Legislature(2001 - 2002)
03/22/2001 01:37 PM Senate TRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
SB 111-BONDS TO FUND PORTS AND HARBORS
SENATOR ROBIN TAYLOR, prime sponsor of SB 111, explained that last
year the legislature passed legislation that provided for upgrading
ports and harbors across the state. This was a major part of the
commitment the legislature made to the taxpayers and voters of
Alaska when it said it would begin addressing the deferred
maintenance needs in the five year plan. Because ports and harbors
do not fall within the statewide transportation improvement plan
(STIP), money was appropriated last year for specific harbors. SB
111 reflects a problem that was occasioned by an amendment made in
the Finance Committee to last year's bill. That amendment provided
that each community would have to pay for and obligate itself to a
bond and, upon accomplishing the repair, the harbor would then be
transferred to the community. None of the communities that he is
aware of wanted to do that. The final version of the bill provided
a mechanism the communities could not take advantage of without
significantly increasing the cost to themselves. The harbors would
not be transferred to the communities until DOTPF signed off on the
repairs. That process has never been used before. The harbors
were originally built with 50 percent federal money and 50 percent
state money. Unfortunately, the state never set up an account to
maintain the harbors.
SENATOR TAYLOR explained that the only difference between SB 111
and last year's bill is that SB 111 would fund harbor repairs in
the same way they have been funded in the past, through general
obligation bonds. Those bonds are backed up by a $50 million
appropriation that the state receives from the Alaska Housing
Finance Corporation. That appropriation accomplishes the purpose
of funding these projects. He hopes that additional funds will be
forthcoming from AHFC and that the legislature will hold to its
commitment made last year.
SENATOR TAYLOR recommended two amendments to the committee: one by
Senator Elton for funding to renovate the harbors in Juneau; and
one that includes the Adak small boat harbor at a cost of $500,000.
The Adak small boat harbor could play a large role in fisheries in
that area, especially small boats that deliver to the processing
plants. He pointed out SB 111 will need to be accompanied by a
companion bill that will provide for the transfer of the harbor
facilities and require the communities to be responsible for harbor
maintenance.
SENATOR TAYLOR moved to adopt CSSB 111(TRA). There being no
objection, the motion carried.
SENATOR ELTON noted that he hardly ever completely concurs with
Senator Taylor, but SB 111 is one of those instances in which he
does. He believes Senator Taylor is absolutely right. The
deferred maintenance task force and the legislature recognized the
perfect arrangement of constellations in which the state could
bring the harbors up to snuff and then step aside from the ongoing
maintenance responsibilities by turning the harbors over to the
communities. He thinks the communities welcomed that notion
because they recognize that ports and harbors are economic engines.
However, communities were reluctant to take on that responsibility
until the state brought the harbors up to code. SB 111 gets back
to the original intent of the legislature, which was based on the
deferred maintenance task force's recommendations.
SENATOR ELTON noted that the bill may need two other changes that
are technical in nature. He explained that his proposed amendment
(Amendment 1) is on page 2. On line 9, the $34,627,500 total
amount is changed to $41,746,500 and after line 23, a new line is
added that reads, "Juneau 7,119,000." On page 3, lines 22 and 25,
the $34,627,500 total amount is replaced with $41,746,500.
CHAIRMAN COWDERY asked Senator Taylor if he is agreeable to the
amendment.
SENATOR TAYLOR said he is.
SENATOR ELTON moved to adopt Amendment 1. There being no
objection, the motion carried.
CHAIRMAN COWDERY took public testimony.
MR. CHARLIE BRANCH, City of Cordova Harbor Department, stated that
last year's last minute change put the transfer of ownership of
harbors on the municipalities first and promised to reimburse for
repairs after. He is glad to see the return to the original
intent. He supports CSSB 111(TRA).
MR. RAY MAJESKI, Sitka Harbormaster, commented that he appreciates
Senator Taylor's effort. Sitka has been eager to take over the
three state-owned harbors, but it needs the money to do the
repairs. Sitka needs the harbors repaired and transferred as
quickly as possible. Any further delay will cause the harbors to
fall into more disrepair and cost more as time goes on. DOTPF's
repair estimates are already two years old. It is critical that SB
111 pass quickly with no strings attached. Obtaining permits for
repairs could take up to five years.
Number 9993
SENATOR TAYLOR asked if the City of Sitka has already initiated
some of the emergency repairs without state funding.
MR. MAJESKI said the A, B, C, and D floats at Old Thompson Harbor
were sinking so the City appropriated $156,000 to replace
floatation and do some structural repairs.
SENATOR TAYLOR commented that some of these cities are so desperate
they are having to go into their treasuries to repair state-owned
harbors.
MR. BILL McLENDON, Acting City Administrator of Sitka, said he is
encouraged about returning to the original plan of action, that
being the money up front with no strings attached.
