in statute and                     
  regulation by the Federal Highway Administration, and it                     
  technically means a lease for occupying the right-of-way                     
  above, at, or below the surface of the earth.  Even though                   
  it seems to be something suspended in mid-air, that is not                   
  the intent.                                                                  
                                                                               
  Number 0399                                                                  
                                                                               
  REPRESENTATIVE MENARD asked MR. GARY WILSON from the FEDERAL                 
  HIGHWAY SYSTEM how strong the enforcement on this mandate                    
  was and if it was uniform among the 50 states.                               
                                                                               
  MR. WILSON stated it was uniform and that it was probably                    
  more stringent in some of the other states than it has been                  
  in Alaska.  They have acknowledged the wide, uncleared                       
  rights-of-way in Alaska that has created problems for                        
  businesses, and so in the past they haven't pushed this too                  
  hard.  However, now that the ISTEA legislation is here, they                 
  almost have to.                                                              
                                                                               
  REPRESENTATIVE MENARD asked if there was a time period that                  
  they had in relation to the time period.                                     
                                                                               
  MR. WILSON replied that there was 90 days in the statute to                  
  remove all illegal signs.  The illegal signs they were                       
  referring to were outside the highway rights-of-way.  He                     
  said ISTEA didn't really pertain to encroachments within the                 
  right-of-way, they've always been illegal and the DOT has                    
  always tried to require removal.                                             
                                                                               
  Number 0425                                                                  
                                                                               
  REPRESENTATIVE MENARD asked, In so far as fees that the DOT                  
  charged on permits or airspace agreements, were there any                    
  federal requirements that establishes that certain fees had                  
  to be charged on those areas?                                                
                                                                               
  MR. WILSON replied that U.S. Code, Title 23, requires that                   
  fair market value be charged for all non-highway uses of the                 
  highway right-of-way.                                                        
                                                                               
  Number 0430                                                                  
                                                                               
  REPRESENTATIVE MENARD asked if that was assessed every five                  
  years.                                                                       
                                                                               
  MR. WILSON replied that it was not specific and that the                     
  leases are renewable annually.  Fair market value is charged                 
  when it is renewed annually.                                                 
                                                                               
  Number 0436                                                                  
                                                                               
  VICE-CHAIR DAVIS spoke to Mr. Wilson and indicated that he                   
  understood that Mr. Wilson seemed to be searching for a word                 
  that applies to the situation, and he felt that the federal                  
  and state has been handling their enforcement by                             
  "accommodating" (might be the proper word).  He said there                   
  is definitely a problem and always has been.  The state has                  
  a wide right-of-way and everybody wants their signs to be                    
  seen.  A lot of expense has gone into signs, and to have                     
  someone come down and tell them they have to tear it down is                 
  definitely a problem.  There are some five thousand to ten                   
  thousand dollar illegal signs in the right-of-way.  The                      
  effort is definitely needed.  There has been an attempt by                   
  the federal government, the TODS (Tourist Oriented                           
  Directional Signs) program.                                                  
                                                                               
  MR. WILSON what the TODS program was to Mr. Ottesen.  He                     
  said the TODS program is an optional program authorized by                   
  the federal highway administration.  The ISTEA not only                      
  authorizes the TODS program, it encourages the states to go                  
  forward with the program.  Alaska has had a program for the                  
  past five years and TODS is part of the solution.  He stated                 
  it works for some businesses but not all.                                    
                                                                               
  MR. WILSON stated that the primary beneficiaries of TODS are                 
  businesses not in the highway, but back from the highway.                    
  The program is specifically not allowed for someone who has                  
  highway frontage and has the ability to have an on-premise                   
  sign that has the ability to be seen, unless they are in a                   
  situation created by topography, vegetation, or some other                   
  feature that makes them invisible to a traveller going down                  
  the highway.  The TODS is available to any business that can                 
  demonstrate that 25 percent of their annual revenue comes                    
  from people who are not local.  A dry cleaner is probably                    
  not an eligible business, but a hardware store might be.  It                 
  is also eligible to businesses up to 25 miles off the                        
  highway.                                                                     
                                                                               
