Legislature(1997 - 1998)
02/24/1998 05:04 PM House ITT
| Audio | Topic |
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HOUSE SPECIAL COMMITTEE ON
INTERNATIONAL TRADE AND TOURISM
February 24, 1998
5:04 p.m.
MEMBERS PRESENT
Representative John Cowdery, Chairman
Representative Eldon Mulder
Representative Pete Kott
Representative Gail Phillips
Representative Kim Elton
Representative Reggie Joule
MEMBERS ABSENT
Representative Ramona Barnes
OTHER HOUSE MEMBERS PRESENT
Representative Joe Ryan
Representative Norm Rokeberg
COMMITTEE CALENDAR
* HOUSE BILL NO. 432
"An Act relating to the bond authorization for international
airports revenue bonds; and providing for an effective date."
- HEARD AND HELD
* HOUSE BILL NO. 382
"An Act relating to international airports revenue bonds; and
providing for an effective date."
- BILL HEARING CANCELLED
(* First public hearing)
PREVIOUS ACTION
BILL: HB 432
SHORT TITLE: AIRPORT REVENUE BONDS
SPONSOR(S): REPRESENTATIVES(S) COWDERY
Jrn-Date Jrn-Page Action
02/18/98 2353 (H) READ THE FIRST TIME - REFERRAL(S)
02/18/98 2353 (H) ITT, TRANSPORTATION, FINANCE
02/24/98 (H) ITT AT 5:00 PM BUTROVICH RM 205
WITNESS REGISTER
MARCO PIGNALBERI, Legislative Assistant
to Representative John Cowdery
Alaska State Legislature
Capitol Building, Room 416
Juneau, Alaska 99801
Telephone: (907) 465-3879
POSITION STATEMENT: Provided information on HB 432.
KURT PARKAN, Deputy Commissioner
Department of Transportation & Public Facilities
3132 Channel Drive
Juneau, Alaska 99801-7898
Telephone: (907) 465-6977
POSITION STATEMENT: Testified on HB 432.
MORT PLUMB, Director
Anchorage International Airport
P.O. Box 196960
Anchorage, Alaska 99519-6960
Telephone: (907) 266-2525
POSITION STATEMENT: Testified on HB 432.
CLIFF ARGUE, Staff Vice President
of Properties and Facilities
Alaska Airlines; and Chairman, Anchorage/
Fairbanks Airlines Airport Affairs Committee
P.O. Box 68900
Seattle, Washington 98168
Telephone: (206) 433-3184
POSITION STATEMENT: Testified on HB 432.
LEIF SELKREGG, Program Management Consultant
to Anchorage International Airport and
Department of Transportation & Public Facilities
RISE Alaska
880 H Street, Suite 101
Anchorage, Alaska 99502
Telephone: (907) 276-8095
POSITION STATEMENT: Testified on HB 432.
DAVE EBERLE, Director
Design and Construction, Central Region
Department of Transportation & Public Facilities
P.O. Box 196900
Anchorage, Alaska 99519-6900
Telephone: (907) 269-0780
POSITION STATEMENT: Testified on HB 432.
GEORGE KING, Financial Consultant
HUDSON AIPF, LLC
730 Fifth Avenue, Ninth Floor
New York, New York 10019
Telephone: (212) 333-8684
POSITION STATEMENT: Testified on HB 432.
ROSS KINNEY, Deputy Commissioner
Treasury Division
Department of Revenue
P.O. Box 110405
Juneau, Alaska 99811-0405
Telephone: (907) 465-4880
POSITION STATEMENT: Testified on HB 432.
JOHN UNGAR, Controller
Alaska International Airport System
Department of Transportation & Public Facilities
P.O. Box 196960
Anchorage, Alaska 99519-6960
Telephone: (907) 266-2541
POSITION STATEMENT: Testified on HB 432.
RON SIMPSON, Manager
Airports Division
Federal Aviation Administration, Alaska Region
222 West Seventh Avenue
Anchorage, Alaska 99519
Telephone: (907) 271-5438
POSITION STATEMENT: Testified on HB 432.
MANO FREY, President
Alaska AFL-CIO
2501 Commercial Drive
Anchorage, Alaska 99501
Telephone: (907) 258-6284
POSITION STATEMENT: Testified in support of HB 432.
DUANE HEYMAN, Executive Director
Commonwealth North
Address Not Provided
Telephone: (907) 276-1414
POSITION STATEMENT: Testified in support of HB 432.
RON LANCE, General Manager
United Airlines
P.O. Box 190756
Anchorage, Alaska 99519
Telephone: (907) 218-2625
POSITION STATEMENT: Testified in support of HB 432.
JOE GRIFFITH, Representative
Anchorage Chamber of Commerce
441 West Fifth Avenue
Anchorage, Alaska 99501
Telephone: (907) 272-2401
POSITION STATEMENT: Testified in support of HB 432.
SHERMAN ERNOUF, Special Assistant
to Mayor Rick Mystrom
Municipality of Anchorage
P.O. Box 196650
Anchorage, Alaska 99519
Telephone: (907) 343-4431
POSITION STATEMENT: Testified in support of HB 432.
ACTION NARRATIVE
TAPE 98-1, SIDE A
Number 0001
CHAIRMAN JOHN COWDERY called the House Special Committee on
International Trade and Tourism meeting to order at 5:04 p.m.
Members present at the call to order were Representatives Cowdery,
Phillips and Elton. Representatives Joule, Kott and Mulder joined
the meeting in progress. Representative Barnes was absent.
HB 432 - AIRPORT REVENUE BONDS
Number 0010
CHAIRMAN COWDERY announced the first order of business was HB 432,
"An Act relating to the bond authorization for international
airports revenue bonds; and providing for an effective date." In
his sponsor statement, Chairman Cowdery explained that HB 432 would
provide authorization for the state to issue up to $280 million in
revenue bonds to pay for improvements to the Anchorage
International Airport (AIA). The amount of the bonding
authorization may change depending on information received during
the committee process. He sponsored HB 432 because he supports the
developments and improvements at the Anchorage International
Airport; however, as the committee of first referral, he said it is
the committee's job to develop a complete record on the issues
involved in this project. He said the committee would try to
surface as many questions about the underlying assumptions made to
justify this project, although it may not be possible to get all
the answers. He said that officials of the Department of Revenue,
the Department of Transportation & Public Facilities (DOTPF) and
the Anchorage International Airport may have to work hard to
justify this project.
Number 0038
CHAIRMAN COWDERY announced the committee was scheduled to meet
until 7:00 p.m. and would reconvene at 5:00 p.m. the following
evening at which time he would open up the meeting for questions.
A follow-up meeting will be held in approximately one week.