MS. NANCY PETERSON, Assistant City Manager of Valdez, said the City
of Valdez is very supportive of CSSB 111(TRA). She agrees with Mr.
Majeski that passing the bill this year would be very beneficial.
The City of Valdez is in need of the money now and costs are
increasing on a daily basis.
The moderator from the Petersburg LIO informed Chairman Cowdery
that Daniel Hickman would like to testify and that four other
participants from Petersburg concur with Mr. Hickman's position.
Those participants are Dean Weeden, Mark Jensen, John Stromdahl and
John Deboer.
MR. DANIEL HICKMAN, a member of the Petersburg harbor board, said
he is speaking for the members of the harbor board, most of which
were present. The board supports CSSB 111(TRA). Petersburg's
harbors are in definite need of renovation and some construction.
The board recognizes that the harbors hold an important economic
position in the community. He asked whether the bill contains any
local bond requirements or responsibilities and what the intent and
timeline is to transfer the harbors to the municipalities.
SENATOR TAYLOR explained that two bills will be necessary to
accomplish this purpose. One bill will provide for the
appropriation and the second bill will provide for the substantive
change in law. The second bill will provide for the transfer of
the harbors to the communities from the state upon the completion
of the repairs. He assumes the repairs will have to be done to
both DOTPF's and the communities' satisfaction. That bill will
probably be filed by Monday.
Number 615
MR. ROBERT PRUNELLA, City Manager of Wrangell, said the City of
Wrangell concurs with CSSB 111(TRA) and would like to see it
expedited.
MS. SANDRA MOELLER, President and CEO of the Aleut Enterprise
Corporation, expressed support for CSSB 111(TRA) and the amendment
to include work on the Adak. Adak has a fish processor and is
trying to attract small boats. Adak has five to six vessels that
are less than 60 feet but port facilities are limited and were not
set up to accommodate fishing vessels. Adak contributes to the
general fund through its fish and fuel taxes.
MR. CHRIS GATES, also with the Aleut Enterprise Corporation, told
committee members that the U.S. Navy has condemned the small boat
harbor on Adak. A small boat harbor is important to attracting
businesses and families to the community.
MR. MATT ROWLEY, City of Whittier, stated full concurrence with
CSSB 111(TRA) and the amendments as presented.
MR. JOHN BITNEY, legislative liaison for the Alaska Housing Finance
Corporation (AHFC), said SB 111 is a rewrite of a piece of
legislation that passed last year that made various bond
authorizations. The projects in SB 111 are being added to a
section of last year's bill that authorized AHFC to issue general
obligation bonds whereby the repayment of those bonds was to come
from the $50 million dividend that AHFC provides to the state each
year. The bonds authorized in last year's legislation were closed
on February 7. The full $50 million was pledged as the debt
service payment for those bonds out to fiscal year 2007. At this
time, the full capacity of AHFC to issue general obligation bonds
has been completed. The package that was done completed the
capacity that was made available to the state when AHFC first
started doing this in 1998. This was the first time that a housing
authority had gone out and issued bonds backed by its own credit on
behalf of the state government. He repeated the capacity has been
completed at this time and the full amount of funds have been
obligated into the future.
SENATOR TAYLOR said he understood AHFC's fiscal note but he does
not understand how, under last year's legislation, had each of
these communities gone out and bonded themselves, that legislation
provided the mechanism for reimbursement. He asked if AHFC would
not have had any money available to reimburse those communities
until 2007.
MR. BITNEY replied,
The section in the bill that offered reimbursement to the
municipalities was an offer to these municipalities - the
reimbursement was offered from the state general fund.
The reimbursement in this case here was not intended to
come from AHFC. There were two packages of bond projects
in that bill. There were the reimbursements that I just
discussed, as well as the list of projects that were
added to here. So the projects that we're running in
here were ones that were supposed to be reimbursed from
the state general fund, not from the Alaska Housing
Finance Corporation.
SENATOR TAYLOR asked, had the municipalities gone out and bonded
themselves and rebuilt their harbors last year, the legislature
would have to come up with general funds and there would be no
bonding capacity.
MR. BITNEY said that is correct.
SENATOR TAYLOR said, "Well, I guess we got lied to two ways then,
didn't we? Thank you very much. I appreciate your comments John."
Number 24
KURT PARKAN, Deputy Commissioner of the Department of
Transportation and Public Facilities, introduced Harold Moeser,
DOTPF's harbor engineer. Mr. Parkan said DOTPF shares Senator
Taylor's concern and believes the harbors need to be repaired as
soon as possible and transferred to the communities that are
willing to take ownership of them.
TAPE 01-11, SIDE A
MR. PARKAN explained a few differences between CSSB 111(TRA) and SB
118, the Administration's bill. First, the only difference in the
list of harbors in both bills, aside from Adak and Juneau, is the
inclusion of the Yakutat harbor at a cost of $526,000 in SB 118.
