Legislature(1995 - 1996)
04/20/1995 01:05 PM House CRA
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* first hearing in first committee of referral
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= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
April 20, 1995
1:05 p.m.
MEMBERS PRESENT
Representative Ivan Ivan, Co-Chair
Representative Alan Austerman, Co-Chair
Representative Kim Elton
Representative Al Vezey
Representative Pete Kott
MEMBERS ABSENT
Representative Irene Nicholia
Representative Jerry Mackie
COMMITTEE CALENDAR
HB 294: "An Act relating to the procurement of construction
contracts for village safe water and hygienic sewage
disposal facilities and to contributions by the users
of the facilities."
HEARD AND HELD
HB 154: "An Act requiring the Department of Law to provide
guidelines regarding unconstitutional state and
municipal takings of private real property; relating to
the taxation of private real property taken
unconstitutionally by state or municipal action;
establishing a time limit for bringing an action for an
unconstitutional state or municipal taking of private
real property; and providing for an effective date."
PASSED OUT OF COMMITTEE
WITNESS REGISTER
WALTON SMITH, City Manager
City of St. Mary's
P.O. Box 163
St. Mary's, AK 99658
Telephone: (907) 438-2575
POSITION STATEMENT: Testified against HB 294
BOB CHARLES, Vice President of Operations
Alaska Council of Village Presidents
P.O. Box 219
Bethel, AK 99559
Telephone: (907) 543-3521
POSITION STATEMENT: Testified against HB 294
GREG CAPITO
Village Safe Water Program
Department of Community & Regional Affairs
400 Willoughby Avenue
Juneau, AK 99801
Telephone: (907) 465-5137
POSITION STATEMENT: Testified against HB 294
TOM QUICK, Vice Mayor
City of Ouzinkie
P.O. Box 110
Ouzinkie, AK 99644
Telephone: (907) 680-2209
POSITION STATEMENT: Testified against HB 294
WILLIAM J. HUNTER, City Manager
City of Bethel
P.O. Box 388
Bethel, AK 99559
Telephone: (907) 543-2047
POSITION STATEMENT: Testified on HB 294
CHUCK EGGENER
Box 232946
Anchorage, AK 99523
Telephone: (907) 349-1010
POSITION STATEMENT: Testified against HB 294
MARIE SANSONE, Assistant Attorney General
Department of Law
P.O. Box 110300
Juneau, AK 99811
Telephone: (907) 465-6726
POSITION STATEMENT: Testified on HB 294
TOM BOEDECKER, Borough Attorney
Kenai Peninsula Borough
177 N. Birch Lane
Soldotna, AK 99669
Telephone: (907)262-4441
POSITION STATEMENT: Testified against HB 154
JON ISAACS
308 G Street, No. 313
Anchorage, AK 99523
Telephone: (907) 349-1010
POSITION STATEMENT: Testified against HB 154
BEN SUDDATH
Mile 1 Nash Road, Box 1291
Seward, AK 99664
Telephone: Not Available
POSITION STATEMENT: Testified on HB 154
BILL CUMMINGS, Assistant Attorney General
Department of Law
P.O. Box 110300
Juneau, AK 99811
Telephone: (907) 465-4164
POSITION STATEMENT: Testified against HB 154
SARA HANNAN
Alaska Environmental Lobby
P.O. Box 22151
Juneau, AK 99801
Telephone: (907) 463-3366
POSITION STATEMENT: Testified against HB 154
TOM BOUTIN, Director
Division of Forestry
Department of Natural Resources
400 Willoughby Avenue
Juneau, AK 99801-1754
Telephone: (907) 465-3379
POSITION STATEMENT: Testified against HB 154
CRAIG LYON, House Researcher
Representative Vic Kohring
Alaska State Legislature
State Capitol, Room 428
Juneau, AK 99801
Telephone: (907) 465-2186
POSITION STATEMENT: Testified in support of HB 154
PREVIOUS ACTION
BILL: HB 294
SHORT TITLE: BIDDING FOR VILLAGE WATER/SEWER FACILITY
SPONSOR(S): REPRESENTATIVE(S) VEZEY
JRN-DATE JRN-PG ACTION
04/05/95 1026 (H) READ THE FIRST TIME - REFERRAL(S)
04/05/95 1026 (H) CRA, LABOR & COMMERCE, FINANCE
04/11/95 (H) CRA AT 01:00 PM CAPITOL 124
04/18/95 (H) CRA AT 01:00 PM CAPITOL 124
04/18/95 (H) MINUTE(CRA)
04/20/95 (H) CRA AT 01:00 PM CAPITOL 124
BILL: HB 154
SHORT TITLE: REGULATORY TAKING OF PRIVATE PROPERTY
SPONSOR(S): REPRESENTATIVE(S) KOHRING,Rokeberg,Kott
JRN-DATE JRN-PG ACTION
02/03/95 237 (H) READ THE FIRST TIME - REFERRAL(S)
02/03/95 237 (H) CRA, JUD, FIN
02/16/95 (H) CRA AT 01:00 PM CAPITOL 124
02/21/95 (H) CRA AT 01:00 PM CAPITOL 124
02/21/95 (H) MINUTE(CRA)
03/01/95 550 (H) COSPONSOR(S): ROKEBERG