  Number 0514                                                                  
                                                                               
  REPRESENTATIVE HUDSON moved to pass HB 26 out of committee                   
  with individual recommendations.                                             
                                                                               
  Number 0518                                                                  
                                                                               
  REPRESENTATIVE VEZEY objected, noting the amount of                          
  materials in the packet and new information to ingest.                       
                                                                               
  Number 0520                                                                  
                                                                               
  REPRESENTATIVE HUDSON removed his motion.  He announced that                 
  HB 26 would be held over for further consideration before                    
  the committee.                                                               
                                                                               
  HB 23:  MANDATE SALE OF ALASKA RAILROAD                                      
                                                                               
  Number 0551                                                                  
                                                                               
  VICE-CHAIR DAVIS referred to the next item on the agenda, HB
  23, and indicated that this was merely a work session on the                 
  bill; no official action would be taken.  He invited the                     
  sponsor of HB 23 to come and testify before the committee.                   
                                                                               
  Number 0561                                                                  
                                                                               
  REPRESENTATIVE TERRY MARTIN began his testimony by stating                   
  that Alaska was approaching a very important date that very                  
  few people realize has a significant difference to the                       
  future of Alaska.  He said on January 7, 1995, Alaska will                   
  have full ownership of all the property transferred from the                 
  federal government to the state government for operation of                  
  the Alaska Railroad.  He stated there has been a significant                 
  decrease for the federal government.  Over the years, there                  
  has been significant concern by various businesses in the                    
  free enterprize system, by the truckers association and                      
  other groups, who are concerned with Alaska competing                        
  against free enterprize.                                                     
                                                                               
  REPRESENTATIVE MARTIN felt it was appropriate for the                        
  legislature to look into the future of the Alaska Railroad                   
  Corporation to see if they want to keep, sell, or look at                    
  other options.  He felt it was important to look at the                      
  Alaska Railroad, give it a true evaluation, and find out all                 
  aspects now in relation to what do we have, how it is                        
  competing, and has it been beneficial to the free market?                    
  What would be gained if the railroad was sold, he asked, and                 
  what would be lost?  Take a look at all the pros and cons,                   
  he said.                                                                     
                                                                               
  REPRESENTATIVE MARTIN indicated it would be a good idea to                   
  take the hearings up into the Interior and into Anchorage                    
  and discuss this with the union people, railroad people,                     
  hotel people, tourism; basically, all aspects.                               
                                                                               
  Number 0580                                                                  
                                                                               
  REPRESENTATIVE MARTIN asked if it would be better for                        
  society to consider a private railroad.  He asked if we                      
  could do better selling the railroad and leasing out the                     
  land, and to what degree of taxation would Alaska gain                       
  revenues.  He indicated there were so many questions that                    
  could be asked, but he felt that they needed to be asked in                  
  order to get an understanding as to what the state had in                    
  the railroad.                                                                
                                                                               
  REPRESENTATIVE MARTIN stated he wanted to make it very clear                 
  that he did not have any hang-up, and that he did believe in                 
  the free enterprize system; and through the evaluations and                  
  work you would see if this is harmful to competition or                      
  beneficial to competition.  Rep. Martin indicated that these                 
  questions must be answered in what is best for Alaska.                       
                                                                               
  Number 0603                                                                  
                                                                               
  REPRESENTATIVE VEZEY indicated he believed very strong in                    
  the free enterprize system, but one question he felt should                  
  be looked at was increased capitalization of the railroad.                   
  In his opinion, more track needed to be built.  Rep. Vezey                   
  said he would not want to jeopardize the state expansion of                  
  the track.                                                                   
                                                                               
  Number 0610                                                                  
                                                                               
  REPRESENTATIVE MARTIN replied that a lot of people said                      
  let's expand to the Canadian Railroad, let's make it cheaper                 
  for the Interior to receive merchandise, let's make it                       
  better for Mat-Su Valley to ship out coal and timber.  He                    
  said there are a lot of reasons and options perhaps to                       
  expand the railroad.  He wanted to look at the future, and                   
  to what degree the state will get involved if it is sold or                  
  kept.                                                                        
                                                                               