Yakutat is willing to take over its harbor if it is fixed. Second,
the funding mechanism in SB 118 is via certificates of
participation. Deven Mitchell, debt manager for the state, can
speak to the details of that method. He noted SB 118 uses the
marine motor fuel tax as a revenue source and issues debt using
certificates of participation for that debt. That debt would be
issued this fall and the money would go to the communities
immediately after that. The projects could be done as early as
next summer. Using a general obligation bond approach would
require a vote of the people in the next general election in 2002
and the bonds would be sold in the following spring. Essentially,
both proposals look at addressing a need that is recognized by
communities.
SENATOR TAYLOR asked if Adak was a military facility that was
conveyed to a Native corporation and whether the state actually
owns that harbor.
MR. MOESER, Ports and Harbors engineer, DOTPF, said the state does
not own it.
SENATOR TAYLOR asked if that presents a unique question as to
ownership and bonding and the capacity of the state to go in and do
the repairs.
MR. MOESER said that is correct in the way SB 111 is written now.
The bill would take some additional language.
SENATOR TAYLOR said he would hold off on making the Adak amendment
at this time to get clarification on the additional language. He
moved a second amendment (Amendment 2) to include $526,000 for the
Yakutat harbor and to change the totals in the bill to reflect that
addition. There being no objection, the motion carried.
SENATOR TAYLOR then made a conceptual amendment (Amendment 3) to
integrate the funding mechanisms for certificates of participation
and utilization of the marine fuels tax into CSSB 111(TRA) as
opposed to the paragraph that begins, "The bond committee shall
issue ...."
SENATOR ELTON objected and asked Mr. Parkan if, in the process of
giving the money that DOTPF raises by issuing certificates of
participation, DOTPF is required to put strings on how that money
is used and whether communities can determine the priorities on the
harbor fixes that are needed.
MR. PARKAN explained that DOTPF would give the communities the
money and ownership and would lease back the facilities until the
debt was paid off, at which point the transfer would take place.
SENATOR ELTON said he is comfortable with DOTPF giving the
communities the money to fix the harbors in the way the communities
see fit. He is less comfortable if DOTPF tells the communities
which projects the money can be spent on.
MR. MOESER said it is DOTPF's intent to transfer the money with as
few strings as possible. Whatever strings the bonds put on DOTPF
will have to be put on the communities. DOTPF needs to have an
interest in the properties in order to pay off the bonds. He
repeated that DOTPF's intent is to transfer the money to the
communities so that they can implement the projects. The basis of
the estimates is on a "shell," meaning that if DOTPF was going in,
that is where they would put the money. However, DOTPF doesn't
care as long as the money goes into the harbors. He stated the
communities do need to establish their priorities and develop their
projects without any interference from DOTPF.
SENATOR ELTON removed his objection to Amendment 3, therefore it
was adopted.
SENATOR TAYLOR thanked Mr. Moeser for the work he has done in the
communities in his district. All of the harbormasters in his
district appreciate the way Mr. Moeser has assisted them.
MR. MARK HICKEY, representing the Aleut Enterprise Corporation and
the community of Adak, told Senator Taylor that the harbor in Adak
is under the control of the Adak Reeves Corporation, which is a
public non-profit corporation set up under the Base Closing Act.
The agreement has the harbor ultimately owned by the community of
Adak. The community will be voting for incorporation in about 10
days and that community is expected to be set up by July. One
other harbor project in the bill is not for a state-owned harbor,
and that is in Nome. That harbor is owned by the City of Nome. SB
118, which includes Adak and Nome, has a mechanism to accommodate
Senator Taylor's concern. Under SB 118, the state would end up
with a lease-hold interest covering the time period of payment of
the debt so that the process of using the certificates of
participation would be legitimate for both Nome and Adak. He
suggested if the committee is supportive of doing the Adak project,
it could treat Adak consistent with the way it is done in SB 118.
He pointed out the concern Senator Taylor is raising is already in
SB 111 because of Nome. Adak is a little different in that the
harbor is expected to be in the city's hands by August. SB 118
does not allow any money to be spent on Adak unless that happens.
SENATOR TAYLOR said with that thought in mind, he offers Amendment
4, and that is to include Adak at $500,000. He said he is
concerned about that number because he doesn't think Mr. Moeser has
had an opportunity to go out and see that harbor to determine the
true cost of that project. He said that number is soft at this
point but he will offer it as an amendment, as well as a conceptual
amendment (Amendment 5) to include the transitional language (from
SB 118) necessary to allow Nome and Adak to receive funds.
CHAIRMAN COWDERY announced, with no objection, Amendments 4 and 5
were adopted.
SENATOR TAYLOR moved CSSB 111(TRA) from committee with individual
recommendations. There being no objection, the motion carried.
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