Number 0059
MARCO PIGNALBERI, Legislative Assistant to Representative John
Cowdery, Alaska State Legislature said this bill amends the
statutory bonding limit for the state of Alaska to seek
international airport revenue bonds. The current limit is
$100,825,000 and this bill would change the limit to $280,000,000.
The difference between the old amount and the new amount is
$179,175,000, which is the amount of new debt proposed to finance
passenger terminal improvements at Anchorage International Airport.
Number 0072
MR. PIGNALBERI continued this increased bonding authority is only
one component of the financing for the proposed airport
improvements. Another component includes federal highway funds for
curbside improvements and a surface transportation access corridor.
A third component is federal airport funding for ramp and airside
improvements. The bonding cap contained in this bill is $25
million less than a similar bill introduced by the Governor. This
bill contemplates an additional $25 million in federal funding;
thus, reducing the amount the state needs to borrow. By taking the
$25 million off the table, it will not be available to expand the
project.
MR. PIGNALBERI said the $179 million in proposed terminal
improvements represents the single largest public works project the
Department of Transportation & Public Facilities has ever
undertaken. The wisdom of taking on such a high amount of debt,
and whether the international airport revenue fund (IARF) can
afford the debt, remains to be proven in the legislative committee
hearing process. Several of the small air carriers have expressed
concern that the proposed project is too large. They voted against
it, but lost. Still, their concerns may be valid and we owe it to
them to make the project no more expensive than is necessary.
Number 0097
MR. PIGNALBERI further stated this bill is also notable for what it
does not contain. It differs from the Governor's proposal in that
it does not change the statutes to allow for undefined brokerage
fees and unspecified obligations to be charged against the IARF.
He noted that Chairman Cowdery as the sponsor of HB 432, would be
willing to entertain narrow amendments, if necessary, and if the
Departments of Revenue and Transportation and Public Facilities can
justify any changes.
Number 0112
KURT PARKAN, Deputy Commissioner, Department of Transportation &
Public Facilities, expressed his appreciation to Chairman Cowdery
for sponsoring HB 432 which the department considers to be an
important project for the state of Alaska. The DOTPF has some
concerns, however, on some of the elements of HB 432, specifically,
the dollar amount.
Number 0128
MR. PARKAN announced that Mort Plumb, Director, Anchorage
International Airport, would be discussing the current status of
the airport and the need for the development of this project. Leif
Selkregg, program management consultant with the firm of RISE,
Alaska who helped develop the program and the scope for the project
will be testifying, followed by David Eberle, Program Director for
Gateway Alaska. Mr. Parkan said that Mr. Eberle is currently the
Director of Construction and Operations for the Central Region at
the Department of Transportation & Public Facilities. His
experience includes projects of this size; he was the project
manager for the Bradley Lake Hydroelectric Plant; and project
director for the northern intertie. The DOTPF felt fortunate to
have someone with Mr. Eberle's experience on board as the project
director for this particular project.
MR. PARKAN noted that following Mr. Eberle's testimony, George King
of Hudson AIPF will discuss the financial package and why this is
the time is now to go forward with this project in terms of
interest rates for bonds and other considerations. Mr. Parkan
asked Mr. Plumb to present his testimony.
Number 0176
MORT PLUMB, Director, Anchorage International Airport, said as
director, he has a responsibility that is vitally important and
very humbling, at times. It's a challenge that he takes very
seriously and a challenge he has dedicated his total professional
efforts, as well as the efforts of the professional airport team,
to manage this resource in the best interest of the state. He said
the terminal's existing deficiencies and need is substantial and
has been carefully documented by a team of experts, along with the
airlines in developing reasonable solutions to these problems. The
growth of aviation and the aviation-related industries, is huge on
a national and global scale. What is being presented to the
committee at this hearing is only a small example of the challenges
facing airports everywhere - updating outdated facilities and
meeting increased need.
Number 0195
MR. PLUMB said the plan being presented is conservative in its
planning assessments. It is a phased approach with planning to the
year 2015, but building to the year 2005. The plan is fiscally
responsible; there are no general funds being used. The plan is a
product of a close working relationship with the airlines which
resulted in a positive vote for the project. Anchorage
International Airport is the entry and exist point for most
traveling Alaskans, tourist and business travelers. The airport is
woefully out of balance at this time. The terminal facilities are
unable to support the growing airside activity. For example, the
airport has only 43 percent needed in the baggage claim area, 40
percent in the ticket lobby and inadequate curbside.
Number 0272
MR. PLUMB recognizes the project as significant, but it is a
project that must happen. The piecemeal approach to airport needs
must be avoided; it's too expensive and valuable ground is being
lost each year as the airport falls further behind in meeting the
increasing facility needs. The plan being presented is the most
cost effective way of keeping Anchorage International Airport as a
part of the statewide economy, provide a safe and good quality
environment for the traveling public, and to protect the investment
of the shareholder's of the state of Alaska.
CHAIRMAN COWDERY thanked Mr. Plumb for his testimony and asked Mr.
Argue to present his comments.
Number 0236
CLIFF ARGUE, Staff Vice President of Properties and Facilities,
Alaska Airlines; and Chairman, Anchorage/Fairbanks Airlines Airport
Affairs Committee, testified offnet from Seattle. He said the
Anchorage/Fairbanks Airlines Airport Affairs Committee is comprised
of 25 airlines who have signed lease and operating agreements with
one or both of the international airports. Last November, the
airlines voted in accordance with the agreement each had executed
and long standing past practice, to approve the financing and
construction of the proposed terminal redevelopment project at
Anchorage International Airport with an estimated total cost of
$191 million. During the voting process, the DOTPF pledged $26.5
million in federal highway funds to the project, leaving a net
total of $164.5 million. The vote also approved the Alaska
International Airport System (AIAS) to issue airport revenue bonds
in an amount necessary to cover the new net project cost, financing
and escalation with the understanding that AIAS would continue to
"use its best efforts to obtain alternate sources of
funding/financing to reduce airline cost exposure." It is the
hope, but not certain at this time, that federal airport
improvement funds will also be available to help in this regard.
MR. ARGUE stated, "Based on this approval by the signatory
airlines, I appear before you today to speak in favor of HB 432
representing those carriers who voted for the project." Having
been involved for nearly 30 years in the planning and development
of airport terminal facilities, he said the work to date on the
Anchorage project is among the most thorough and professional such
effort he has seen. The needs assessment, conceptual solutions and
financing plan were carefully developed by an expert team of
airport staff and consultants. There was excellent coordination
with the airlines at every step in the process.