03/09/95 (H) CRA AT 01:00 PM CAPITOL 124
03/09/95 (H) MINUTE(CRA)
03/16/95 (H) CRA AT 01:00 PM CAPITOL 124
03/24/95 919 (H) COSPONSOR(S): KOTT
03/25/95 (H) CRA AT 01:00 PM CAPITOL 124
03/25/95 (H) MINUTE(CRA)
04/20/95 (H) CRA AT 01:00 PM CAPITOL 124
ACTION NARRATIVE
TAPE 95-15, SIDE A
Number 000
CO-CHAIR IVAN IVAN called the House Community and Regional Affairs
Committee meeting to order at 1:05 p.m. He noted the members
present at the call to order were Representatives Ivan, Austerman,
Kott, Vezey and Elton. The first bill for consideration was HB 294
-- Village Safe Water Bidding. This was a continuation of the last
meeting. Teleconferenced sites were Fairbanks, Anchorage, Homer,
Kodiak, Mat-Su, Seward, Kenai/Soldotna and Bethel. He invited
Representative Vezey to make opening comments.
HB 294 - BIDDING FOR VILLAGE WATER/SEWER FACILITIES
Number 028
REPRESENTATIVE VEZEY stated he understood previous testimony to
indicate there would be a conflict of the statutes regarding
contracting out the projects and force accounting. He was not
aware of any conflict. Another area of conflicting testimony was
regarding local hire. He pointed out that one of the incentives to
local hire was that communities did not have to pay Little Davis
Bacon wages. If that option was extended to contractors, he felt
it would be a great incentive for them to hire locally. He felt
that the issue of prevailing or legally mandated wages might be an
issue the committee would want to investigate. He indicated the
wages should apply equally. He felt that going to a competitive
wage system would in no way restrict a local community from
participating in the construction projects.
CO-CHAIR IVAN opened the testimony to teleconference participants.
The first site was Bethel.
Number 120
WALTON SMITH, City Manager of St. Mary's, stated that he supported
the intent of the legislation; however, he felt that force
accounting had provided quality work and excellent prices on their
projects. He disagreed with the sponsor's statement that "only by
competitive bidding can we be assured that the funds spent for
these construction projects will result in the greatest value to
the state and the communities involved." He did not believe that
competitive bid process did that. The bidding process would
require more engineering work, time to develop bid documents, etc.,
and delay the projects considerably. He was also concerned that
contractor profit would increase the cost of the projects. With
the city managing the project, profit was not a concern and local
hire was maximized. This also facilitated training locals to care
for and operate the systems once completed. He wondered what kind
of ethical standards were going to be implemented that weren't
already in place. He expressed concern that contractors would
subcontract parts of the jobs with little oversight. It was his
opinion that currently both options, force accounting and
competitive bidding, existed and changing the system would not be
cost effective or efficient.
Number 262
REPRESENTATIVE VEZEY stated that he felt the procurement
procedures allowed for greater flexibility and didn't anticipate
that the competitive bid process would be more costly or time
consuming.
Number 293
MR. SMITH indicated that he felt the flexibility was already in the
statutes. He thought the proposed legislation restricted that
flexibility. He was concerned that this method would require
considerable more documentation and procedures which would be more
costly and inefficient.
Number 348
REPRESENTATIVE VEZEY responded that standard specifications were
commonly utilized on all similar projects. He was concerned that
a system was lacking to judge the efficiency of the programs.
Contractors routinely bid on unit prices and did not require change
orders just because work was added or deleted.
Number 390
MR. SMITH reiterated his fear that this would not allow for the
necessary flexibility to accomplish the project efficiently and
cited examples of situations he had been involved in where there
had been problems. He reinforced his support of force accounting
and local hire.