  TAPE 93-3, SIDE 2                                                            
  Number 010                                                                   
                                                                               
  REPRESENTATIVE MENARD stated that it would be expensive to                   
  do a full evaluation and it would be hard to get figures as                  
  to what the value of the railroad is.                                        
                                                                               
  Number 010                                                                   
                                                                               
  REPRESENTATIVE MARTIN stated that HB 23 is only a vehicle to                 
  begin looking at the whole issue, as to what revenues it                     
  might generate as a private business.  The hotel people are                  
  concerned about hotel agreements.  This is just a vehicle                    
  for the committee to determine whether they want to look                     
  into this.                                                                   
                                                                               
  Number 058                                                                   
                                                                               
  BOB HATFIELD, PRESIDENT, ALASKA RAILROAD CORPORATION, began                  
  his testimony by stating that he was disappointed that this                  
  bill was to start discussion rather than engineer the sale                   
  of the railroad, since it is disruptive to negotiations with                 
  potential clients and with employee unions.  Action on                       
  legislation such as this where ownership is in doubt makes                   
  borrowing and financing more difficult.  He referred the                     
  committee to the Alaska Railroad position paper.                             
                                                                               
  MR. HATFIELD indicated he did not know whether legislation                   
  at this time was appropriate in order to answer the                          
  questions presented by Rep. Martin was asking.  He said tt                   
  is terribly expensive to do this.  The costs to sell the                     
  Alaska Railroad are unknown.  However, during the transfer                   
  process in 1984 to 1985, the U.S. government spent an                        
  estimated $1.7 million for various studies, appraisals and                   
  financial assessment.  He noted that the state of Alaska                     
  expended an estimated $2.0 million for acquisition                           
  assessments, facilities assessments, legal advice, analysis                  
  of USRA evaluation, and transfer report.                                     
                                                                               
  MR. HATFIELD indicated that he believed the action would be                  
  more of an auction, and it would be incumbent upon the state                 
  of Alaska or somebody to verify information set forth; which                 
  is an extremely expensive endeavor.  In the instance of an                   
  auction, he noted that you may or may not get the highest                    
  value for your money.  In looking at the future of the                       
  operation, he questioned what is it that can be accomplished                 
  by selling it that cannot be accomplished by holding onto                    
  it.                                                                          
                                                                               
  MR. HATFIELD felt that the Alaska Railroad Corp. currently                   
  does a pretty good job providing passenger services for                      
  tourists and residents of the state.  Unless required to do                  
  so, he felt that a private owner would not be interested in                  
  continuing the Whittier shuttle without state subsidy.  A                    
  private owner may not be interested in dropping off people                   
  along the railroad line either.  Those two operations                        
  together currently lose significant amounts of money each                    
  year.                                                                        
                                                                               
  MR. HATFIELD said the railroad also provides a host of land                  
  leases to municipalities and permits for one dollar per                      
  year, he said.  A private owner would certainly change that                  
  to reflect fair market value.  The railroad provides a                       
  number of services for resource development; in particular,                  
  the export coal in Korea, which would be difficult to                        
  characterize that as profitable.  A private industry would                   
  not continue to operate that operation in the way that the                   
  Alaska Railroad Corporation has, according to Mr. Hatfield.                  
                                                                               
  MR. HATFIELD said the state must look at exactly what they                   
  are trying to accomplish with the Alaska Railroad.  He said                  
  the state has a terrific asset with the Alaska Railroad, and                 
  it is something the citizens of Alaska are quite proud of,                   
  and it is something that people have come to rely on; and if                 
  the state tries to sell the railroad, as he had mentioned to                 
  many legislators previously, the transportation business                     
  would have a margin that is razor thin.                                      
                                                                               
  MR. HATFIELD noted that railroads in the United States, in                   
  the past though less so today, have gotten the bulk of their                 
  net revenues in real estate and in that regard, the Alaska                   
  Railroad is no different from any other railroad in America.                 
  In 1992, there was a net revenue of about 2.5 million                        
  dollars. Income from real estate was just a little over 4                    
  million dollars.  He stated they spent 4 hundred thousand                    
  dollars getting at 4 million dollars, and they lost 2                        
  million dollars on the transportation side, so that gave                     
  them the net revenue of about 2.5 million dollars.  As a                     
  rule of thumb, he said, the transportation end loses about 2                 
  million dollars a year.                                                      
                                                                               
