Legislature(2007 - 2008)Ketchikan

08/21/2007 10:00 AM House TRANSPORTATION


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Audio Topic
10:07:29 AM Start
10:08:08 AM Transportation Issues Between Alaska and Canada
11:58:41 AM Adjourn
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
Cape Fox Lodge
-- Teleconference --
-- Testimony <Invitation Only> --
+ Transportation issues between Alaska & TELECONFERENCED
Canada
Work Session
                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE TRANSPORTATION STANDING COMMITTEE                                                                           
                       Ketchikan, Alaska                                                                                        
                        August 21, 2007                                                                                         
                           10:07 a.m.                                                                                           
                                                                                                                              
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Representative Kyle Johansen, Chair                                                                                             
Representative Mark Neuman, Vice-Chair                                                                                          
Representative Mike Doogan                                                                                                      
Representative Craig Johnson                                                                                                    
Representative Woodie Salmon                                                                                                    
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Representative Anna Fairclough                                                                                                  
Representative Vic Kohring                                                                                                      
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
TRANSPORTATION ISSUES BETWEEN ALASKA AND CANADA                                                                                 
                                                                                                                                
PREVIOUS COMMITTEE ACTION                                                                                                     
                                                                                                                                
No previous action to report                                                                                                    
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
JOE WILLIAMS, Mayor                                                                                                             
City of Saxman;                                                                                                                 
Mayor, Ketchikan Gateway Borough                                                                                                
Saxman, Alaska                                                                                                                  
POSITION STATEMENT:  Supported daily transportation service                                                                 
between Ketchikan, Alaska, and Prince Rupert, British Columbia.                                                                 
                                                                                                                                
HERB POND, Mayor                                                                                                                
City of Prince Rupert                                                                                                           
Prince Rupert, British Columbia, Canada                                                                                         
POSITION STATEMENT:  Supported daily transportation service                                                                 
between Ketchikan, Alaska, and Prince Rupert, British Columbia.                                                                 
                                                                                                                                
BOB WEINSTEIN, Mayor                                                                                                            
City of Ketchikan                                                                                                               
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Supported daily transportation service                                                                 
between Ketchikan, Alaska, and Prince Rupert, British Columbia.                                                                 
                                                                                                                                
VICTOR WELLINGTON, Mayor                                                                                                        
City of Metlakatla                                                                                                              
Metlakatla, Alaska                                                                                                              
ACTION NARRATIVE:  Expressed his hope that this meeting creates                                                               
positive momentum regarding transportation service.                                                                             
                                                                                                                                
DAVE MACDONALD, Mayor                                                                                                           
District of Port Edwards                                                                                                        
Port Edwards, British Columbia, Canada                                                                                          
POSITION STATEMENT:  Stated that the Prince Rupert harbor will                                                              
help several communities.                                                                                                       
                                                                                                                                
CHARLIE FREEMAN, Vice-Mayor                                                                                                     
City of Ketchikan                                                                                                               
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Welcomed participants.                                                                                 
                                                                                                                                
JERRY REESE, Chief                                                                                                              
British Columbia, Canada                                                                                                        
POSITION STATEMENT:  Supported transportation service between                                                               
Ketchikan, Alaska, and Prince Rupert, British Columbia.                                                                         
                                                                                                                                
JIM VANHORN, Staff                                                                                                              
to Senator Bert Stedman                                                                                                         
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  [Comment indiscernible.]                                                                               
                                                                                                                                
BILL WILLIAMS                                                                                                                   
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Welcomed participants.                                                                                 
                                                                                                                                
RUSSELL KELLY, Legislative Liaison                                                                                              
Office of the Governor                                                                                                          
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Stated many changes are taking place in the                                                            
Department of Transportation & Public Facilities (DOT&PF).                                                                      
                                                                                                                                
CATHIE ROEMMICH, Chair                                                                                                          
Marine Transportation Advisory Board (MTAB)                                                                                     
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Said she hopes this meeting enhances                                                                   
communications with DOT&PF.                                                                                                     
                                                                                                                                
JOHN (JC) CONLEY                                                                                                                
Marine Transportation Advisory Board (MTAB)                                                                                     
Ketchikan, Alaska                                                                                                               
POSITION  STATEMENT:   Supported  transportation service  between                                                           
Ketchikan, Alaska, and Prince Rupert, British Columbia.                                                                         
                                                                                                                                
GEORGE CAPACCI, Captain, Vice President                                                                                         
Fleet Operations                                                                                                                
British Columbia Ferry Services, Inc. ("BC Ferries")                                                                            
(No address provided)                                                                                                           
POSITION  STATEMENT:   Stated that  a goal  of BC  Ferries is  to                                                             
build  a  joint port  facility  that  the Alaska  Marine  Highway                                                               
System (AMHS) could make use of.                                                                                                
                                                                                                                                