Number 464
BOB CHARLES, Vice President of Operations, Alaska Council of
Village Presidents, and Chairman of the Rural Alaska Sanitation
Coalition, expressed his opposition to the legislation. He
supported the force accounting concept and believed it promoted and
stimulated the local economy. It gave the communities the ability
to determine how the sanitation project would be implemented. He
felt it was important for the community to establish a feeling of
ownership of the project. He questioned whether the lowest bidder
was always the best. He felt it was essential that an
understanding of village life and the problems involved be a strong
consideration in developing the projects. Most often contractors
did not have this insight or personal investment in the community.
He thought the state should be promoting flexibility instead of
limiting them. He stated that the people he represented were
opposed to the bill.
Number 525
GREG CAPITO, Village Safe Water Program (VSWP), Department of
Community and Regional Affairs, stated that it was his
responsibility to assist with the planning, design, and building of
safe sanitation facilities in the bush. The facilities, once
completed, became owned and operated by the community and are not
owned by the state. He indicated the department opposed the
legislation. It was the VSWP's belief that local government should
decided how a project must be built since they have to own and
operate the facility. Ownership was integral to successful
operation and maintenance of the facility. He stated that
administrators and city managers need as many alternatives as
possible to complete the projects. VSWP encourages a mix of force
accounting and contract construction to accomplish the projects.
He noted that approximately $8 million worth of projects were
currently being bid. The communities need the authority and
responsibility to make these decisions. He felt it was the
contractor's responsibility to adapt to the needs of the remote
communities.
Number 584
REPRESENTATIVE VEZEY asked if it was accurate that local wages were
60 percent of the Little Davis Bacon wages.
MR. CAPITO answered that yes, 60 percent was correct. For a force
account job, the local prevailing rate varied depending on the area
of the state. The wage rate is adjusted up according to the skills
of the job required. He estimated that, for an entry level
position, the hourly rate would be $12-12.50 and up to $17-18 per
hour for a journeyman or skilled person.
REPRESENTATIVE VEZEY estimated those rates to be 35-40 percent of
the Davis Bacon rates. He stated that Davis Bacon rates would run
from a low of about $31-32 to upwards of $41-44 per hour. He
inquired as to why Mr. Capito felt that the contractor would have
to pay Davis Bacon wages.
MR. CAPITO indicated that if local government does the job using
force accounts, the prevailing wage rate of that community is the
one that is employed. If a licensed contractor does the same work
under the statutes, Davis Bacon wage rates kick in.
REPRESENTATIVE VEZEY felt that the law stated that Title 36 wages
were not required on village safe water projects and indicated that
it was not the intent of the legislation to do so. He stated the
funding source was a significant factor in whether the Davis Bacon
wages were used. He also felt that if a contractor hired locally
there was not a need for the cost of a camp.
MR. CAPITO stated that he had never seen a project where a
contractor came into a village and didn't bring his own people.
Housing, water and sewage are considerable problems under those
circumstances.
REPRESENTATIVE VEZEY felt that if a contractor could get employees
for $15 instead of $35, he would hire locally.
MR. CAPITO indicated that the funding source was not the issue, but
that the statute clearly stated that, if the contractor paid the
people, they received Davis Bacon wages; if the local government
employed the workers, the local prevailing wage was used.
TAPE 95-15, SIDE B
Number 000
CO-CHAIR IVAN stated that the complexity of some projects
automatically excludes force accounting in communities, but those
that could be handled at the local level were encouraged,
particularly because of the bad economy.
Number 024
CO-CHAIR AUSTERMAN indicated it was his understanding that, if it
was force accounting, the workers were municipal employees and not
subject to the Davis Bacon; but if the municipality goes to
competitive bid and contracts it out, those contract employees are
subject to Davis Bacon.
REPRESENTATIVE VEZEY stated that it was his understanding the
village safe water project were exempt from Title 36 if the funding
came through that source.
Number 062
TOM QUICK, Vice Mayor of Ouzinkie, President of the Kodiak Island
Village Utility Council, and representing the Kodiak Area Native
Association on the Rural Alaska Sanitation Coalition, wanted to
emphasize cost isn't the only factor. He was concerned about the
quality and on-going serviceability and viability of the projects.
Under force accounting, the local government wasn't in need of the
profit factor as was a private contractor. Contractor interest
tends to be very short-term. Use of local people provides a
community resource and knowledge. He cited problems he had
encountered with contractors working in the villages, such as abuse
of the equipment, use of subcontractors, and a desire to get the
job done too quickly. He expressed a strong concern for
maintenance as an ongoing resource in the state of local Alaska
people to work with when there are problems or needs for future
planning of projects.
