Legislature(1993 - 1994)
04/05/1993 08:10 AM Senate FIN
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
Cross-reference to HCS CSSB 183 (Finance), the 1994 capital
budget.
Co-chair Pearce next directed that the committee proceed to
discussion of the proposed new ferry for the ALASKA MARINE
HIGHWAY SYSTEM as well as financing proposals to cover the
cost of construction.
JIM AYERS, System Manager, Alaska Marine Highway System,
Dept. of Transportation and Public Facilities, came before
committee. As background information, he advised that the
department conducted both an economic impact analysis and a
"condition survey of the entire fleet" to determine the
condition of all vessels and what would be necessary to
maintain the fleet into the next century. Approximately 25
hearing were had regarding the Alaska Marine Highway System
and its importance to the state economy and the economic and
social stability of communities. From that information, the
department developed a master plan to refurbish all vessels
but the MALASPINA. Since that vessel is 30 years old, and
no work had been done on it aside from the stretching in the
mid 1970s, the estimated cost for repowering and
refurbishing was $50 to $62 million. A comparative analysis
determined it was more viable to build a new vessel.
The state has, on several occasions (most recently for the
EXXON VALDEZ oil spill), used the ferries in emergency
situations. Emergency response plans for fire, earthquake,
tsunami, etc. involve and include use of one of the marine
highway system vessels. It was thus clear that the new
vessel needed to be ocean-going and have both command
capability and ability to provide assistance to a smaller
fleet of vessels (fishing vessels).
A design contract was let through the RFP process to Glosten
Associates in Seattle. Mr. Ayers noted the presence of Mr.
Van Slyke, an engineer with Glosten. Mr. Ayers further
spoke to the advisability of having a project manager follow
the project through construction and manage both shipyard
activity as well as design. The system contracted with M.
Rosenblatt & Sons, Inc. for that service. Mr. Ayers next
introduced Mr. Richard Ploss, an engineer with Rosenblatt &
Sons.
The conceptual design stage has now been completed. Mr.
Ayers referenced a video outlining the proposed new vessel
and asked that Mr. Ploss provide a narrative. Prior to
commencing the video, Mr. Ayers explained that the vessel
would serve southeast. Since it would be ocean going, it
could also fill in for the TUSTUMENA, allowing the system to
provide service to Kodiak and the Aleutian Chain through
fall and early winter.
(Senator Kerttula arrived at the meeting at this time.)
RICHARD PLOSS, Project Manager, M. Rosenblatt and Sons,
Inc., came before committee and directed attention to a
video utilizing virtual imaging to characterize the proposed
vessel. The new ferry would be 85 feet wide and 380 feet
long. It would have a helicopter pad, and a car elevator
for southwest operation. Vehicle capacity would be
approximately 120 cars. There would be 98 to 104 cabins for
passengers. The vessel would include extensive electronic
communication capability via satellite, ability to convert
to necessary work stations to monitor an oil spill, and a
modular float.
Brief discussion followed between Mr. Ayers and Senator
Kelly regarding lack of establishment of depots by the oil
spill response advisory team and the coast guard. Boom
needed to contain a spill is to be located at depots. The
vessel would have loading capability. DEC modulars with
needed equipment (diving equipment, computers, refrigeration
facilities ) would also be located at specific sites. The
new vessel would be pre-wired for plug in of this equipment
when needed.
Discussion followed between Co-chair Pearce, Senator Kelly,
and Mr. Ayers pertaining to the cost of DEC equipment.
Further comments followed by Mr. Ploss regarding
refrigeration capabilities and the number of cars carried
when the ferry is in use in southwest rather than southeast
Alaska.
In response to a question from Co-chair Pearce, Mr. Ploss
advised that the new ferry would have an ice-strengthened
bow but no ice breaking hull. It will not be able to serve
as an ice breaker. In response to a further question from
the Co-chair, Mr. Ploss said that the new ferry would be
able to come into Cook Inlet during the winter.
Co-chair Pearce inquired concerning the most recent cost
estimate. Mr. Ayers said that at conceptual design stage
the estimate is $85 million. Co-chair Frank asked when a
fixed dollar contract would issue. Mr. Ayers said the state
has been working with the federal government to avoid need
to solicit a low-cost bid which allows a shipyard, through
changes orders, to drive up the price. The preliminary
design will be completed with as much detail as possible.
Bids will be sought from three qualified shipyards. The
project will then be managed so that it is neither low-cost
bid nor cost plus. Those two items cause shipyard prices to
vary radically.
In response to a question from Co-chair Frank, Mr. Ayers
explained that the project would require use of federal
highway dollars. The federal highway regulations bidding
process thus governs. Further discussion followed regarding
pre-qualification of shipyards and evaluation of proposals.
Co-chair Pearce raised concern regarding the financial
capability of shipyards. Mr. Ploss advised that
approximately 17 yards are interested in the project. He
stressed that the pre-qualification procedure is designed to
ensure financial qualification. Mr. Ploss advised of his
belief that 10 to 12 yards could handle a project of this
size.
Senator Sharp raised a question concerning federal
participation in cost overruns. HAROLD MOESER, Construction
Engineer, Alaska Marine Highway System, Dept. of
Transportation and Public Facilities, came before committee.
He said that once the federal government agrees to
participate in a project with the state, it also agrees to
participate in change orders. The only exception is a gross
blunder or negligence.
