Legislature(2003 - 2004)
03/16/2004 08:04 AM House STA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
ALASKA STATE LEGISLATURE
HOUSE STATE AFFAIRS STANDING COMMITTEE
March 16, 2004
8:04 a.m.
MEMBERS PRESENT
Representative Bruce Weyhrauch
Representative Jim Holm, Vice Chair
Representative Coghill
Representative Seaton
Representative Gruenberg
MEMBERS ABSENT
Representative Lynn
Representative Berkowitz
OTHER LEGISLATORS PRESENT
Representative Beth Kerttula
Senator Kim Elton
COMMITTEE CALENDAR
^OVERVIEW - DEPARTMENT OF TRANSPORTATION/PUBLIC FACILITIES
TAPES
04-35, SIDE(S) A & B
04-36, SIDE(S) A
CHAIR BRUCE WEYHRAUCH convened the meeting of the House State
Affairs Standing Committee at 8:04 a.m.
SUMMARY OF INFORMATION
CHAIR WEYHRAUCH introduced Commissioner Mike Barton, Alaska
Department of Transportation/Public Facilities (DOT/PF); and
Deputy Commissioner Tom Briggs, Director, Alaska Marine Highway
System (AMHS), Alaska Department of Transportation/Public
Facilities. He explained that the House State Affairs Standing
Committee has plenary jurisdiction over DOT/PF relating to
public facilities. Currently, AMHS maintains a headquarters in
Juneau at an area designated as three-mile. The proposed lease
property [Wards Cove Plant] will house the headquarters in
Ketchikan. There is tremendous public interest in this
proposal, therefore, the House State Affairs Standing Committee
is holding this public hearing.
There were no questions from the committee prior to the
beginning of testimony.
CHAIR WEYHRAUCH outlined the points he wanted Commissioner
Barton and Deputy Commissioner Briggs to address as follows: A
background of what the lease is; why the state thinks it is in
the public interest to have this move take place; some of the
background on what led to the decision to have the lease and to
make the move; why it is in the best interest of AMHS to have a
lease on that particular building and move the personnel from
Juneau to Ketchikan; what the beneficial impact is to AMHS; and
what the cost is to the public.
COMMISSIONER BARTON addressed the governor's concern regarding
the fiscal situation and having the state operate in a more
efficient and business-like manner. Shoreside management near
the fleet provides better opportunities for management to
interact with the actual operations. The department and the
governor believe that this move will be beneficial and will, in
the long run, be a more cost effective, efficient way to run
AMHS; give better service to Alaskans and help enable AMHS to
reduce the amount of general fund subsidy that it requires. The
estimated costs of the move are between $340,000 to $520,000.
Savings of about $240,000-plus are anticipated. The Ketchikan
Gateway Borough will reimburse the move cost through lease-
payment incentives in the form of reduced lease payments until
after the cost of the move is amortized. He related his
understanding that the reduced lease rate will be effective
until 100 percent of the cost of the move is amortized.
COMMISSIONER BARTON, in response to Chair Weyhrauch's question
as to whether that was his "understanding" or if that is what
the lease actually says, responded that he thinks that is what
the lease says. However, he said that he does not have a copy
of the lease with him. He informed the committee that the lease
has not been signed, and is still being reviewed. In response
to a comment from Representative Gruenberg, Commissioner Barton
said that although the decision to enter into the lease has not
been made, the decision to move the headquarters [of AMHS] to
Ketchikan have been made, the lease is still in the works. The
decision to move was made after December 8, 2003.
COMMISSIONER BARTON, in response to Chair Weyhrauch, specified
that he had been involved with the decision-making process of
this move since last fall when the Ketchikan Gateway Borough
approached the State of Alaska. He deferred to Deputy
Commissioner Briggs for the answer to the questions about the
personnel being included in the process. Commissioner Barton
recalled that George Cappaci, General Manager, AMHS, was
involved in advising the personnel of the plans.
DEPUTY COMMISSIONER BRIGGS stated there were no formal
discussions with the employees. In response to Chair
Weyhrauch's question of "Why?", Deputy Commissioner Briggs said
"we hadn't gotten to that point yet." He explained fully what
his tasks were at that time. In further response to Chair
Weyhrauch, Deputy Commissioner Briggs said his job was to work
with the borough to negotiate a position in which a formal offer
could be made.