Number 0271
MR. ARGUE said that his colleagues from a number of other airlines,
including Reeve, Lynden, Northwest, United, Delta, Reno, America
West, Federal Express and UPS all share his feeling on the quality
of the process. The serious deficiencies in the existing Anchorage
domestic terminal are well known, both as documented in the studies
that Mr. Plumb spoke to earlier, and certainly experienced at one
time or another by most people when traveling or meeting someone
who is traveling. The plan to remedy these shortcoming between now
and the year 2005 is sound and conservative. It will provide the
citizens of Alaska and the many visitors from outside a modern,
efficient and functional airport terminal serving the largest city
and air transportation hub of the state. It will also allow
passengers flying out of Anchorage to use the newest technologies
to speed their progress through the terminal. The people at Alaska
Airlines are especially excited about the opportunities this
project presents for offering better customer service as quickly as
possible. He urged committee members as they consider this
legislation, to give the AIAS the maximum flexibility to issue the
bonds necessary for the project all at one time. This is the most
cost effective way to proceed rather than try to phase it. These
bonds will be backed by airport revenues generated from rates, fees
and charges to the airlines and in no way impact the state's
general fund. The additional cost to the airlines, when considered
on a cost per en planed passenger basis, is modest. The AIAS
proposal is a prudent and reasonable approach to funding much
needed improvements to one of the major economic engines of the
state.
Number 0295
MR. ARGUE requested the committee's favorable action to allow this
project to move ahead in a timely and complete fashion. He thanked
the committee for the opportunity to present his comments.
Number 0297
CHAIRMAN COWDERY asked Mr. Argue to explain how the vote approval
process works among the members of the Airline/Airport Affairs
Committee.
MR. ARGUE said that under the agreement, the DOTPF or the AIAS
brings forward a list of capital projects to the carriers. Those
projects are reviewed with the airport and then the voting takes
place where each airline that is signatory to the agreement votes
to either approve or disapprove. In order for a project not to be
approved, it requires 66 2/3 percent of the airlines voting to
disapprove a project, in which case the project is then eliminated
from the DOTPF's capital program that comes forward to the
legislature. However, that is only a one-year deferral and the
following year, if the DOTPF deems the project is still necessary,
it can be brought forward again and presented to the carriers. If
the project is voted down a second time, the DOTPF can still bring
it forward to the legislature. He explained this is a provision
that was negotiated in 1985/1986 when the first agreements were
signed; it's been renewed on two occasions and is similar to what's
found in the voting procedures at various airports. He noted there
are a number of variations on the voting process and this is just
one of them.
Number 0321
CHAIRMAN COWDERY asked if there is a time limit once a project is
approved by the committee.
MR. ARGUE replied, "In this case, we saw a financing plan that
carried out the cost of this project would be spread on the bond
debt service, and I don't have that document in front of me, I
believe it's probably in about the 20 to 25 year time frame.
Normally, most projects that are approved have a life of 25 years.
Some equipment is less than that - I believe it's 10 to 15 years."
CHAIRMAN COWDERY next asked Leif Selkregg to come forward to
testify.
Number 0337
LEIF SELKREGG, Program Management Consultant to the Anchorage
International Airport and the Department of Transportation & Public
Facilities, testified that in September 1996 AIA and the DOTPF
assembled a planning team and initiated the planning process to
develop the AIA terminal master plan for the planning horizon year
2015. He said this planning effort was supported a carefully
developed needs assessment in a phased implementation program
strategy. The planning team is comprised of leading national
aviation planning consultants including TAMS Consultants for
aviation forecasting, Landham (ph) and Brown for terminal master
planning, Joe Hirsch (ph) & Associates for space programming, P &
D Aviation for retail concession planning, and Hudson AIPF for
financial planning. The planning team also includes Alaska based
project management and architectural engineering firms who are
working in the prime contract role, coordinating the multi-
disciplined experts in integrating the plan into the Alaskan
environment, RISE Alaska for program management support, McCool,
Carlson, Green for architectural engineering and R&M Consultants
for civil engineering.
Number 0349
MR. SELKREGG discussed the process utilized to get to this stage.
The planning team has worked closely with the airlines and AIA
management to develop a partnership approach to the planning
process. Based on a series of workshops, meetings and direct
input, a preferred terminal master plan has been approved by the
AIA management and the airlines to address today's needs and demand
to the year 2005, while still maintaining maximum flexibility for
terminal development beyond 2005 to 2015. He commented that
getting to the preferred terminal master plan for 2005 required
that a detailed aviation forecast and needs assessment be prepared.
This was followed by the development of 14 separate master plan
concepts; those master plan concepts were refined down to 4 and
eventually 1 concept with supporting budget, schedule and plan of
finance information which was presented to the committee. He noted
that throughout the entire process there has been a discipline of
internal peer review between the aviation consultants on both the
forecasts and the needs assessment work.
Number 0361
MR. SELKREGG said with regards to the aviation forecast, the TAMS
aviation forecast for domestic enplanement growth at AIA to the
year 2015 is projected to be 3.6 percent. He explained that
forecast growth is shown as a straight line forecast, but in
reality, it's comprised of peaks, valleys and plateaus. Growth at
AIA over the next 10 years is forecast to be 4.8 percent, then
slowing as the forecast horizon gets further away and more
difficult to predict. Historical activity at AIA for the last
seven years shows 4.65 percent growth; the Federal Aviation
Administration (FAA) for AIA for the next 10 years is 4.13 percent
and the Lee Fisher (ph) forecast which was prepared for AIA in 1993
is consistent with the TAMS forecast. To convert the forecast,
enplanements in 1997 were 2,136,000 and predicted to grow to 2.5
million by the year 2000; and 3 million by the end of the year
2005.
Number 0373
MR. SELKREGG said in terms of deficiencies, the domestic south
terminal consists of three major sections which vary in age,
condition and function. Concourse C was built in the 1950s and was
originally designed for small propeller aircraft and has met the
end of its useful life. Concourse B, built in the 1960s, was
designed for jet aircraft with second level boarding and before the
advent of passenger security screening in today's larger aircraft.
Concourse A was built in the early 1980s to accommodate a unique
mixture of secured and not secured flights. Since Concourse A was
built 15 years ago, passenger traffic has increased at AIA by over
60 percent and the standards for security and levels of service
have dramatically changed in the aviation sector.
Number 0381
MR. SELKREGG explained that to meet today's needs and today's
enplanement activities, AIA has only 43 percent of the baggage
claim area required, 40 percent of the ticket lobby area required,
and 89 percent of the jet gates required. There is a significant
imbalance between the airside capacity, at 80 percent, and the
publicside capacity, at 40 percent. He said that because of the
unique peaking of activity at AIA in the summer months, the current
domestic terminal area is at service levels D and F, which is a
rating schedule of A-F. With the imminent demolition of Concourse
C, AIA will be at 75 percent capacity on today's space needs and by
the year 2000 it will be at 60 percent. He pointed out that a
preferred terminal master plan concept has been developed and
approved by the airlines. That came as a result of an intense six
month planning process directly with the airlines requiring a high
degree of involvement from the airlines. An evaluation process was
developed that allowed the airlines to refine the preferred concept
from the original pool of 14 concepts. Meeting with the airlines
on a bi-weekly basis, the airlines input guided the planning team
to the final development of the concept and implementation plan for
construction of new and renovated components in a controlled roll
out, triggered by need.