Number 230
WILLIAM J. HUNTER, City Manager of Bethel, supported the idea of
competitive bidding in general; however, he felt local governments
needed options other than competitive bidding.
Number 272
CHUCK EGGENER, Sanitary Engineer and Bush Contractor, explained
that he had been a contractor and brought a camp in to do the
projects; however, in the last ten years, he had gone to a small
core group and utilizing local workers, essentially becoming a
force accounting construction management company. He felt that
they build contractor quality projects at 35 percent less cost. He
felt they had an excellent reputation for quality and efficiency.
He thought that the mechanism allowing communities to do force
accounting was working and there were a lot of spin-off benefits to
the local community. He opposed the legislation.
Number 346
REPRESENTATIVE VEZEY asked if there was an effort to establish a
regional wage scale.
MR. EGGENER stated that you couldn't get good performers who are
skilled at their jobs to leave Anchorage for less than Davis Bacon
wages. Local people are available, have a vested interest in the
outcome of the construction, and view it as an opportunity.
Number 375
REPRESENTATIVE VEZEY asked if Mr. Eggener was able, as a
contractor, to pay local or regional prevailing wages, would it
influence his decision as to the source of labor.
MR. EGGENER indicated that it may to some extent, but the bidding
contractor, not knowing his labor, would bid a large contingency
just in case he couldn't get the quality of labor needed.
REPRESENTATIVE VEZEY asked if he was testify the productivity
wouldn't be any more or less, but that in a fixed price or unit
price bid a contractor would have to allow for contingencies.
MR. EGGENER indicated that you were paying a lower wage, but you
were training the individuals.
REPRESENTATIVE VEZEY asked if by hiring workers at 35 percent less,
couldn't you afford to train them.
MR. EGGENER said he thought a contractor would take advantage of
that opportunity.
Number 426
MARIE SANSONE, Assistant Attorney General, Department of Law,
stated that the Department of Environmental Conservation had asked
the Department of Law to review the legislation. She indicated
there were three areas of concern: 1) the bill as drafted
conflicted with the state procurement code in at least one and
possibly several areas that would require amendments to the
procurement code in order to avoid the conflict; 2) the bill was
ambiguous as to whether the recipient of a grant under the village
safe water program under Title 6 could continue to use force
account labor, and there was some ambiguity as to the other
recipients of the other types of grants that are covered by this
bill; and 3) there were a number of provisions, terms and
definitions in the bill that conflicted or differed from other
terminology that was used in the procurement code, in Title 36,
Title 37 or Title 46. She elaborated on these issues and felt that
they needed to be clarified in order to carry out the true intent
of the legislation.
Number 566
REPRESENTATIVE VEZEY asked if she would provide her comments in
writing. He asked for clarification between AS 36.30 regarding
exempting grants.
MS. SANSONE stated the provision of the procurement code that
exempts the grants from the procurement code has the effect of
allowing the grantee to elect to use force accounting. When the
grantee chooses to contract, they were required to follow the
procurement code which would trigger the Little Davis Bacon Act.
Number 604
CO-CHAIR IVAN informed the committee that HB 294 would be held for
more hearings because of the affect it had on over 200 villages in
the state.
HB 154 - REGULATORY TAKING OF PRIVATE PROPERTY
Number 620
CO-CHAIR IVAN then indicated the committee would take up HB 154
sponsored by Representative Kohring. He asked that Co-Chair
Austerman, representing the subcommittee on the bill, discuss the
concerns on the bill.
CO-CHAIR AUSTERMAN stated the recommendations had been distributed
to committee members and Representative Kohring had provided a
response. He noted that it had been suggested that the
subcommittee recommendations be attached and forwarded to House
Judiciary since most of the issues were under their purview.
Number 640
CO-CHAIR IVAN asked for testimony from those on teleconference,
starting with Tom Boedecker of Kenai.
Number 649
TOM BOEDECKER, Borough Attorney for Kenai Peninsula Borough,
expressed his concerns regarding this legislation. He interpreted
the focus of the sponsor to be dealing with takings by regulatory
action; however, the definition of governmental action was too
broad to be limited to that. He also expressed concern regarding
assessments of property which may be redundant in existing law. Of
particular concern to him were the guidelines to be developed by
the Attorney General (AG). Under the bill it was specified the
guideline to be developed by the AG would not alter the law beyond
what the Constitution provides. He felt the AG would be very
conservative in the viewpoints and the guidelines, and would rule
that things were takings much more often than not. It raised the
question of immunity of local officials.