CHAIR WEYHRAUCH restated his original question to Mr. Briggs
regarding who was supposed to be talking to AMHS staff regarding
the proposed move.
DEPUTY COMMISSIONER BRIGGS responded that he and Commissioner
Barton, and down through the general manager were discussed as
the people who were to do that. Mr. Briggs related that he had
also requested that the Department of Personnel, Diane Corso and
her staff, put together a team to sit down with AMHS employees
to discuss a potential move.
DEPUTY COMMISSIONER BRIGGS, in response to Representative
Gruenberg's questions, responded that the governor had made the
decision to move AMHS headquarters to Ketchikan. He went on to
say that Ketchikan has been trying for years to get AMHS
headquarters to move there. Mr. Briggs reviewed the positive
aspects of moving AMHS headquarters to Ketchikan.
CHAIR WEYHRAUCH referred to a February 2003, Welsh, Whitney
architect's study of the Ward Cove building [ which is the
building the Ketchikan Gateway Borough proposes to house AMHS
headquarters]. The report discussed existing asbestos, mold,
windows that couldn't be opened, and suggested that a hazardous
materials survey should be performed. He asked Deputy
Commissioner Briggs if he could perform that survey.
DEPUTY COMMISSIONER BRIGGS responded that Vern Jones, Department
of Administration, Division of General Services, would be able
to answer that question since Department of Administration is
administering the lease. Deputy Commissioner Briggs said the
Steve Flodin report discusses the windows. The Department of
Administration requires a complete hazardous materials survey;
as a condition of the lease. He mentioned that the problems
with the building will be remediated before AMHS occupies it.
COMMISSIONER BARTON recalled that the building must meet all
state and federal laws and regulations.
CHAIR WEYHRAUCH again asked if a hazardous materials survey was
going to be performed before the state signs the lease.
COMMISSIONER BARTON deferred to the Department of
Administration; but related his understanding that the building
will be certified for occupancy before any staff are moved into
the space.
CHAIR WEYHRAUCH asked if DOT/PF would recommend that such a
survey be completed prior to the signing of the lease.
COMMISSIONER BARTON said he would be happy to make such a
request in writing.
CHAIR WEYHRAUCH asked if DOT/PF will recommend that the state
require a structural engineering survey be done prior to the
signing of the lease.
COMMISSIONER BARTON responded in the affirmative.
CHAIR WEYHRAUCH spoke of a May 2003 report from SRI
International written when the National Oceanic and Atmospheric
Administration (NOAA) had considered docking a ship on that
area. He asked if shoreside power is available to AMHS vessels
at the docking area.
DEPUTY COMMISSIONER BRIGGS answered in the affirmative. The
survey notes some concern in the area of the Comprehensive
Environmental Response Liability Act (CERCLA) with regard to
susceptibility to shared liability for on-site contamination
unless environmental due diligence assessments were performed.
CHAIR WEYHRAUCH asked if the Department of Law has reviewed this
proposal for potential liability to the State of Alaska in the
case of a substance being found either on-site or off-shore. He
also inquired as to the potential up-welling of those hazardous
substances. Chair Weyhrauch expressed concern over the process
being too abrupt and hasty. He stated he doesn't feel there has
been adequate time or sufficient information for the public to
understand what is happening.
DEPUTY COMMISSIONER BRIGGS said he was only recently made aware
of that report and has not had a chance to review it. However,
he assured the committee that he would take this information to
the Department of Administration. He further assured the
committee that the state would never put any of it's employees
or the state in harm's way. He said he will recommend that the
Department of Law and the Department of Administration review
the report before the lease is signed.
REPRESENTATIVE GRUENBERG queried Deputy Commissioner Briggs
about a March 15, 1997, report on Impact Analysis from
Information Insights, which is fairly negative.
DEPUTY COMMISSIONER BRIGGS stated he was familiar with that
report and agreed that it is a very negative report. He also
spoke to the advantages of having the shipyard near the docking
facility. In response to Chair Weyhrauch, Deputy Commissioner
Briggs agreed that any information covering this subject would
be made available to the legislature. In response to a question
from Representative Seaton, Deputy Commissioner Briggs explained
that currently work is being done to AMHS ships in various
locations around the country.