Number 0346
MR. SELKREGG concluded the concept which has been approved by the
airlines increases the capacity for five new jet gates to the north
and seven new regional parking positions. This would bring the
total number of jet gates to 24 and the regional parking positions
to 20. In order to accomplish this program, there has to be cross-
utilization between jet positions and regional aircraft positions
which requires careful scheduling by the airlines. If the cross-
utilization is not gotten with the airlines, additional jet gates
will be required. The ticket lobby and baggage claim area has been
extended to the west side of the existing terminal, the curbside
and road system will be extended to accommodate the new terminal
area, there will be a new tour group processing facilities and
expanded retail space.
MR. SELKREGG introduced David Eberle who would discuss the schedule
and budget components.
Number 0409
DAVE EBERLE, Director, Design and Construction, Central Region,
Department of Transportation & Public Facilities, said he had been
asked to become the program director for the Gateway Alaska project
and the terminal redevelopment project. Presently, he is involved
in the environmental assessment process for this project, including
public participation and developing schematic designs for the
terminal project. The construction of the project will actually
take place over a five-year-period to help minimize impact on the
airlines as well as the traveling public. The first step will
involve the "enabling projects" which are small projects that are
required in order to first relocate the regional carriers, as well
as Delta Airlines. He explained that Delta Airlines will be
temporarily relocated into the international terminal and the
regional carriers will be distributed through the existing
facility. After the enabling projects, Concourse C will be
demolished, beginning as early as the beginning of 1999.
Immediately following, will be the construction of the replacement
Concourse C which could begin as early as the summer of 1999. It
will take approximately 2 1/2 years to build that portion of the
project. Once that is completed, some of the carriers will be
moved into their permanent relocations, others will be on a
temporary assignment and then the rehabilitation of the existing
concourse will begin in two stages. The west half will be first
and will take approximately one year, between the years 2001 and
2002. The east half will then be done between the years 2002 and
2003.
Number 0430
MR. EBERLE referred to a drawing and explained that as parallel
activities to the concourse development itself, the road work will
be done which consists of widening the access road coming in as
well as a new elevated section of the roadway and curbside adjacent
to the new Concourse C. Also, a return radius will be completed to
facilitate internal circulation within the airport which is
presently not good. The parking area within the loop will also be
improved. In addition to the roadside, airside improvements
including new aprons paralleling the new structures, as well as
some remote field stationing sites and overnight parking for
aircraft away from the terminal will be undertaken.
Number 0437
MR. EBERLE said that's most of the construction elements and
relative timing of those elements. All work will be completed by
the end of year 2003; ready for use in the year 2004.
CHAIRMAN COWDERY referred to Concourse C and asked what the total
extension would be in feet.
MR. SELKREGG responded about 300 linear feet.
Number 0444
REPRESENTATIVE GAIL PHILLIPS asked what plans had been made for the
smaller carriers using Concourse C while it is being rebuilt.
MR. EBERLE said those would be the regional carriers and there are
two possible solutions. Delta Airlines will be moved to the
international terminal, Alaska Airlines could be shifted, which
would allow space for the regional carriers. Or, the regional
carriers could actually move into the old Delta Airlines area.
REPRESENTATIVE PHILLIPS assumed the area would have to be secured
before construction began.
MR. PLUMB confirmed that would be the two options available. The
two gates would need to be secured, as it now an unsecured area.
Number 0454
MR. EBERLE said with respect to project cost, the 1997 estimate
prepared by Mr. Selkregg, is $191 million. If that amount is
escalated to the midpoint of construction, allowing for inflation,
it's about $205 million. The following is a breakdown by feature:
enabling works, approximately $5 million; road and parking portion,
about $34 million; terminal C replacement, approximately $84
million; airside improvements, roughly $38 million; and the
renovation of the existing terminal is about $43 million, for a
total of $205 million. He said the management plan to be used on
this project is basically the same approach he used on Bradley Lake
in the Anchorage/Fairbanks Intertie, and that is to do the majority
of the work through the use of professional consultants with very
little support from the in-house staff, itself. The Department of
Transportation & Public Facilities is not going to be gearing up to
do this project; existing staff will be used but primarily it will
be consultant work. The design work for the terminal and all the
road improvements will be by consultant, the airside improvements
will be split between consultants and in-house staff, using
existing staff, and the project management will be a combination of
existing staff augmented by consultants. He found this to be a
very effective way of managing and it avoids having to gear up an
agency, only to layoff people later on. Other elements he would be
involved with are the road projects between International Airport
Road and the Seward Highway, which will be implemented on an as-
needed basis and are part of the Federal Highway Statewide
Transportation Improvement Program (STIP) process.
Number 0472
MR. EBERLE stated in terms of funding source and plan of finance
for this project, the estimated construction cost is $205 million.
When the bond issuance cost and interest during construction are
added in, the total cost is $230 million. The anticipated funding
sources right now are $204 million in revenue bonds and $26 million
in federal highway monies. In addition, the airport is attempting
to secure additional funds through the Federal Aviation
Administration (FAA) but that is uncertain at this time.
Number 0481
REPRESENTATIVE PHILLIPS wanted to confirm for the record that the
expansion or the work on the pipeline is not part of the project.
MR. EBERLE confirmed that it is not part of the project. He
announced that George King was available offnet to discuss the plan
of finance.
Number 0485
GEORGE KING, Financial Consultant, HUDSON AIPF, LLC, said he would
address certain considerations relating to the financial plan for
the project. The first item he would speak to is the purpose of
the financial plan and the second is to outline the three key
objectives and how those objectives have been met.
Number 0489
MR. KING said the overall purpose of the financial plan is to be
sure that funds will be delivered at the proper time and in the
proper amount to support the project. In order to accomplish this,
three principal objectives were set forth. First, to achieve low
cost; second, to do so with low risk; and third, to maintain high
flexibility. With respect to the first objective, the financial
plan has met this objective in two principal ways. He said first
of all we have the benefit of being in the lowest interest rate
environment experienced in the last 20-30 years. Secondly, we also
have the benefit of favorable federal tax law which allows the
airport to issue tax exempt bonds. This is favorable federal tax
law policy is in effect in recognition of the importance of airport
projects throughout the country to the national transportation
system. This is a discretionary authority that Congress has given
airports at this time.