BRUCE JONES, General Manager                                                                                                    
Inter-Island Ferry Authority (IFA)                                                                                              
Craig, Alaska                                                                                                                   
POSITION  STATEMENT:    Called  [transportation  service  between                                                             
Ketchikan and Prince Rupert] an exciting concept.                                                                               
                                                                                                                                
RUDY BRUEGGEMANN, Political and Economic Relations Officer                                                                      
Canadian Consulate                                                                                                              
Anchorage, Alaska                                                                                                               
POSITION STATEMENT:  Stated he is  at this meeting to help people                                                             
understand the issues and listen to what they have to say.                                                                      
                                                                                                                                
DENNIS HARDY, Deputy Commissioner of Marine Operations                                                                          
Marine Highway System (AMHS)                                                                                                    
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Stated he is at this meeting to listen.                                                                
                                                                                                                              
JOHN FALVEY, Captain, General Manager                                                                                           
Marine Highway System (AMHS)                                                                                                    
Alaska Department of Transportation & Public Facilities (DOT&PF)                                                                
Ketchikan, Alaska                                                                                                               
POSITION STATEMENT:  Stated that  planning for a southern gateway                                                             
shuttle was reinstated  in 2007, but there is no  funding at this                                                               
time to build the shuttle.                                                                                                      
                                                                                                                                
KENT MILLER                                                                                                                     
Ketchikan, Alaska                                                                                                               
POSITION  STATEMENT:    Presented  a private  sector  option  for                                                             
passenger and vehicle ferry service  between Ketchikan and Prince                                                               
Rupert.                                                                                                                         
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
CHAIR  KYLE JOHANSEN  called  the  House Transportation  Standing                                                             
Committee  meeting  to order  at  10:07:29  AM.   Representatives                                                             
Neuman, Doogan, and  Johansen were present at the  call to order.                                                               
Representatives Salmon and Johnson arrived  as the meeting was in                                                               
progress.  Senator Stedman was also present.                                                                                    
                                                                                                                                
^TRANSPORTATION ISSUES BETWEEN ALASKA AND CANADA                                                                              
                                                                                                                              
10:08:08 AM                                                                                                                   
                                                                                                                                
CHAIR  JOHANSEN announced  that  Mayor Williams  asked the  House                                                               
Transportation Committee to  act as the vehicle to  get the issue                                                               
of connecting Ketchikan and British  Columbia "on the table."  He                                                               
has been contacted by officials  from Hyder about the same issue.                                                               
Representatives  Johnson, Neuman,  Doogan,  Salmon, and  Johansen                                                               
were  present at  the  call to  order.   Representative  Johansen                                                               
asked participants at the meeting to introduce themselves.                                                                      
                                                                                                                                
10:09:14 AM                                                                                                                   
                                                                                                                                
Participants  introduced  themselves  as   follows:    Mayor  Joe                                                               
Williams,  Ketchikan  Gateway Borough  and  the  City of  Saxman;                                                               
Mayor  Dave   MacDonald,  District   of  Port   Edwards,  British                                                               
Columbia;  Rudy  Brueggemann,  Political and  Economic  Relations                                                               
Officer, Anchorage; Captain John  Falvey, General Manager, Alaska                                                           
Marine  Highway  System;  Bruce Jones,  General  Manager,  Inter-                                                               
Island  Ferry Authority;  Chief  Jerry  Reese, British  Columbia;                                                               
Captain George  Capacci, Vice President  of Fleet  Operations, BC                                                               
Ferries;  Dennis Hardy,  Deputy  Commissioner of  Transportation;                                                               
Russ  Kelly,  Special  Assistant  to Governor  Palin;  Mayor  Bob                                                               
Weinstein, City  of Ketchikan;   Mayor Herb Pond, City  of Prince                                                               
Rupert;  Mayor  Victor   Wellington,  Metlakatla;  Sol  Atkinson,                                                               
Transportation  Director, Metlakatla;  John  (JC) Conley,  Marine                                                               
Transportation  Advisory  Board;  Cathie Roemmich;  Kent  Miller,                                                               
private industrial  economist, Ketchikan; Charlie  Freeman, Vice-                                                               
Mayor,  City of  Ketchikan; Jim  VanHorn, Staff  to Senator  Bert                                                               
Stedman;  Pete  Ecklund,  Staff to  Representative  Kevin  Meyer;                                                               
[remainder of introductions indiscernible].                                                                                   
                                                                                                                                
10:12:38 AM                                                                                                                   
                                                                                                                                
CHAIR JOHANSEN thanked all participants  for coming and said this                                                               
topic is  extremely important to  him.  Prince Rupert  has always                                                               
been an important  connection to Ketchikan.  He  believes for the                                                               
health  of the  economies of  both  communities, a  good plan  or                                                               
schedule is  necessary to move  people and goods back  and forth.                                                               
His intent  is to bring  this issue to  the table and  "see where                                                               
people are coming  from."  The committee has  no predisposed plan                                                               
nor will it  be making any decisions; this meeting  is strictly a                                                               
brainstorming session.   He plans to follow up with  a meeting in                                                               
Juneau during  the next  session.  He  commented that  the Alaska                                                               
Marine Highway  System (AMHS)  is aging so  its replacement  or a                                                               
new  system  needs to  be  contemplated  and brought  before  the                                                               
legislature because any plan will need statewide support.                                                                       
                                                                                                                                
