Legislature(2003 - 2004)

05/03/2004 01:36 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
             SB 396-INTERIOR RIVERS PORT AUTHORITY                                                                          
CHAIR STEDMAN announced SB 396 to be up for consideration. He                                                                   
didn't intend to move the bill that day and there would likely                                                                  
be a committee substitute offered at the next hearing.                                                                          
PAUL FUHS introduced himself and said:                                                                                          
     At the request of  Representative Morgan I helped draft                                                                    
     this legislation and helped him  work on it. It was his                                                                    
     idea  to  provide  a  regional  approach  to  providing                                                                    
     economic development and provision  of some services in                                                                    
     the Interior rivers area.                                                                                                  
     I'll hold  up a  map for  you to  see. It's  all pretty                                                                    
     much small  communities. They're all 80  to 300 people.                                                                    
     They all face a lot of  the same issues of high cost of                                                                    
     energy,   limited   transportation,  limited   economic                                                                    
     development  opportunities  although   there  are  some                                                                    
     pretty good mineral developments in the area.                                                                              
     In studies  on the  area for its  municipal government,                                                                    
     there  isn't  enough  there to  really  justify  it  so                                                                    
     they've really been  looking for the ways  how can they                                                                    
     do some  of the things  that local government  would do                                                                    
     especially  in the  economic development  area. They're                                                                    
     looking  for transportation  -  with  the Donlin  Creek                                                                    
     Mine going in  - to help facilitate that -  some of the                                                                    
     other  mines.  Transportation  in the  area,  the  bill                                                                    
     would allow  them to do  bulk fuel purchases.  It would                                                                    
     allow  them to  look at  inter-ties if  that made  more                                                                    
     sense  and could  provide power  cheaper or  could help                                                                    
     develop  some of  the mining  properties. Also  look at                                                                    
     tourism development in the area.                                                                                           
     In  your   packet  you'll  see   that  all   the  major                                                                    
     landholders  and agencies  in the  area have  supported                                                                    
     this and  are looking  for a  way to  try and  lift the                                                                    
     whole region up.                                                                                                           
     Port  authorities  have  been  used  around  the  world                                                                    
     because they really provide a  clear focus for economic                                                                    
     development  or whatever  purpose they're  put up  for.                                                                    
     We've  seen a  couple of  others. The  Prince of  Wales                                                                    
     Island   Port   Authority   that's  doing   the   ferry                                                                    
     transportation  down  here  has  been  real  successful                                                                    
     [and]  we've got  the Knik  Arm Crossing.  There's also                                                                    
     been   a  proposal   for  airport   authority  at   the                                                                    
     international airports.                                                                                                    
     It provides  a legal framework for  providing financing                                                                    
     for economic  development projects  and I think  one of                                                                    
     the most important provisions that  you want to look at                                                                    
     in the legislation is on page  15. And if I was sitting                                                                    
     in  your  seat,  this  is  one of  the  things  I'd  be                                                                    
     concerned about.  You're setting  up an  authority that                                                                    
     has the  ability to  issue bonds and  go into  debt and                                                                    
     yet  it's set  up  as a  state  corporation and  that's                                                                    
     necessary because there is no local government there.                                                                      
     Alaska's port  authority legislation,  which authorizes                                                                    
     municipalities to  form it -  which I worked on  in '93                                                                    
     with Drew Pearce  - you have to  have municipalities to                                                                    
     do it. The  reason state legislation is  needed here is                                                                    
     because this  is an unorganized  section of  the state.                                                                    
     And I would say that this  is probably one of the first                                                                    
     times  that the  Legislature  is really  acting as  the                                                                    
     borough assembly for the  unorganized borough, which is                                                                    
     one of your  mandates under the constitution.  So it is                                                                    
     one of those steps.                                                                                                        
     The question  would be  if they take  on debt,  is that                                                                    
     something  that the  state  is going  to  end up  being                                                                    
     responsible for? And under this  section, the credit of                                                                    
     the  state is  not pledged.  If they  go out  and issue                                                                    
     revenue bonds, they are dependant  upon the revenues of                                                                    
     the  project. They  have to  pass an  independent third                                                                    
     party   independent  evaluation   by  both   investment                                                                    