General discussion was held on various aspects of ship
maintenance and requirements by AMHS for overhauls and general
maintenance.
CHAIR WEYHRAUCH initiated discussion with Deputy Commissioner
Briggs as to why the Wards Cove location was chosen over other
places in the state.
DEPUTY COMMISSIONER BRIGGS offered that the Ketchikan Gateway
Borough came forward with the lease offer. He noted that he was
never directed not to look at any other offers that might come
up.
REPRESENTATIVE KERTTULA asked how the shipyard in Ketchikan is
currently managed and who here in Juneau is responsible for
interacting with the shipyard.
DEPUTY COMMISSIONER BRIGGS responded that Alaska Ship and
Drydock, under a contract from AIDEA, operate the shipyard. He
explained that the contact is on a project-by-project basis -
port engineers are primarily the ones to interact with the
shipyard.
CHAIR WEYHRAUCH stressed the importance of encouraging
industrial development in all areas of the State of Alaska.
REPRESENTATIVE KERTTULA asked the commissioner and deputy
commissioner to comment on the impact to the community as well
as to the employees who are going to be affected by this move.
In previous studies the impact is shown to be great.
DEPUTY COMMISSIONER BRIGGS explained how the efficiency of AMHS
will be maintained and possibly improved by the relocation.
CHAIR WEYHRAUCH asked if the Marine Transportation Advisory
Board (MTAB) had reviewed and approved the move.
DEPUTY COMMISSIONER BRIGGS answered that it had not.
A short discussion of the MTAB involvement or non-involvement
followed with Chair Weyhrauch being very firm in believing MTAB
should have been more involved in this entire issue.
REPRESENTATIVE GRUENBERG commented on being involved with people
in the Naval fleet in comparison with AMHS ships and their
ability to interface with the people on the ships to more
effectively manage and communicate.
DEPUTY COMMISSIONER BRIGGS agreed with that idea. He said he
doesn't see the disadvantage of having shoreside management in
Ketchikan. In response to a comment from Representative
Gruenberg relative to the amount of time Deputy Commissioner
Briggs spent talking to his predecessors, Deputy Commissioner
Briggs responded that the only talked with Greg Dronker,
Assistant Director and head of Marine Engineering for AMHS and
George Cappaci, General Manager, AMHS.
CHAIR WEYHRAUCH announced he was opening up public testimony and
asked that the commissioner and deputy commissioner remain in
the room while the general public testified.
DEPUTY COMMISSIONER BRIGGS explained that there are marine
safety officers in Ketchikan. The Captain of the port is here
in Juneau. He said he has no idea whether there are plans to
move the Captain of the port to Ketchikan. In response to Chair
Weyhrauch's comment regarding how the system will save any money
if no one moves and all of the staff have to be replaced, Deputy
Commissioner Briggs clarified that it was never the intent of
AMHS to save money by losing people.
DEPUTY COMMISSIONER BRIGGS, in response to Representative
Seaton's question, said the lease at three mile is privately
owned and is in effect until 2014. The Department of
Administration is responsible for managing that contract. The
estimation is that the space will be filled fairly quickly. In
response to Representative Holm, Deputy Commissioner Briggs
confirmed that this move is an administrative proposal for a
better administration rather than a proposal to save money. He
related his opinion that this proposal is so close to break-even
that the contention is justified.
PAT DAVIDSON, Director, Legislative Audit Division, spoke to her
review of the discussion paper prepared by Pacific Marine
Technical Services in terms of the cost savings that were
addressed in the paper. She pointed out that "the true value of
the two alternative leases isn't necessarily going to the be the
value of the three mile lease." In response to a question from
Representative Gruenberg regarding that she was only being asked
to look at the lease issue, she responded that she was given a
stack of documents and asked if, in a short amount of time, she
could read through them and make comments. She stated she
focused on those areas she knew the most about. Ms. Davidson
explained that originally her involvement came about because
there were requests made of the Legislative Budget and Audit
Committee to do an audit. These types of issues, in her opinion,
would take a full audit to evaluate, therefore, she said she is
unable to comment on these other matters.