10:15:28 AM                                                                                                                   
                                                                                                                                
JOE  WILLIAMS,  Mayor,  City  of  Saxman,  and  Mayor,  Ketchikan                                                               
Gateway Borough,  performed a traditional tribal  welcome "to his                                                               
father's  people's land"  by singing  a song  and explained  that                                                               
down feathers  are simultaneously thrown  in the air and  land on                                                               
people as  a sign of welcome.   Mayor Williams then  sang another                                                               
song for members.                                                                                                               
                                                                                                                                
MAYOR WILLIAMS thanked everyone for  attending.  He noted that he                                                               
and Mayor  Pond have been  talking about organizing  this meeting                                                               
for over  a year.   Mayor Pond  had invited Borough  officials to                                                               
attend a meeting  in Prince Rupert in October of  last year.  The                                                               
Ketchikan officials  had to  charter a  plane to  get there  at a                                                               
cost  of $1100.   The  distance  is 90  miles.   Mayor Pond  then                                                               
traveled to  Ketchikan but  his route  was through  Vancouver and                                                               
Seattle.   Mayor  Williams said  he and  Mayor Pond  visited over                                                               
      th                                                                                                                        
July 4   and discussed organizing a House Transportation Standing                                                               
Committee  meeting.   He  and  Mayor  Pond  desire to  get  daily                                                               
transportation service  between Ketchikan and Prince  Rupert.  He                                                               
told members that Prince Rupert  is developing a deep water port,                                                               
which will  benefit Ketchikan  and Metlakatla,  as well  as other                                                               
Southeast Alaska towns.   He said daily service  to Prince Rupert                                                               
will provide further services.                                                                                                  
                                                                                                                                
10:23:09 AM                                                                                                                   
                                                                                                                                
HERB  POND,  Mayor, City  of  Prince  Rupert, told  members  that                                                               
although he will  refer to Prince Rupert in  his presentation, he                                                               
is  speaking about  an  entire territory.    He introduced  Chief                                                               
Jerry Reese  and pointed out that  Prince Rupert is in  the heart                                                               
of Tsimshian territory.  He referred  to an historical photo of a                                                               
British Columbia (BC)  ferry assisting an Alaskan  ferry that hit                                                               
a  rock and  another photo  of  the first  annual Prince  Rupert-                                                               
Ketchikan  baseball  tournament in  1912,  a  lively event.    He                                                               
thought the  baseball photo was  significant in that  logging did                                                               
not  even begin  in the  area until  1907.   He pointed  out that                                                               
Ketchikan  is the  closest  community to  Prince  Rupert that  is                                                               
similar in  size, yet transportation between  the two communities                                                               
is very limited.  Mayor Pond told members:                                                                                      
                                                                                                                                
     I'm just tickled  by all of the people that  have come here.                                                               
     When I saw  the invitation list and who had  agreed from the                                                               
     Alaska  side, I  was extremely  impressed.   When I  saw who                                                               
     from  [indisc.]   side,  just  immediately  signed   up  and                                                               
     indicated  they  wanted to  be  here  and were  prepared  to                                                               
     switch their schedules around, I  was equally impressed, and                                                               
     I want  to thank each and  every one of you  for making this                                                               
     happen.  The Tsimshian have a  word, which is kind of an all                                                               
     inclusive  word, and  Gary  can correct  me  and also  these                                                               
     gentlemen can  correct me, but  it's "wy wat" (ph)  and it's                                                               
     often  said at  the end  of something.   It  basically is  a                                                               
     catch-all that says  let's do it, let's make it  happen.  So                                                               
     I hope  at the end  of this  meeting that we  gathered today                                                               
     that  we're able  to say  wy  wat and  let's make  something                                                               
     happen.                                                                                                                    
                                                                                                                                
10:28:43 AM                                                                                                                   
                                                                                                                                
BOB  WEINSTEIN, Mayor,  City of  Ketchikan, welcomed  everyone to                                                               
the meeting  and said  the transportation  issue between  the two                                                               
communities has been of great importance  to him.  He has been an                                                               
advocate of  daily service for many  years.  He said  he was very                                                               
elated several  years ago  when $27 million  was allocated  for a                                                               
gateway shuttle, but was equally  disappointed when the money was                                                               
taken away.  He  said, "Our job is to regroup and  come up with a                                                               
good option  to do what  our communities  have been trying  to do                                                               
for many years, and that not  only includes trying to establish a                                                               
good  transportation link  between  our communities  but also  to                                                               
improve our business [indisc....]"                                                                                              
                                                                                                                                