     banking firm to  take the deal to Wall  Street and then                                                                    
     for Wall  Street to buy the  bonds so it would  have to                                                                    
     be pretty  strong. If the  project failed, it  would be                                                                    
     the  bondholders  who  would be  responsible,  not  the                                                                    
     State of Alaska. So we gave that protection.                                                                               
     Other than that, the authority  has pretty broad powers                                                                    
     to  act  in  the  interests of  its  residents.  It  is                                                                    
     permissive legislation.  The only thing that  they have                                                                    
     to do  is on  page 23.  They really  have to  come back                                                                    
     with   a  development   plan  and   say:  'Here's   the                                                                    
     transportation  under   regional  development   plan  -                                                                    
     energy and tourism related.'                                                                                               
     The Department  of Environmental Conservation  has been                                                                    
     very  interested in  is regional  landfills and  things                                                                    
     like this where  it can be more efficient.  We've got a                                                                    
     lot of uncovered landfills out  there that are creating                                                                    
     some serious  health issues and  they'd really  like to                                                                    
     have  a  regional entity  to  look  at  to do  it  more                                                                    
     efficiently and to do it better.                                                                                           
     So I  would leave it at  that Mr. Chairman. I  would be                                                                    
     glad  to answer  any  questions that  you  may have.  I                                                                    
     would   just  say   that  part   of  the   reason  that                                                                    
     Representative Morgan asked me to  do this is I've been                                                                    
     involved in  the writing of  almost every  authority in                                                                    
     the state so  far and I also served as  chairman of the                                                                    
     AIDA Board,  the Energy Authority,  and the  State Bond                                                                    
     Committee  so  I   could  answer  questions  concerning                                                                    
     financing also.                                                                                                            
SENATOR GARY STEVENS remarked that  the governor appoints a board                                                               
of directors, but  that board could be  making communities liable                                                               
for bonds. He  asked how the communities buy into  what the board                                                               
has decided to do.                                                                                                              
MR. FUHS told him that  because the communities aren't organized,                                                               
this would be the  debt of the authority as a  whole not of those                                                               
communities.  The entire  region would  take on  the debt  as the                                                               
authority  and  go  out  with revenue  bonds  or  whatever  else.                                                               
There's  no  municipal  tax base  or  general  obligation  taxing                                                               
authority in the area.                                                                                                          
CHAIR STEDMAN questioned whether it would be just revenue bonds.                                                                
MR. FUHS said yes and it  also has the authority to receive funds                                                               
from federal,  state and private  sources. It could  receive land                                                               
or  enter   into  contracts  with  other   entities.  The  Denali                                                               
Commission is  also interested because  they're looking  for ways                                                               
to  do deliver  services more  efficiently in  that area  so they                                                               
would  welcome this  and  perhaps be  able  to provide  technical                                                               
assistance grants  or funding for  projects. Also quite a  lot of                                                               
federal  money has  been identified  for the  Donlin Creek  Road,                                                               
which would connect the two rivers with a port on each side.                                                                    
CHAIR STEDMAN remarked  it's a good concept.  It creates economic                                                               
development   in  the   area  and   some   inter-tie  among   the                                                               
communities,  which  might  raise  the  standard  of  living  for                                                               
everyone in the area.                                                                                                           
SENATOR  GARY   STEVENS  asked  if   this  would  ever   have  an                                                               
opportunity of  moving outside that  specific geographic  area or                                                               
would it be limited to the one area.                                                                                            
MR. FUHS replied  that it's limited to the  described area unless                                                               
the state  changes the  statute to include  other areas.  "But it                                                               
could  just by  contract, memorandum  of agreement  or any  other                                                               
mechanism have  joint ventures or  do things with other  parts of                                                               
the state," he said.                                                                                                            
CHAIR STEDMAN asked him to speak to the board structure.                                                                        
MR.  FUHS  explained that  it's  a  nine-member board.  All  land                                                               
owners  and organizations  in the  area would  propose a  list of                                                               
people to  the governor  who would freely  choose and  then there                                                               
would also be  a couple of public members  chosen. They're trying                                                               
to get everyone in the area that  has a stake in the authority to                                                               
be involved.                                                                                                                    
CHAIR STEDMAN said everyone should be represented.                                                                              