Number 0497
MR. KING stated the second objective to achieve low cost with low
risk has been met in three ways: 1) All sources of funds of the
financial plan are within the control of the airport and the state
of Alaska, collectively; 2) the plan has no hypothetical sources of
funds on which the project is dependent; and 3) the plan approaches
the funding by securing the complete funding up-front so the
construction team can bid and construct the project in the most
efficient and economical manner.
Number 0509
MR. KING continued the third objection which is to meet the low
cost and low risk objectives while maintaining high flexibility is
met in two principal ways: 1) Incorporated in the bond resolution
is 25 years of flexibility to meet the airport's commitment to "use
its best efforts to obtain alternate sources of funding or
financing to reduce airline cost exposure." This will be done by
imposing a credit mechanism in the bond resolution to reduce on a
dollar-for-dollar-basis the debt service on the bonds, using future
funds received for the project originally financed by the bonds.
MR. KING said in summary, he is very pleased with the plan of
finance in that through a combination of hard work and fortunate
circumstances, he feels very confident that a low cost, low risk,
high flexibility delivery of funds to the project can be achieved
in a timely way.
Number 0522
CHAIRMAN COWDERY thanked Mr. King for his testimony. He referred
to the brochure and asked Mr. Selkregg to explain the scope of the
additional improvements being proposed in a separate cargo master
plan.
MR. SELKREGG responded the master plan for the cargo section is not
a part of the terminal master planning process, so he deferred the
question to Mr. Plumb who has a separate consulting team working on
the cargo master plan.
Number 0532
MR. PLUMB said the cargo master plan is a separate document, but
will incorporate those principals which were found in the master
plan done by Lee Fisher and also incorporate those which are part
of the terminal master plan. Those improvements are yet to be
identified, so the costs will have to wait until the improvements
have been identified. He indicated that many of the improvements
will be programmatic in that as certain facilities are required and
triggered by the demand, the timing will correspond to that demand.
He said, "We, for example, use, I think, approximately around a
million dollars per square foot of taxiway, so depending on how far
up we may have to put a taxiway, you could use that as a ballpark
figure in gauging." In his opinion, it would be inappropriate to
speculate at this time.
CHAIRMAN COWDERY asked if there had always been a separate cargo
master plan in the past.
MR. PLUMB responded no.
CHAIRMAN COWDERY inquired about the funding for the cargo master
plan.
MR. PLUMB recalled it would come from the advance project design
money.
CHAIRMAN COWDERY called on Ross Kinney from Department of Revenue.
Number 0544
ROSS KINNEY, Deputy Commissioner, Treasury Division, Department of
Revenue, said his purpose was to answer questions. He noted that
George King was the financial advisor for this project, and the
Department of Revenue prepared the fiscal notes based on Mr. King's
information.
CHAIRMAN COWDERY noted the fiscal note includes three interest rate
scenarios and asked which rate was the likely rate if the project
was to go forward this year.
MR. KINNEY explained one of the schedules attached to the fiscal
note has the current interest rates, as of this week. The second
schedule adds 100 basis points, or 1 percent, to each of those
rates and was recalculated; and the third schedule adds 200 basis
points, or 2 percent to those rates. He stated, "When we sit here
and take a look at what's going on in the world today, what's going
on in the United States, what's going on with interest rates, we
have to be a little bit careful in that we allow enough wriggle
room, if you will, to ensure that we are not trying to sell a bill
of goods to people that are dealing with the financing of this
project. And I'm talking about the airlines in that case. And we
don't want to create an expectation that we can't possibly meet.
My recommendation to the committee would be take the schedule that
takes the current interest rates, adds 200 basis points or 2
percent to those current rates, and use that as a rule of thumb to
ensure that everyone's on the same sheet of music and agrees that
this project should go forward at that level. That's not to say
that based on the current market conditions, that we would issue
bonds anywhere close to those rates. It would be more likely
somewhere between the rates we see today and the 200 basis points.
If this bond issue takes place within the next eight or nine
months, hopefully we'll see these rates back off somewhat and we
may see some even lower rates. It's really difficult for me to sit
here and tell you that we can peg those numbers."
Number 0578
MR. KING agreed with Mr. Kinney's comments and indicated he had
some numbers to add for consideration to Chairman Cowdery's
question. From 1977 to 1991, municipal market interest rates in
the category where the bonds would be issued, were in excess of 7
percent, with a very brief period where it was below. From 1991 to
1993, long-term rates declined from about 7 percent to about 5
percent.
TAPE 98-1, SIDE B
Number 0001
MR. KING continued that from 1993 to 1994, the rates went back up
from 5 percent to 7 percent. And from 1994 to present, rates came
back down from 7 percent to 5 percent. So, the rates were above 7
percent from 1977 to 1991 and have been within the range of 7
percent to 5 percent from 1991 to the present.
MR. KINNEY added that in January 1998, the state bond committee
issued bonds for the public health facility in Anchorage,
authorized by the legislature a year ago, and the true interest
cost on that project over a 15-year period was 4.389 percent. He
pointed out that debt was issued with credit enhancement, meaning
that insurance had been acquired to guarantee a triple A rate.
CHAIRMAN COWDERY asked if the sale of these bonds would have any
impact on the bonding capacity for the Fairbanks airport.
MR. KINNEY understands the two airports are combined into one
enterprise fund and one of the major considerations in issuing
revenue bonds for airport projects, is the coverage available to
meet the debt service requirements. In this case, the net revenues
of the two airports combined for the international airport system
would be looked at to determine what that coverage is, which in
turn would have an impact on the capacity to issue debt. In short,
it would have an impact on the total amount of debt that could be
issued until the coverage is raised.
CHAIRMAN COWDERY acknowledged that Representative Rokeberg was
present.
REPRESENTATIVE PHILLIPS asked Mr. Kinney if, in the discussion on
the bonding capabilities and the interest on the bonds, had there
been any discussion regarding the additional bonding that the
legislature is considering for deferred maintenance.
MR. KINNEY said this bonding was entirely separate because the
international airports are operated as an enterprise fund and only
the revenues from the airport operations are used to pay this debt.
It has no bearing on the general fund or its capability to issue
debt because the sources of funding are two entirely different
things.
REPRESENTATIVE NORM ROKEBERG believed that Mr. Kinney's warning
about the 200 basis point increase over the market rates is very
conservative. He asked Mr. Kinney to explain the historic
relationship between the 30-year long bond and an equivalent credit
worthiness of a municipal or tax free bond.
MR. KINNEY replied the differential varies and depends on the bond
rating; tripe A, double A or A rated.
REPRESENTATIVE ROKEBERG said to assume it was the same rating as a
30-year treasury bond.