DAVID LANDIS, Vice Mayor, City and Borough of Ketchikan ,spoke
positively to the proposal and the lease and the appropriateness
of the Wards Cove Plant to house AMHS headquarters. He went on
to say that the building in question is a very fine building
structurally and environmentally sound. The Ketchikan Gateway
Borough is prepared to address [the state's] concerns, whatever
they may be, he said.
REPRESENTATIVE SEATON asked Vice Mayor Landis if, in his
opinion, the reason for the move was a cost savings to the
state.
VICE MAYOR LANDIS responded that [the reason for the move] was
two-fold, referring to the management advantages that Deputy
Commissioner Briggs spoke of as well as the cost savings that
mentioned by Ms. Davidson.
JACK SHAY, Member, Assembly of City and Borough of Ketchikan,
pointed out that there are 43-45 positions, less than 3/10 of 1
percent of the Juneau workforce affected. Mr. Shay also pointed
out that Juneau is the only community in Southeast that is
growing. He went on to comment that when the M/V Taku is taken
out of service and the other new ferries are put into service,
Juneau will regain at least 40 positions.
BRUCE BOTELHO, Mayor, City and Borough of Juneau, spoke to the
standards set by Chair Weyhrauch in relation to the proposed
move and the myths that he considers surround the proposed move.
He suggested certain actions that he believes the legislature
should take. In response to a comment by Representative
Gruenberg regarding the potential of other state agencies moving
to different communities, Mayor Botelho said it is his feeling
that it is important to know what impacts of such moves are,
particularly when they are as monumental as these.
BOB DOLL, Executive Director, Better Ferries for Alaska,
explained that Better Ferries for Alaska is a coalition of
organizations with a common interest in the enhancement of
Alaska's ferry system and the improvement of the service that it
provides to the coastal communities of Alaska. He stressed the
unease of the coalition with the proposed move of AMHS
headquarters from Juneau to Ketchikan. Mr. Doll listed several
points for the committee and general public to consider
regarding the move. He also offered the opinion of the
coalition that the information that has been made available is
somewhat fictitious, and he made corrections that were of his
own opinion.
REPRESENTATIVE SEATON asked Mr. Doll whether the Emergency
Incident Command System that has been established, not just for
Homeland Security but for all kinds of emergencies, involves the
AMHS. He also asked whether the movement of people who might be
involved in this Command System negatively impact the system,
should AMHS be removed from the system.
MR. DOLL indicated that he is not totally familiar with all of
the details of the Command System.
CHAIR WEYHRAUCH requested that an answer be submitted to the
committee in writing by whoever can answer it.
CHAIR WEYHRAUCH announced that there would only be time for the
testimony of two other people and asked that all others wishing
to testify submit their comments to the committee in writing.
JIM SEPEL, Marine Surveyor, expressed his surprise with the
recent announcement by the governor of the proposed move of AMHS
headquarters to Ketchikan. He said he doesn't agree that this is
a wise move. Mr. Sepel went on to urge the committee to request
a proper cost benefit analysis on this proposed move.
FAYE BAIN, retired Leasing and Fiscal Manager, Department of
Administration, directed her comments to the lease and related
her opinion that it's not complete and contains sections that
are contradictory. As someone who is completely familiar with
the way a lease should read, she highlighted the following
questions: 1. What is the accurate number of square feet? 2. Is
the space at three mile going to be backfilled in a timely
manner? She also highlighted that the building is old, damp,
moldy, and has inadequate wiring. However, the cost benefit
analysis that is included in the lease does not talk about
tenant improvements over and above what the Ketchikan Gateway
Borough said it will do. She commented further that the
committee should look at all of the costs involved, as this
paperwork does not cover them well.
CHAIR WEYHRAUCH encouraged those interested to give the
committee their comments in writing. He asked that Deputy
Commissioner Briggs also address any further comments to the
committee in writing.
ANNOUNCEMENTS
There were no announcements.
COMMITTEE ACTION
The committee took no action.
ADJOURNMENT
The overview was adjourned at 9:50 a.m.
NOTE: The meeting was recorded and handwritten log notes were
taken. A copy of the tape(s) and log notes may be obtained by
contacting the House Records Office at State Capitol, Room 3,
Juneau, Alaska 99801 (mailing address), (907) 465-2214, and
after adjournment of the second session of the Twenty-Third
Alaska State Legislature this information may be obtained by
contacting the Legislative Reference Library at (907) 465-3808.
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