10:30:18 AM                                                                                                                   
                                                                                                                                
VICTOR WELLINGTON,  Mayor, City  of Metlakatla, told  members one                                                               
reason he came to  this meeting is that he sat  with the mayor of                                                               
Prince  Rupert  in  Juneau  a  few years  ago  and  talked  about                                                               
transportation.  Road construction is  underway on a road between                                                               
Metlakatla and [Ketchikan].  He is  very excited about what he is                                                               
hearing  about   transportation.    Metlakatla  is   a  Tsimshian                                                               
community;  he  and other  members  of  the community  have  many                                                               
relatives in [northern  Canada].  He relayed that  his staff, Sol                                                               
Atkinson, addresses transportation issues.   He said he hopes the                                                               
meeting creates some positive momentum.                                                                                         
                                                                                                                                
10:33:17 AM                                                                                                                   
                                                                                                                                
DAVE MACDONALD, Mayor, District of  Port Edwards, said the Prince                                                               
Rupert harbor  will help several  communities.  He is  excited to                                                               
be present and is looking forward to the discussions.                                                                           
                                                                                                                                
10:33:57 AM                                                                                                                   
                                                                                                                                
CHARLIE  FREEMAN, Vice-Mayor,  City  of  Ketchikan, welcomed  all                                                               
participants.                                                                                                                   
                                                                                                                                
10:34:39 AM                                                                                                                   
                                                                                                                                
JERRY REESE, Chief, said he was  involved with the City of Prince                                                               
Rupert a number  of years back.  His community  and the community                                                               
of Metlakatla  got together and  talked about creating a  link to                                                               
Prince Rupert.   They lobbied Ottawa;  his goal was to  do a road                                                               
upgrade at  that time.  His  community runs a ferry  service from                                                               
[indisc.] Inlet  to Prince Rupert  at a  deficit every year.   He                                                               
sees  this link  as  a  huge opportunity  for  his community  and                                                               
Metlakatla.   It would open  up tourism  in his community  and in                                                               
the Tsimshian  Peninsula.   He said  there are  discussions about                                                               
building  a ferry  landing in  his community  to shorten  the run                                                               
from  Alaska.   He noted  a bridge  between [indisc.]  and Prince                                                               
Rupert has  been discussed but  that may never happen  because of                                                               
the  cost.   He  said  he  used to  come  to  Metlakatla to  play                                                               
basketball when he was younger.  He has relatives in Metlakatla.                                                                
                                                                                                                                
10:38:06 AM                                                                                                                   
                                                                                                                                
CHAIR JOHANSEN announced that  Representatives Salmon and Johnson                                                               
had  joined the  meeting  via teleconference.    He informed  the                                                               
representatives  that  participants  are going  around  the  room                                                               
introducing themselves.                                                                                                         
                                                                                                                                
10:38:28 AM                                                                                                                   
                                                                                                                                
JIM  VANHORN,  Staff  to Senator  Bert  Stedman,  [Mr.  VanHorn's                                                               
comment was indiscernible.]                                                                                                     
                                                                                                                                
10:40:08 AM                                                                                                                   
                                                                                                                                
CHAIR  JOHANSEN said  this effort  should  dovetail with  Senator                                                               
Stedman's efforts  in the  Senate Finance  Committee and  that he                                                               
would  talk   to  the  Department  of   Transportation  &  Public                                                               
Facilities  (DOT&PF) about  reviewing  the statutory  obligations                                                               
for its Alaska Marine Highway System (AMHS) plans.                                                                              
                                                                                                                                
10:40:39 AM                                                                                                                   
                                                                                                                                
BILL  WILLIAMS,  a  former representative  in  the  Alaska  State                                                               
Legislature, welcomed  everyone to Ketchikan.   [The remainder of                                                               
his comment was indiscernible.]                                                                                                 
                                                                                                                                
10:42:42 AM                                                                                                                   
                                                                                                                                
RUSSELL KELLY, Legislative Liaison,  Office of the Governor, said                                                               
he was  glad to be  attending the  meeting and that  many changes                                                               
are taking place in DOT&PF.   The governor is hoping for improved                                                               
communication  and  is  interested  in innovative  ideas.    [The                                                               
remainder of his comment was indiscernible.]                                                                                    
                                                                                                                                
10:44:32 AM                                                                                                                   
                                                                                                                                
CATHIE  ROEMMICH,  Chair,  Marine Transportation  Advisory  Board                                                               
(MTAB), said  she hopes  to come  out of  the meeting  today with                                                               
more information and enhanced communications with DOT&PF.                                                                       
                                                                                                                                