MR. KINNEY believed it would equal somewhere in the neighborhood of
75 to 100 basis points.
MR. KING confirmed that Mr. Kinney's range was correct. He added
that 75 basis points to about 120 basis points is the range, and it
revolves most closely around 75 - 100 basis points.
REPRESENTATIVE ROKEBERG inquired what the time frame would be for
the issuance of the revenue bonds for this project.
MR. KINNEY said with the possibility of interim financing being
looked at, but the bond issue would be close to the first of the
year, 1999. He directed the committee's attention to the schedules
for the fiscal note which indicated the date of delivery of the
bonds was October 1, 1998. There will be a need for financing
early on and one of the things that may be considered in this
project is whether a financing mechanism, called bond anticipation
notes, is used in order to secure some interim financing in a small
amount up-front to carry the project on or whether "we have to go
for the whole ball of wax." He said it is important for the
committee to be aware that this project exceeds the normal
allowances by the Internal Revenue Service (IRS) for having issued
the debt before it is totally committed or spent and a letter may
have to be requested from the IRS to allow that to be done in order
to meet the arbitrage requirements imposed by the IRS. That will
dictate how much interim financing will be necessary and the
possibility exists that it may have to be separated into two
financings because normally the IRS requires that the proceeds of
the bond issues be spent within 36 months unless the IRS has
granted special dispensation to carry those proceeds longer.
MR. KINNEY pointed out there are some restrictions on the amount of
interest that can be earned on the proceeds, and if the yield on
the bonds is exceeded, then the arbitrage calculations would need
to be done and the excess proceeds would be rebated to the federal
government. He acknowledged there are a number of things that come
into play with this project that will dictate where we are, how we
go about it, and certainly interest rates will play a large part of
that.
REPRESENTATIVE ROKEBERG asked if he was correct that there is a cap
on industrial development bonds based on a statewide IRS (indisc. -
mumbling) and there's a cap established by the IRS.
MR. KINNEY confirmed that.
REPRESENTATIVE ROKEBERG asked if these revenue bonds would in any
way interrupt the industrial development bonds available to be
issued in the state of Alaska.
MR. KINNEY responded there is no connection. The competition right
now within the state for those bonds lies with the Alaska
Industrial Development and Export Authority (AIDEA), Alaska Housing
Finance Corporation (AHFC) and the (indisc.) Corporation.
REPRESENTATIVE ROKEBERG asked, "Mr. King, there's been a concern
raised about the gross amount of financing -- you mentioned the
mechanism but -- if in fact the bond issue was issued without or
some $25 million less than has been requested by the
Administration, what would the cost and time frame be to go back to
the marketplace to go out and ask for additional monies for it -
were it to be forthcoming or would it be necessary -- were it
necessary?"
MR. KING said from a cost point of view, it's hard to put an exact
number on it, but he explained what the components of the cost
would be. First, there would be additional transaction costs of
needing to do over again what had been done the first time in terms
of getting the legal disclosure documents together, printing the
official statement, going to market and marketing the bonds,
soliciting the purchasers, and closing the transaction. Those
transaction costs could be calculated fairly specifically. The
second category of cost is the unknown factor of what might happen
to interest rates in the interim period. He said his previous
examples of rate increases between 1993 to 1994 took place over a
12-month period. That would be the principal source of financial
risk.
REPRESENTATIVE COWDERY asked what 100 points would mean in terms of
interest costs for this project.
MR. KING said that 150 basis points on $100 million of bonds, which
is about half of the project, would over the course of the term of
issue cost about $30 million. He offered to calculate 100 basis
points on the entire amount and provide that information to the
committee at the next meeting.
REPRESENTATIVE COWDERY asked how much money was currently in the
international airport revenue fund.
JOHN UNGAR, Controller, Alaska International Airport System,
Department of Transportation & Public Facilities, said on June 30,
the date of the last audit, there was approximately $75 million in
the revenue fund. He pointed out that wasn't idle cash. Under the
bond resolutions and operating agreement, they are required to keep
about $35 million of that $75 million in reserves. The approximate
remaining $35 million is set aside to complete capital projects
that have been appropriated in prior years that are in various
stages of completion. There was an excess of $5 million over what
was required which was returned to the airlines in the following
year's landing fee calculation.
CHAIRMAN COWDERY asked how much debt is currently against the
international airport revenue fund.
MR. UNGAR said there is about $33 million outstanding of debt.
REPRESENTATIVE KIM ELTON said in terms of revenue bonds, his line
of thinking is that the revenue source would pay off the bonds over
time. He referred to page 1, lines 12-14, and said this language
seems to indicate that if revenues are short, the legislature can
appropriate additional funds to pay off the bonds.
MR. KINNEY said that was correct. In the event that the revenues
were short, the legislature could, in fact, appropriate funds.
REPRESENTATIVE ELTON asked if that was fairly standard language.
MR. KINNEY said that gives the bondholders a level of comfort that
they're assuming less risk than normal and the state derives a
benefit as a result of a lower interest rate because of the
perception, real or otherwise, so it is standard language to
include those kinds of things. Some of the language put into the
bill also provides credit enhancement where insurance is bought.
The less risk, real or perceived, results in lower interest rates.
REPRESENTATIVE ELTON said, "Cliff Argue who testified from Seattle
suggested that in the authorizing legislation we ought to give as
much flexibility as possible and I guess one of the questions about
flexibility and I think maybe the representative across from me was
maybe getting to that, also, is that it seems to me that we're
better off if we don't if the additional federal airport dollars
are there -- that we're better off giving enough authority for the
$204 million rather than $179 million because you don't want to
bind the hands too much. I know that there's a bill out there that
we're not discussing, but I wonder if the chairman would give us a
little bit of latitude to talk about that $25 million and whether
or not in the financial markets, given that we don't know whether
that additional money is out there, we're going to be able to
capture it or corral it, you know, whether or not we ought not to
be bonding for -- or giving authority for $204 million rather than
$179 million."
MR. KINNEY responded that looking at it from debt side, he believed
that (indisc.) scale back the scope of the project for that amount
of money and that's obviously one of the things that needs to be
looked at. He added that a statement of sources and uses of funds
has to be provided for potential investors so it is clear the
project is adequately funded and the project will be completed. So
if the feeling is there are not adequate funds to meet that, the
project will have to be scaled back to the level of funding that
can be secured. In conjunction with that, some of the latitude
being discussed deals with some of the language in the Governor's
bill in that it provides some things that have happened in the
financial markets over the last 20 years that's not seen in the
statutory language as it exists today. One of the flexibilities he
thought Representative Elton was alluding to was simply the fact
that interest can be capitalized, credit enhancements can be used,
determine whether interest rate payments will be made monthly,
quarterly, semi-annually or annually, and depending on how
everything fits together will dictate how this package is put
together, with the idea in mind to keep the cost down for the
airlines. He concluded, "So you saw language, proposed amendments
to the existing statute that provided some of those flexibilities
and made some of those provisions extremely clear; that this is
what we're doing, this is how we're doing it, and that goes along
with our effort to try to keep the airlines informed as to what
we're doing and what we're proposing. And they fully understand
these latitudes and they expect that we, in fact, will take
advantage of those that result in savings."