  MR. HATFIELD said that any investment the railroad gets from                 
  operations on the company scale comes from real estate.  If                  
  you strip away the real estate from the railroad and try to                  
  operate without the real estate, he stated you would have a                  
  terribly difficult time trying to sell it.  If you put the                   
  requirement on the purchaser that they operate the passenger                 
  services in the same manner as currently operated, you will                  
  have to subtract that from your purchase price.  If you ask                  
  them to handle the sort of resource development that they                    
  currently do, you will have to subtract that from the                        
  purchase price, as well as the net market value versus the                   
  fair market value in relation to the one dollar a year                       
  leases to municipalities.                                                    
                                                                               
  If this sale is not handled properly, according to MR.                       
  HATFIELD, you may be disappointed in the amount of money                     
  offered and you will spend a lot of money getting yourself                   
  there.  If you are trying to appraise the property and                       
  assess the value, that depends entirely upon the sort of                     
  instructions given the appraiser.  If you are pricing to                     
  sell something in 30 days, it has one value.  And if you are                 
  pricing to sell in three years under certain circumstances,                  
  it has an entirely different value.                                          
                                                                               
  Number 0298                                                                  
                                                                               
  REPRESENTATIVE MULDER asked how much the state currently                     
  subsidizes the Whittier run.                                                 
                                                                               
  MR. HATFIELD replied that it was approximately one-half                      
  million dollars.                                                             
                                                                               
  Number 0327                                                                  
                                                                               
  MR. HATFIELD pledged to cooperate with any decisions that                    
  the legislature makes in relation to the sale of the                         
  railroad.                                                                    
                                                                               
  Number 0337                                                                  
                                                                               
  HARRY McDONALD, ANCHORAGE, spoke via teleconference in                       
  reference to HB 23.  He stated the railroad deals with them                  
  in four different ways; as a competitor, a good sized                        
  customer, a landlord in two different locations, and that he                 
  is a citizen and a stockholder.  He felt they had always had                 
  a problem with the socialistic aspects of the railroad, and                  
  competing with them has been a way of life, not a new                        
  concern, such as the hotel people were currently facing.                     
  The largest concern he felt should be changed was the $4                     
  million real estate subsidy that the railroad has.  He felt                  
  that taking the real estate out of the railroad would give a                 
  much more realistic look at what the railroad is really                      
  doing.  He was confident that it could break even without                    
  the subsidy.  That subsidy should be decided by the                          
  legislature, he said, either by reducing freight rates, or                   
  education, or whatever the case might be.  He did not feel a                 
  private sale would ever happen.  He said he would prefer                     
  that a more realistic thing happen, such as taking out the                   
  real estate.  His next option would be taken to a public                     
  stock offering, or just giving everybody in the state a                      
  saleable, tradable, piece of stock.                                          
                                                                               
  Number 0372                                                                  
                                                                               
  REPRESENTATIVE VEZEY said Mr. McDonald had expressed                         
  comments he had heard from a lot of people he knew in the                    
  trucking industry.  Which was that their complaint was not                   
  who owned the railroad, but they felt they were competing                    
  against a subsidized entity.                                                 
                                                                               
  MR. McDONALD stated that he would like to see it privately                   
  owned, so the next best option would be to get the $4                        
  million subsidy out of it, and then if the railroad needs to                 
  come to the state and say they can't provide passenger                       
  service without a million dollar subsidy, then the                           
  legislature can make the decision as to whether they want                    
  the subsidy or not.  He said it isn't possible to tell where                 
  the $4 million is being spent now, it might be subsidizing                   
  BP's pipe grade, or it might be subsidizing mail service to                  
  Whittier.                                                                    
                                                                               
  Number 0400                                                                  
                                                                               
  VICE-CHAIR DAVIS adjourned the meeting at 6:35 p.m.                          

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