JOHN (JC)  CONLEY, Marine  Transportation Advisory  Board (MTAB),                                                               
said it is  good to see friends  from Prince Rupert.   He noted a                                                               
daily shuttle has  been discussed for a long time  as well as the                                                               
declining  relationship  with  Prince  Rupert.    He  believes  a                                                               
convergence is occurring.  Prince  Rupert has a world class mega-                                                               
port that  has opened the  world up to  Alaskan products.   It is                                                               
connected to Asia and the  Midwest.  Southeast has some resources                                                               
that can only be sent to  another market for processing.  Another                                                               
opportunity  Southeast  Alaska  has with  its  British  Columbian                                                               
neighbors  is to  create  a  power grid.    That will  eventually                                                               
create affordable energy and a  good transportation link, the two                                                               
necessary components of  economic development and a  link to Asia                                                               
and  the  Midwest.    This  partnership  will  create  a  win/win                                                               
situation.  He hopes the  Legislature will give the Alaska Marine                                                               
Highway  System the  funds  needed  to get  a  ferry  built.   He                                                               
stated:                                                                                                                         
                                                                                                                                
     We  should be  running a  ferry out  of Prince  Rupert, into                                                               
     Ketchikan,  up to  South  Mitkof -  remember  that George  -                                                               
     grabbing  the   fish  at  South   Mitkof,  coming   back  to                                                               
     Ketchikan,  grabbing  some more  fish  and  going to  Prince                                                               
     Rupert and  now we've got  a mega port.   You can  pick your                                                               
     market  -  left or  right  -  Asia  or  Chicago.   This  has                                                               
     changed.   I  applaud your  efforts, Mr.  Chairman, and  I'd                                                               
     like  to thank  Mayor Williams  and  Mayor Pond.   But  it's                                                               
     going to  require your leadership  to ensure that we  have a                                                               
     plan to succeed.   This might be a harsh  comment but having                                                               
     been around the competition of  roads and ferries, I think a                                                               
     lot of times there's a desire that the plan fail.  That's                                                                  
     why they were always talking about building new boats but                                                                  
     not building them.  Thank you.                                                                                             
                                                                                                                                
10:48:30 AM                                                                                                                   
                                                                                                                                
GEORGE  CAPACCI,  Captain,   Vice  President,  Fleet  Operations,                                                               
British Columbia Ferry  Services, Inc., said one of  the goals of                                                               
the ferry  systems throughout northwestern America  is to address                                                               
the challenge of aging infrastructure,  both boats and terminals.                                                               
British Columbia Ferry Services  ("BC Ferries") is rebuilding its                                                               
fleet and it  is embarking on a major  capital investment program                                                               
to  build  a  small  and   intermediate  sized  fleet.    Another                                                               
challenge   to  creating   transportation   links  is   providing                                                               
infrastructure on  shore.   A goal  of BC Ferries  is to  build a                                                               
joint port facility  that the Alaska Marine  Highway System could                                                               
make use of.                                                                                                                    
                                                                                                                                
10:50:27 AM                                                                                                                   
                                                                                                                                
BRUCE  JONES,  General   Manager,  Inter-Island  Ferry  Authority                                                               
(IFA), said he  has only been at his current  job for three weeks                                                               
but  was on  the  board of  the Southeast  Conference  for a  few                                                               
years,  during which  time this  exciting concept  was discussed.                                                               
IFA is governed  by a board of directors.   [The remainder of his                                                               
testimony was indiscernible.]                                                                                                   
                                                                                                                                
RUDY  BRUEGGEMANN  stated   that  he  is  here   to  help  people                                                               
understand how the issues work and  to listen to what people have                                                               
to say.  [The remainder of his testimony was indiscernible.]                                                                    
                                                                                                                                
10:52:19 AM                                                                                                                   
                                                                                                                                
DENNIS HARDY,  Deputy Commissioner  of Marine  Operations, Marine                                                               
Highway System, Department of  Transportation & Public Facilities                                                               
(DOT&PF), said DOT&PF's  goal is to run the boats,  but the fleet                                                               
is aging and something needs to  be done budget-wise to help.  He                                                               
said he is here to listen.                                                                                                      
                                                                                                                                
CHAIR JOHANSEN  said one reason  he scheduled this meeting  is to                                                               
decide  what to  do,  and develop  an airtight  case  to make  it                                                               
easier  to sell  at a  statewide level.   He  related that  Mayor                                                               
Williams and  Mayor Pond want  to get  this started now  and move                                                               
forward with a plan.                                                                                                            
                                                                                                                                
10:55:01 AM                                                                                                                   
                                                                                                                                
[Witness name and comments indiscernible.]                                                                                      
                                                                                                                                
10:55:36 AM                                                                                                                   
                                                                                                                                
MAYOR  WILLIAMS  commented  that  if everyone  is  serious  about                                                               
having daily service  between Ketchikan and Prince  Rupert, it is                                                               
time to do it.  It is  the only means of economic development for                                                               
Ketchikan.  He noted Mayor Pond's  12 hour trip to Ketchikan from                                                               
Prince Rupert and  that no one else would make  that trip because                                                               
of the cost and  time.  He wants to see  the daily shuttle become                                                               
a reality  because with the development  of a deep water  port in                                                               
Prince Rupert,  the shuttle will only  benefit southern Southeast                                                               
Alaska.   He thanked Chair  Johansen for holding the  meeting and                                                               
thanked all participants for attending.                                                                                         
                                                                                                                                