Discussion followed between Senator Sharp and Mr. Ploss
regarding normal bid and construction procedures versus the
innovative process proposed for the new ferry. Mr. Ploss
said that the federal government is most interested in the
project because it has not previously found an organization
interested in pursuing this type of detail ahead of time.
These procedures are utilized by European and Oriental yards
to bring in quality vessels at cost. The procedure has
twice been used successfully in the United States.
In response to a question from Co-chair Pearce, Mr. Ayers
explained that the governor's budget contains a request for
"$60 million of authorization." Obligation of federal
dollars would be over a two-year period. Authorization is
sought this year so that the project may go to bid. Senator
Kelly voiced his understanding that the total represents
"all the discretionary funding in ISTEA." Mr. Ayers
responded negatively. Mr. Moeser advised that ISTEA allows
approximately $70 million a year in discretionary moneys for
ferry transportation. That competition is nationwide. The
department has dedicated approximately $100 million in ISTEA
moneys for port programs. The $30 million over two years
would be set aside out of ISTEA for system expansion.
Senator Kelly voiced his understanding that under percentage
distribution of ISTEA funding for core roads (50%), boroughs
(35%), and discretionary projects (15%), the new ferry would
utilize all state discretionary moneys for two years. He
further voiced his belief that $85 million sounds soft in
terms of total construction cost.
Discussion of state and federal fiscal years and obligation
of funds over a three-year rather than two-year period
followed between Senator Frank and Mr. Moeser.
End, SFC-93, #47, Side 1
Begin, SFC-93, #47, Side 2
In response to a question from Senator Kelly concerning how
the department intends to fund construction of the new
ferry, Mr. Ayers explained that a combination of state and
federal funds would be used. The system has been working
with the state's Washington, D.C., office as well as
attempting to work with the legislature. The department
hopes to obtain additional funds from Congress for the ferry
as a demonstration project.
Co-chair Pearce inquired concerning the actual number for
the federal match in the governor's budget. She noted
funding of $54.6 million in one document and $60 million in
another. Mr. Ayers voiced his understanding that the
governor's budget requests $60 million in federal
authorization. Backup speaks to $27.3 million for two
years--FY 94 and 95. There is a general pool match of $23
million for the approximate $200 million in federal dollars.
The system would get a proportion of that required match,
approximately $6 million. Mr. Ayers further advised of $15
million in transfers. These are not general fund moneys. A
portion of the $15 (approximately $8.5) derives from a
previous transfer, and $7 million is set forth in the front
section of the operating budget.
Senator Kelly inquired concerning the governor's commitment
to the new ferry versus other projects throughout the state.
Mr. Ayers advised that he could not respond.
Co-chair Pearce inquired regarding the $6.4 million in
funding from the vessel replacement fund set forth in the
governor's capital budget. Mr. Ayers explained that it
relates to the $15 million in transfers. Co-chair Pearce
further pointed to information listing $54.6 million in
federal moneys as the cost of the multi-purpose replacement
vessel. Information further shows funding at $27.3 million
in FY 94 and a like amount in 95 rather than $30 and $30.
Mr. Ayers voiced his understanding that the listed figure
are "as much as we were prepared to commit as coming out of
the ISTEA funds for those two years." The system hopes to
get authorization for those amount and then "hopefully we
would get the additional federal money somehow or we'd take
it into 96." Co-chair Pearce voiced her understanding that
under the scenario described by Mr. Ayers, the project would
still be short federal obligation. Mr. Ayers pointed to
authorization to utilize other moneys, possible need to
extend the project to FY 96, or receipt of additional
discretionary funds from Washington, D. C.
In response to a request from Co-chair Pearce, Mr. Ayers
advised that the balance of the vessel replacement fund is
approximately $4.5 million. The legislature has not
authorized expenditure of those funds. The system has not
requested an appropriation from the fund in the upcoming
budget.
Senator Kelly inquired concerning the amount appropriated
for the replacement vessel up to this time, noting the
$500.0 and the $7.5 million in general funds. Mr. Ayers
concurred in the amounts and advised that they represent
appropriations from the 470 fund. Senator Kelly then asked
how much of the $8 million had been spent. Mr. Ayers
answered approximately $850.0. He further explained that
while the department has authorization to proceed, the
system told the legislature it would return with a
conceptual design prior to proceeding. The Senator next
asked how far the project could proceed without additional
appropriations. Mr. Ayers that he had personally made a
decision to stop the project until "Everyone is comfortable
that we know what it costs and where we're going." The
design phase has been stopped until the legislature
indicates it wishes to proceed.
Further discussion followed between Co-chair Pearce and Mr.
Ayers regarding the $5 to $5.5 million general fund match.
Co-chair Pearce voiced her understanding that the $5 million
designated as "other money" is presently in EXXON VALDEZ
settlement legislation introduced in both the House and
Senate. The $5 million is general fund money returning to
the state as reimbursement rather than mitigation moneys for
expenditures made by the state after the spill. Mr. Ayers
answered, "As far as I know, Madam Chair." Co-chair Pearce
then noted that of the $15 million transfer, the system has
already received $8 million. There is thus a $7 million
gap. Mr. Ayers concurred.
Senator Kelly advised that he was sold on the ship but
questioned the financing plan. He voiced concern regarding
utilization of all ISTEA discretionary funding for two years
and possible need from the mitigation account. The Senator
also advised of need for an indication from the
administration that the proposed replacement vessel is a
priority in terms of general funds. Senator Kerttula
concurred in need for endorsement from the Governor.
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