MR. FUHS agreed.                                                                                                                
SENATOR LINCOLN  asked whether  the administration  supported the                                                               
MR.  FUHS said  he  didn't know  whether  the administration  had                                                               
taken  a  formal   position,  but  he  knew  that   some  of  the                                                               
departments were interested in the regional approach.                                                                           
SENATOR LINCOLN said perhaps Representative  Morgan had an answer                                                               
and that  she would like  to hear  from the departments  that had                                                               
expressed support.                                                                                                              
MR. FUHS  told her the  Department of  Commerce, DOT and  DEC had                                                               
expressed interest.                                                                                                             
SALLY  SADDLER  with the  Department  of  Community and  Economic                                                               
Development  stated, "the  concept has  merit particularly  as we                                                               
talk about putting  an economic development entity  in place that                                                               
can help  this region take  control and charge of  their economic                                                               
destiny."  Currently they  are  evaluating the  bill  and if  any                                                               
questions arise they pledge to work toward a resolution.                                                                        
CHAIR STEDMAN asked Ms. Saddler to  be at the next hearing of the                                                               
MS. SADDLER agreed to be at the next hearing.                                                                                   
REPRESENTATIVE CARL  MORGAN, bill sponsor, first  noted that some                                                               
were  concerned  that  there  was  too  much  Native  corporation                                                               
representation  in  the  original   board  composition.  He  then                                                               
explained  that  the board  has  nine  members; three  seats  are                                                               
public  members  appointed  by  the  governor,  one  seat  is  an                                                               
industry member  who is  working in  the area,  and the  rest are                                                               
Native corporation members.                                                                                                     
CHAIR STEDMAN asked him to speak to the fiscal note.                                                                            
REPRESENTATIVE MORGAN said the fiscal note is indeterminate.                                                                    
CHAIR STEDMAN asked  him to talk about the  economic benefit this                                                               
would bring to the region.                                                                                                      
REPRESENTATIVE MORGAN  explained that this area  has been studied                                                               
extensively  and   the  conclusion  is  always   the  same.  It's                                                               
difficult to  do business in  the region, it's  impoverished, and                                                               
it's mineral rich. The Donlin  Creek Mine holds much promise, but                                                               
it's held back because of a lack of infrastructure.                                                                             
SENATOR WAGONER asked what kind  of commercial enterprises are in                                                               
the area currently.                                                                                                             
REPRESENTATIVE MORGAN  told him  that it's largely  barge service                                                               
and air  transportation freight  currently. With  the possibility                                                               
of the road corridor tying  the Yukon and Kuskokwim rivers, it'll                                                               
basically be railroad to rivers to roads to resources.                                                                          
SENATOR   LINCOLN  asked   whether  the   public  members   would                                                               
specifically not be Native.                                                                                                     
REPRESENTATIVE MORGAN said it would be up to the governor.                                                                      
CHAIR  STEDMAN  stated that  neither  nationality  nor ethnic  or                                                               
religious backgrounds  should preclude anyone from  having access                                                               
into and benefit of the economic system.                                                                                        
SENATOR  LINCOLN said  she  appreciates that  very  much and  she                                                               
commended Representative Morgan for  having put the bill together                                                               
at such a late date.                                                                                                            
SENATOR WAGONER  stated that, "just because  they're Natives from                                                               
the Native corporations  and the Native association  sets out the                                                               
representation of those  groups, it doesn't mean they  have to be                                                               
a Native. ...  It doesn't matter. I think if  this thing happens,                                                               
I think it should be controlled by the people in that district."                                                                
REPRESENTATIVE MORGAN added  that this is the first  of its kind.                                                               
It has taken considerable time trying  to get all the entities to                                                               
agree. The  25 villages and communities  are scattered throughout                                                               
the region with  populations that average 225  people. They can't                                                               
support a municipality,  but getting them to work  together was a                                                               
major step.                                                                                                                     
There were no further questions asked of Representative Morgan.                                                                 
BOB  CHARLES, the  Calista Corporation  president, testified  via                                                               
teleconference in  support of SB  396. The measure has  a focused                                                               
approach to  economic development  and they  look forward  to its                                                               
passage so they can get to work.                                                                                                
There were no questions.                                                                                                        
CHAIR STEDMAN  announced he  would hold SB  396 in  committee and                                                               
adjourned the meeting at 3:15 pm.                                                                                               

Document Name Date/Time Subjects