10:57:47 AM                                                                                                                   
                                                                                                                                
MAYOR   POND  stated   the   following   during  his   PowerPoint                                                               
presentation:                                                                                                                   
                                                                                                                                
     All  of  us   in  the  room  are  aware   of  the  Southeast                                                               
     Conference,  the  great  organization  that it  is  and  the                                                               
     incredible work that it achieves.   But I think sometimes we                                                               
     forget  about the  origins of  the Southeast  Conference and                                                               
     that Prince Rupert indeed was  a charter member of Southeast                                                               
     Conference.  As  the governor of Alaska and  the premiere of                                                               
     British Columbia  in the day  decided that it would  be very                                                               
     important to link  our countries with a ferry  network.  The                                                               
     premiere of  British Columbia  committed to  extending ferry                                                               
     service  into  Prince  Rupert and  the  governor  of  Alaska                                                               
     committed to  extending ferry service down  to Prince Rupert                                                               
     and the  Southeast Conference  was formed  around that.   To                                                               
     this day, it  is what it is  and has had the  impact that it                                                               
     has.                                                                                                                       
                                                                                                                                
     I want to suggest to you  today that had those decisions not                                                               
     been made, that we would have  all the reason today to do it                                                               
     again - that  if we were to enter into  this world today and                                                               
     there wasn't  linkage back and  forth between  our countries                                                               
     and  our  communities  at  this  level,  that  we  would  be                                                               
     gathering here today to talk  about why we should be because                                                               
     there's opportunities for both of us.                                                                                      
                                                                                                                                
     I happen to  have a picture which my  buddy [indisc.] pulled                                                               
     up  for  me  and  I  sure appreciate  that.    He  obviously                                                               
     understands where  my heartstrings are  at.  I  don't expect                                                               
     you to  see it very clearly  but this is pulled  off the web                                                               
     ... because these  are the cranes arriving  in Prince Rupert                                                               
     last  night.   Three large  cranes coming  all the  way from                                                               
     China on  a special  vessel designed to  carry this  sort of                                                               
     load.  It's  kind of hard to  get it when you  look at these                                                               
     things, but  our [indisc.]  Hotel in Prince  Rupert is  a 14                                                               
     story  structure.   These cranes  will dwarf  that 14  story                                                               
     hotel. ...  It gives you  a sense of  what it is  that we're                                                               
     talking about in  Prince Rupert and really  why this matters                                                               
     to Alaska.  In  my view there [are] two reasons  - JC hit it                                                               
     well.                                                                                                                      
                                                                                                                                
     One is the development of a  trade corridor that is going to                                                               
     open  up opportunities  for the  movement of  goods and  the                                                               
     movement of  resources and the  connecting of business  in a                                                               
     new way.  Business is shifting  around the world and some of                                                               
     us have been a little slow to catch  it.  We all have a view                                                               
     of this  shirt having been  made in  China and shipped  to a                                                               
     shelf at  Wal-Mart where I  bought it.   That's kind  of the                                                               
     way that  [indisc.] really works.   But the reality  is that                                                               
     it's  much more  complex.   The reality  is that  the cotton                                                               
     that  went into  this shirt  actually came  out of  Memphis.                                                               
     One  of the  big partners  that  Prince Rupert  has in  this                                                               
     addition is Memphis, Tennessee,  because they're going to be                                                               
     loading cotton into containers that  will float back to Asia                                                               
     through Prince Rupert.  So  the cotton came from Memphis and                                                               
     it goes  to China and it  goes to a particular  community in                                                               
     China  where  they  weave  it  into  thread  and  then  load                                                               
     containers  full  of  thread  to  move  it  to  yet  another                                                               
     community  that specializes  in  the weaving  of the  cloth.                                                               
     And then  load the cloth  into containers again to  be moved                                                               
     to  yet another  community that  specializes in  the cutting                                                               
     and sewing and creating the shirt.                                                                                         
                                                                                                                                
     Meanwhile, containers  of buttons  have come  from Indonesia                                                               
     where they  are taking petroleum byproducts  and forming the                                                               
     buttons and they  will be joined to the shirts  to be put in                                                               
     the containers to  be shipped back through  Prince Rupert to                                                               
     Chicago where  they will be  distributed into  the heartland                                                               
     of the United States and put on store shelves.                                                                             
                                                                                                                                
     Your cell  phone is made  that way.   Your car is  made that                                                               
     way.   It is  no longer  a single  assembly line.   It  is a                                                               
     world  of interconnected  specialization  and raw  resources                                                               
     and  if you  aren't on  the corridor,  you are  not in  that                                                               
     trade group,  you are not in  that economy.  It's  just that                                                               
     simple.   So -  want to  give a map  for context,  we always                                                               
     talk about how close we are,  but here we are.  There's this                                                               
     tiny little  bit of open  water that  separates us and  is a                                                               
     rather artificial boundary.  Certainly  from a First Nations                                                               
     or  Native  development point  of  view,  a very  artificial                                                               
     boundary  that  was  put  on  there  and  we're  that  close                                                               
     together....                                                                                                               
                                                                                                                                