CHAIRMAN COWDERY asked if he was correct in that if, in fact, it is
determined that more money is needed a year or two down the road,
the door has not been closed to an additional authorization.
MR. KINNEY thought it would be up to the airport management and the
Department of Transportation & Public Facilities, but obviously, it
would be possible to come back before the legislature and ask for
additional authorization to issue additional bonds.
CHAIRMAN COWDERY referred to the $25 million in FAA monies
available for this project, and asked if that $25 million was
included in the amount of the bonds, would it be more difficult to
convince the FAA there's a need for the money.
MR. KINNEY said he couldn't answer that question.
CHAIRMAN COWDERY said he had reason to believe the FAA would find
a reason to not hold up the project ....
MR. KINNEY pointed out that Mr. King had stated part of the bond
resolution would include a statement to the effect that in the
event additional money was forthcoming, that money would be
utilized to retire the debt and in turn lower the fee to the air
carriers.
REPRESENTATIVE ELTON asked if the state does bond for the extra $25
million, are there constraints on those funds that aren't in HB 432
or in the Governor's bill?
MR. KINNEY said yes, there are strings attached to this money.
First, the original project must be completed before that money can
be spent for anything other than what was originally specified. It
will probably be set up with a "call feature" that will allow some
of the bonds to be called and retired in the event excess monies
were available. Or those monies could be applied to debt service
before any additional projects would be approved by the legislature
or by the airlines affairs group.
CHAIRMAN COWDERY next called on Ron Simpson to present his
testimony from Anchorage.
RON SIMPSON, Manager, Airports Division, Federal Aviation
Administration, Alaska Region, said his division was responsible
for the administration of the airport improvement program (AIP) and
provide federal funding for airport and (indisc.) development
projects in Alaska. He said based on earlier testimony, it is
clear that HB 432 contemplates an additional $25 million in funding
from the FAA in support of the Anchorage international development
project. He stated, "Let me say first off that we in the FAA
strongly support the development proposals at Anchorage
International. The airside improvement, the terminal expansion, as
well as the access road improvements, we see as vital and important
to the long-term needs of the airport." His comments today would
be directed on financing and funding options in an attempt to give
the committee a perspective as to what is available in the area of
airport improvement funding and what the outlook would be.
MR. SIMPSON pointed out that Anchorage International Airport
receives funding from primarily two categories: Entitlement
funding and discretionary funding. The entitlement funding has
been averaging around $5.5 million a year and is based on a
national formula that's distributed based on the overall AIP
funding levels. It is distributed based on two categories;
passenger entitlement, based on the annual number of passengers who
use the airport, which averages about $2.6 million annually; and
cargo entitlements, based on cargo weigh bills, which averages
about $3 million annually. Those funds are pretty much guaranteed
to the Anchorage International Airport as long as there is an AIP
bill supporting that. The discretionary funding is the second
category and is distributed competitively on a national basis. In
FY 95, Anchorage received $2 million in discretionary funds, $2.1
million in FY 96 and $2.3 in FY 97. However, discretionary funds
are tentative; there's no guarantee. He emphasized that Anchorage
International Airport competes nationally with all other airports
in the same category for discretionary funds. These discretionary
funds are allocated based on priority as defined by the FAA's
national priority system which focuses primarily on safety,
security and capacity enhancements. In order to compete
effectively for discretionary funds, projects submitted must be
high priority projects. With respect to the development plans for
Anchorage which include apron work, terminal work and access roads,
he said the apron work is a relatively low national priority. The
terminal building does not compete at all for discretionary money,
but he understands the access road will be primarily funded with
federal highway dollars.
MR. SIMPSON said in looking at the strategy for FY 98, the FAA is
contemplating about $6.25 million in discretionary requests, he
thought the best advantage for securing discretionary dollars would
be to approach financing these projects through the development of
a letter of intent (LOI). He explained that a letter of intent
primarily is a long-term plan for future commitment of AIP funds
where the project far exceeds the anticipated entitlement levels,
which is the case with Anchorage International Airport. The FAA's
policy on letters of intent emphasizes four areas: 1) the
projects must meet cost benefit analysis based on FAA methodology
and approved forecasts; 2) the projects must significantly enhance
the national air transportation system; 3) the projects must be
ready projects; in other words, the planning, environmental and
design must be completed and a complete funding strategy in place;
and 4) the criteria looked at by the committee in FAA headquarters
in approving letters of intent is the nonfederal financial
commitment portion of the financial plan demonstrating how the
letter of intent would be leveraged from nonfederal sources, such
as airport revenue bonding.
MR. SIMPSON continued the FAA is now in the process of working very
closely with Anchorage International Airport on the letter of
intent package which is due at FAA headquarters on March 1. The
letter of intent description includes (indisc.) at approximately
$13 million, overnight parking positions for passenger carriers at
approximately $6 million, terminal apron reconstruction at
approximately $23 million, including the terminal development,
expansion, as well as replacing old pavement sections. The runway
reconstruction is also included in the letter of intent package,
phase II, at approximately $10.4 million. Overall, the letter of
intent application amount will be about $48 million, but he
cautioned committee members to bear in mind that "in items 1, 2,
and 3 about $38 million is what's being contemplated (indisc.)
including in House Bill 432." The letter of intent can be used by
Anchorage to offset the airport revenue bonding expenditures;
however, it very early in the process and we won't know exactly how
much federal funds will be available in the way of discretionary
dollars for Anchorage International Airport until decisions are
made, probably in June or July.
MR. SIMPSON said also from a funding strategy standpoint, he would
be remiss if he didn't mention how projects of this magnitude are
funded at other major airports throughout the country. He had
spoken to the legislature previously about the importance of
implementing a passenger facility charge (PFC) program in the state
of Alaska. Actually, Anchorage International Airport could be
earning anywhere from $5 million to $6 million annually from PFC
collections. Basically, PFCs are a $3 per passenger user fee for
use of the airport facility and are the most viable way to finance
large airport infrastructure development projects. The PFCs
provide a reliable stream for funding for long-term planning,
especially for terminal building and landside improvements that do
not compete well in terms of the FAA national priority system.
Also, PFC revenues can be used to pay back debt service.
