Legislature(1993 - 1994)
01/20/1994 09:00 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
SB 247 - An Act relating to state leases and to state lease-purchase and lease-financing agreements, and repealing a legislative authorization previously given for acquisition of a facility through a lease-purchase agreement; and providing for an effective date. Testimony was heard in support of SB 247 by Jerry Burnett, aide to Senator Phillips and aide to Legislative Budget & Audit Committee, and Welker, legislative auditor, Legislative Audit Division. The bill was REPORTED OUT of committee as amended with individual recommendations and a zero fiscal note from the Department of Administration. SB 247 - An Act relating to state leases and to state lease-purchase and lease-financing agreements, and repealing a legislative authorization previously given for acquisition of a facility through a lease-purchase agreement; and providing for an effective date. Co-chair Frank announced that SB 247 was before the committee. He invited Jerry Burnett, aide to Senator Phillips and aide to Legislative Budget & Audit Committee, to join the members at the table and speak to the bill. JERRY BURNETT said that on January 12, 1994, LB&A met and voted unanimously to introduce SB 247. It fully implemented a recommendation in a 1993 Office of Management & Budget Audit that said that all real property financing should require approval by the legislature. SB 129 was amended to require all agencies to bring real property financing before the legislature for approval but during the interim further changes to the lease financing statute were needed to provide prior legislative approval for lease financing of real property. It specifically included the court system, the legislature, and cleared up any ambiguity whether or not the University was included in the statute. Mr. Burnett went on to say that the Department of Natural Resources would no longer be able to take title to facilities and act as a nominal lessor as they had with the Wildwood facility, and the Court Plaza Building. The audit on the Wildwood facility contained a legal opinion from Jack Chenoweth, legislative legal services, that questioned the statutory authority of the Department of Natural Resources. Currently in statute, authority existed for Alaska Housing Finance Corp. to issue lease back revenue bonds. Senator Kerttula said he would be delighted to sunset that whole agency and he was not comfortable with leaving the authority there. Co-chair Frank had been thinking the Department of Transportation & Public Facilities could be given the authority. Discussion continued regarding this issue. Mr. Burnett stated that one legal opinion included in the Wildwood audit said that if a state agency took title to a public facility, it could create a debt for the state and may be unconstitutional. A quasi-public corporation such as Alaska Housing had the ability to contract debt. Mr. Burnett said that AHFC was not specifically mentioned in the bill. Discussion was had by Senator Kerttula and Co-chair Frank regarding this issue. Co-chair Frank said he wanted to answer the question of who should own these buildings. He felt SB 247 was adequate but he proposed a letter of intent that said DNR was an inappropriate agency for the lessor and if legislation were to authorize in the future, the Department of Transportation & Public Facilities would be the owner/manager agency. RANDY WELKER, legislative auditor, Legislative Audit Division, agreed that a letter of intent such as outlined by Co-chair Frank would be acceptable. In the audit, the concern was over financing and DNR was not authorized to do this type of financing. In statute, AHFC would have that authority. Senator Rieger noted that on page 5, where it stated an appropriation would constitute approval, it seemed that an appropriation could be approved and if it was a lump sum, the legislature could inadvertently approve something they did not wish to approve. He wanted the wording to be more specific. Mr. Welker said that the section Senator Rieger was referring to dealt only with leasing. This meant that the appropriation it referred to dealt only with the lease for the first year. Senator Rieger withdrew his objection. Mr. Welker brought up to minor modifications to the bill on page 6, line 16, and again on page 7, line 9. He asked that the word "real" be inserted before "property" to make it clear that it referred to real property. Senator Kerttula MOVED an amendment to make the change proposed by Mr. Welker. No objection being heard, it was ADOPTED. Senator Kerttula MOVED for passage of SB 247 from committee with individual recommendations. No objection being heard, it was REPORTED OUT with individual recommendations. Co- chair Frank, Senators Rieger and Jacko signed a "do pass." Senator Kerttula signed "no recommendation." Note that on January 26, 1994, SB 247 was returned to committee. CSSB 274(2d FIN) was REPORTED OUT again on February 1, 1994. ADJOURNMENT The meeting was adjourned at approximately 11:00 a.m.
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