11:03:04 AM                                                                                                                   
                                                                                                                                
     This  is  Prince  Rupert, Port  Edwards'  population,  about                                                               
     15,000 in  the immediate service  area when you  include the                                                               
     Tsimshian communities,  22,000.  If  you go out  and include                                                               
     the Charlottes and the larger  area, 66,000, and you keep on                                                               
     going.  This is what we're  all talking about and the reason                                                               
     I'm  doing this  for you  today is  if I  could take  you to                                                               
     Prince Rupert  I wouldn't have  to do this presentation.   I                                                               
     just want  to give you  a little taste  of what you  may not                                                               
     have seen in a little while.                                                                                               
                                                                                                                                
     This  is the  community  of Prince  Rupert,  very much  like                                                               
     Ketchikan.  It  is sandwiched between the  mountains and the                                                               
     ocean.  It  sits up here.   The rail bed that  goes out into                                                               
     the  North American  marketplace, straight  out of  here and                                                               
     actually  the  most  preferable grade  through  the  Rockies                                                               
     anywhere on the  West Coast of North  America, comes through                                                               
     here.    And   then  this  is  the   terminal  that's  being                                                               
     converted, or largely has been  converted, it's a rather old                                                               
     photo, into that  facility.  This is an artist's  mock up of                                                               
     what  it's going  to be  when it's  up and  running but  the                                                               
     cranes,  as   you  see  over  here,   it's  almost  entirely                                                               
     intermodal.  In other words,  one of the reasons people said                                                               
     this container port would not work  is we don't have much of                                                               
     a  local  market.   You  bring  containers into  Seattle  or                                                               
     Vancouver  or  Long  Beach  and  30 to  40  percent  of  the                                                               
     containers are  for local  destinations in  that marketplace                                                               
     and the others  move on through.  People said  the reason we                                                               
     [indisc.]  is  because  don't   have  a  local  marketplace.                                                               
     What's  happened   over  the  last   decade  is   the  local                                                               
     marketplace  is actually  so congested,  Seattle, Vancouver,                                                               
     and  Long Beach  and other  places, the  communities located                                                               
     around  those  container  ports are  saying  we  don't  want                                                               
     anymore  trucks or  trains coming  through our  communities.                                                               
     The mayor of Delta in  Vancouver, where there is a container                                                               
     port is  one of my greatest  allies.  She says  I don't want                                                               
     one  more container  coming  into my  community.   Will  you                                                               
     please send them to Prince  Rupert?  That's what's happening                                                               
     down  in those  communities.   This  is largely  intermodal.                                                               
     Containers dock  and within  hours it's put  on a  crane and                                                               
     it's gone.                                                                                                                 
                                                                                                                                
11:06:06 AM                                                                                                                   
                                                                                                                                
     Phase  1  is  half  a  million  TEU.    If  you  talk  about                                                               
     containers, some  of you  are in  the shipping  business and                                                               
     this  is like  the  whole [indisc.]  here, but  a  TEU is  a                                                               
     twenty foot equivalent unit.   That's how containers started                                                               
     - in  20 foot units.   Now there are  a number of  sizes and                                                               
     not very many  are 20 feet actually, but  they still measure                                                               
     the capacity  of vessels  in 20 foot  equivalent units.   So                                                               
     we'll  be half  a million  TEUs in  the beginning,  which is                                                               
     nice  but,  quite frankly,  it's  rather  small on  a  world                                                               
     scale.  Phase 2  will take us up to 1.5,  a little over, 1.5                                                               
     - they  think they can squeeze  more out of it.   That takes                                                               
     us up  roughly to the  capacity of the four  container ports                                                               
     in Vancouver today to give you a sense of the scale.                                                                       
                                                                                                                                
     There's an opportunity for a  terminal too, which would be a                                                               
     whole  other  container area  within  the  harbor of  Prince                                                               
     Rupert, which would take us  into considerably larger volume                                                               
     for that.  And this is what  it's all about.  When you stare                                                               
     at the maps you  don't get it.  When you  stare at the globe                                                               
     you do.                                                                                                                    
                                                                                                                                
     Here's Chicago.  Here's the  Prince Rupert - Ketchikan area.                                                               
     There's Asia.   If you  take a string  and dangle it  over a                                                               
     map  between   Korea,  between  China,  between   India  and                                                               
     Chicago, Memphis,  any of those  major hubs back  there, you                                                               
     watch  where that  string rolls  when you  [indisc.] and  it                                                               
     does  not  roll  over  LA  and it  doesn't  even  roll  over                                                               
     Vancouver.   It  rolls  up  North, up  here.    This is  the                                                               
     shortest possible route between those  - shaving days off of                                                               
     ships [indisc.] and  here is a graphic of  exactly that, the                                                               
     red  being  Prince Rupert  and  the  shipping times  between                                                               
     these various ports, Singapore, Hong  Kong, and the point is                                                               
     clear.  This is the shortest possible shipping route.                                                                      
                                                                                                                                