MR. SIMPSON said in any event, the FAA fully supports the projects
at Anchorage International Airport and will do everything possible
to maximum the federal funding available to support these projects.
CHAIRMAN COWDERY announced that Representative Mulder had joined
the meeting.
REPRESENTATIVE ROKEBERG asked how long Mr. Simpson had been in his
current job with the FAA and how long had he been in Alaska.
MR. SIMPSON said he had been in airports program since 1980 and in
the Alaska region since 1991.
REPRESENTATIVE ROKEBERG said that Mr. Simpson had indicated that no
decisions would be made until June or July and asked if he was
referring to decisions made at the FAA level. Also, he inquired if
a congressional appropriation was required to fund the money.
MR. SIMPSON said in answer to the first question, the decisions are
made at the national level by the airports organization in FAA
headquarters; and secondly, the legislative appropriation for the
FY 98 program was passed last calendar year and there is funding
available at this time. The funding he spoke to specifically in
the area of entitlement funding, is available right now for
Anchorage International Airport this fiscal year.
REPRESENTATIVE ROKEBERG asked what the scope of those monies would
be? Would it be the entire $48 million or would it be when the
projects are approved by some trip-wire mechanism that's in the
letter of intent?
MR. SIMPSON explained the letter of intent is a long-term plan and
along with it is a long-term funding strategy, and the funds for
the letter of intent would be paid out over the term of the letter
of intent agreement. So, for a project of this magnitude with a
debt service over a number of years, the letter of intent federal
financial commitment would also be over that term.
REPRESENTATIVE ROKEBERG asked if he was correct in that the money
is available now, but it would be paid out over a year so there
would not be any other congressional funding of the monies.
MR. SIMPSON clarified the letter of intent would primarily be the
request for discretionary funds, which goes through the competitive
process. The entitlement fund is a different pot of money. As the
long term needs of Anchorage International Airport are looked at,
it's not the best strategy to tie up entitlement funds throughout
the term of a letter of intent if other nonfederal funding can be
secured as well. The AIP program is funded through the next two
fiscal years, at which time it will take additional action by
Congress to either extend or prove continuation of the AIP program.
REPRESENTATIVE ROKEBERG questioned if AIP funding was both
entitlement and discretionary funding, but the letter of intent was
discretionary funding.
MR. SIMPSON responded that the letter of intent is basically a
request for discretionary commitment from the federal government.
REPRESENTATIVE ROKEBERG asked Mr. Simpson to expand on his
cautionary comment about tying up entitlement monies.
MR. SIMPSON said the airport does have an option to commit its
entitlement fully to the letter of intent during the period of the
letter of intent, so when other airport development needs that may
develop during the term of the letter of intent agreement are
looked at, it's not always the best strategy to tie up the
airport's entitlements for the entire length of the letter of
intent commitment.
REPRESENTATIVE ROKEBERG asked, "Do you think if we have an LOI
commitment for $48 million, it would hurt our chances to get
additional funds on an entitlement basis?"
MR. SIMPSON said the line of financial strategy would be to commit
a portion of the entitlement funds, but not the entirety. That
would certainly show local commitment to the overall letter of
intent package.
CHAIRMAN COWDERY thanked Mr. Simpson for his testimony and said the
committee may have additional questions later.
MR. SIMPSON acknowledged the funding picture is somewhat complex,
but he said the $25 million contemplated by HB 432 is not
guaranteed and FAA would have to have a good funding strategy as
well as high priority projects to secure that level of funding.
CHAIRMAN COWDERY asked Mano Frey to present his testimony from
Anchorage.
MANO FREY, President, Alaska AFL-CIO, testified that his job often
requires him to travel outside the state, so he is familiar with a
number of airports. He avoids going to Detroit at any cost because
it's a terrible facility with not much hope in the near future of
making it better. He has, however, been in a number of airports
and often thought it would be nice if Anchorage had a facility like
that. He said it is time for Concourse C to go, so he is pleased
to see that one of the first phases would be to get rid of
Concourse C and build a new wing so the traveling public can be
better served.
MR. FREY said that Alaska AFL-CIO, especially the construction
unions that would be involved in this project, fully support the
concept of Gateway Alaska which is much broader than just the
funding of the airport improvements. It includes repairs to
International Airport Road, widening of C Street, and other
improvements. He encouraged cooperation between the legislature
and the Administration in order that this plan may go forward and
avoid any delays which would result in additional spending. He
said this is easily the largest construction project in Anchorage's
near term future and stressed the importance of getting the project
underway as efficiently as possible.
CHAIRMAN COWDERY stated he believed that everyone seated at the
table and the majority of the people support this project. He
thanked Mr. Mano for his testimony and asked Mr. Heyman to testify.
DUANE HEYMAN, Executive Director, Commonwealth North, testified
from Anchorage that Commonwealth North is a public policy research
group with 350 members. On February 10, Commonwealth North passed
a resolution in support of revitalizing the Anchorage International
Airport. They endorsed the revitalization project as approved by
the airlines and have requested the legislature to approve the
authorizing legislation. He said there are a number of reasons for
Commonwealth North's endorsement and emphasized the impact on
Alaska's economy both now and in the future, plus the 11,000 jobs
related to the airport.
CHAIRMAN COWDERY noted that he and most of the other legislators
had received the letter of endorsement from Commonwealth North.
He thanked Mr. Heyman for his testimony and asked Ron Lance to
begin his testimony.
RON LANCE, General Manager, United Airlines, testified from
Anchorage in support of the project and expressed support for the
process of the projects in place. He said it's a very unique
opportunity to participate in this project between the airlines and
the airports and is satisfied that everyone involved has done their
part. After working 12 years at the Anchorage International
Airport, he is aware that the airport needs to be fixed.
Hopefully, this project will take care of that.
CHAIRMAN COWDERY thanked Ron Lance for his testimony and asked Joe
Griffith for his comments.
JOE GRIFFITH, Representative, Anchorage Chamber of Commerce,
testified via teleconference from Anchorage. He said the Anchorage
Chamber of Commerce had passed a resolution supporting this
project.
CHAIRMAN COWDERY noted that the letter from the Anchorage Chamber
of Commerce was in committee files and thanked Mr. Griffith for his
testimony. He asked Sherman Ernouf to testify next.
SHERMAN ERNOUF, Special Assistant to Mayor Rick Mystrom, testified
on behalf of Mayor Mystrom in support of this project.
CHAIRMAN COWDERY inquired if there was anyone else waiting to
testify?
TAPE 98-2, SIDE A
Number 0001
CHAIRMAN COWDERY said the committee would meet again the following
evening at 5:00 p.m.
ADJOURNMENT
Number 0013
CHAIRMAN COWDERY adjourned the Special Committee on International
Trade and Tourism at 6:35 p.m.
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