TAPE 95-16, SIDE A
Number 000
JON ISAACS, Anchorage, expressed concern on the current version and
preferred the C version which developed guidelines for government
to follow and has a much more reasonable definition of government
action. It takes into account the effect of government takings on
property tax. He felt the K version of the bill was too broad and
would create a legal and financial nightmare for both state and
local governments and private citizens.
Number 048
BEN SUDDATH, testified via teleconference from Seward, outlining
personal problems he had encountered regarding this issue.
Number 131
BILL CUMMINGS, Assistant Attorney General, Department of Law,
indicated he thought this legislation was quite revolutionary and
felt there were some serious questions that needed to be addressed.
He stated there were provisions in the legislation that were
unconstitutional, ambiguous, and major departures from public
policy. His main concern was the constitutional issues which were
in Section 3 of the bill. He felt there was a question of what the
effect was to be of the guidelines the AG was to prepare. The
Constitution gave only the legislature the right to enact laws.
Under the provisions of the bill, funding of the damage award was
to come from the budget of the agency doing the taking. He
indicated there was a constitutional problem in that appropriations
are made to the agency for certain activities and can't be spent
for other things. Another problem was that a person who suffers a
regulatory taking was to be fully compensated. The problem was the
definition does not include all the constitutional provisions
already provided. The final problem he felt was with the interest
provisions using the London Interbank rate. The norm in Alaska is
to pay the legal interest rate which is currently set by statute at
10.5 percent and also applies in condemnation cases. Many of the
takings in this bill result from physical invasions or depravation
of the benefits of ownership. In the cases where the London
Interbank rate would be lower than 10.5 percent, the people would
have a great chance of prevailing on a constitutional argument that
they were denied equal protection under the law because there is no
logical difference between a person experiencing an administrative
taking and one who experiences a more traditional taking. One
other area of concern was the taking of access from property. The
bill provides that payment be made for depravation of access and is
left with two provisions; to buy out the parcel of land or provide
access to it. Buying out the land is good public policy; however,
providing access in addition to paying for damages is like double
payment.
Number 265
SARA HANNAN, Alaska Environmental Lobby, expressed strong
opposition to the bill. She also expressed strong disagreement
with the idea of passing this legislation on to the next committee
without addressing the problems identified.
Number 318
CO-CHAIR IVAN noted that the subcommittee had brought forward
issues that the House Judiciary Committee would better address.
Number 323
TOM BOUTIN, Director, Division of Forestry, Department of Natural
Resources, stated this legislation would be devastating to the
Alaska Forest and Resources Practices Act. The Act statutorily
requires a great deal of protection of fish habitat and water
quality that are takings under HB 154. In Southeast Alaska alone,
for buffer strips, he felt that the impact could be as much as $200
million. The division's budget was only $7 million annually, which
could not begin to cover the costs. He reiterated that this
legislation had severe ramifications on the Forest Practices Act
and would consider most of their actions as takings, which would be
very expensive.
Number 361
CRAIG LYON, House Researcher to Representative Kohring, stated that
they appreciated the time the committee and subcommittee had taken.
He hoped the memo had addressed some of the concerns of the
subcommittee and supported passing the legislation on to the House
Judiciary Committee.
Number 371
REPRESENTATIVE KOTT stated he was concerned that the response to
the subcommittee's questions had only been received just prior to
the beginning of the committee meeting.
Number 384
REPRESENTATIVE VEZEY moved that the committee pass CSHB 154(CRA)
out of committee with individual recommendations and attach the
subcommittee's letter of recommendations for the next committee of
referral.
Number 392
REPRESENTATIVE ELTON expressed objection. He expressed concern
that the committee should be incorporating village and municipal
input into the legislation. He felt the legislation had tremendous
impact on local governments and should address the issues during
the interim as was the recommendation of the subcommittee. He
noted that the Departments of Law and Natural Resources had
presented many reservations. He expressed a concern on the
retroactivity clause in the bill and felt the committee was not
being responsible. He maintained his objection.
Number 450
CO-CHAIR IVAN asked for a roll call vote. The motion was adopted
with Representatives Austerman, Ivan, Kott and Vezey voting in
favor of the motion and Representative Elton voting against the
motion. Co-Chair Ivan noted that the bill had moved to the next
committee.
Number 458
CO-CHAIR IVAN noted that the next meeting was Tuesday, April 25
which would deal with SB 16, Increased Land Grants to the
University of Alaska, and SB 6, Suspended Driver Licenses/Traffic
Offenses.
ADJOURNMENT
CO-CHAIR IVAN adjourned the House Community and Regional Affairs
Committee at 3:06 p.m.
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