     That has  generated other activities  in our community.   As                                                               
     you well  know, the story  of Rupert and Ketchikan  are just                                                               
     so similar.   We went through  the closure of our  pulp mill                                                               
     for slightly different reasons but  we suffered the downturn                                                               
     that you  suffered and I  would argue that our  downturn was                                                               
     longer and deeper  and more substantial.  As the  mayor of a                                                               
     community  and dealing  with  the social  side  of that  and                                                               
     dealing  with families  and people  literally  crying in  my                                                               
     office  asking me  if now  is  the time  to leave  - it  was                                                               
     really,  really tough.   This  turnaround  is bringing  life                                                               
     into our  community at  all kinds of  levels.   We're seeing                                                               
     investments  in our  community from  literally all  over the                                                               
     world.    People  are arriving  everyday  with  millions  of                                                               
     dollars  looking  for  investment opportunities  within  the                                                               
     community of Prince  Rupert and the surrounding  areas.  One                                                               
     of those  investment companies is actually  represented here                                                               
     today and  that is a  gaming center  or a casino  that's now                                                               
     about a $15  million build.  For those of  you that know the                                                               
     Crest Hotel,  it sits right  beside the Crest Hotel,  one of                                                               
     the  few  casinos  in  the  world that's  going  to  have  a                                                               
     gorgeous  water view  out over  the  harbor with  incredible                                                               
     facilities  so  it's  under construction.    These  pictures                                                               
     don't do  it justice but come  in a month and  you'll get to                                                               
     see it properly....                                                                                                        
                                                                                                                                
     It's attracted investors out of  Calgary who want to do some                                                               
     big box  format retail  development.  They've  acquired some                                                               
     land.  This is the schematic.  They are going to probably be                                                               
     scratching toward the  end of this year and  so we're pretty                                                               
     excited about that investment.                                                                                             
                                                                                                                                
     We're  seeing  new  residential  construction.    In  Prince                                                               
     Rupert  the only  houses that  have been  built in  the last                                                               
     decade are  houses that were  custom built for  somebody who                                                               
     was building a dream house.   That's not an economy.  That's                                                               
     somebody  that's  lucky,  right,   or  worked  hard  and  is                                                               
     enjoying the fruit of their labors.  That's not an economy.                                                                
                                                                                                                                
11:10:13 AM                                                                                                                   
                                                                                                                                
MAYOR POND continued:                                                                                                           
                                                                                                                                
     What we're  seeing now  is companies coming  in from  out of                                                               
     town actually  developing whole subdivisions so  this is one                                                               
     of  the  early ones  here.    Anyway,  we're seeing  a  huge                                                               
     presence  of  security.   [Indisc.]  Services  hired 35  new                                                               
     officers, bringing  the [indisc.]  up to nearly  50 officers                                                               
     in Prince Rupert.  The  RCMP [Royal Canadian Mounted Police]                                                               
     are upping their presence, as are other agencies.                                                                          
                                                                                                                                
     Now we  know -  and I've got  to identify -  I mean  we'd be                                                               
     foolish  not to  recognize  that there  are challenges  that                                                               
     have entered  into the system  of operating  between British                                                               
     Columbia  and  Alaska  that   didn't  exist  when  Southeast                                                               
     Conference  was  formed  in  1963 and  when  we  began  this                                                               
     venture.   Safety of  Life at  Sea requirements  that didn't                                                               
     exist back  then.  Actually  that's a  bit of a  red herring                                                               
     but [indisc].  Old Canada  and U.S. Customs issues that have                                                               
     become really  intensified and, you  know, I  understand the                                                               
     dynamics of those as well, I think, as anybody.                                                                            
                                                                                                                                
     The advanced  ferry schedule wasn't  actually in  my talking                                                               
     points but I want  to make a note on that  just the same and                                                               
     that is  this: when  I first  moved to  Prince Rupert  I got                                                               
     introduced to  Alaska by a  hotelier in Prince  Rupert whose                                                               
     hotel was  primarily built around  the 1963  coming together                                                               
     of  those two  systems.   He  was in  Alaska  and active  in                                                               
     Alaska all  the time as  a member of  what was then  the AVA                                                               
     [Alaska  Vistors  Association]  and  now  the  ATIA  [Alaska                                                               
     Travel  Industry Association]  and we  were active  up here.                                                               
     That  hotelier  now spends  zero  percent  of his  time  and                                                               
     energy  on Alaska  and it  really has  to do  with a  lot of                                                               
     decline in the system.  One  of the things that we were very                                                               
     successful as  local communities  lobbying BC Ferries  is to                                                               
     say  that if  you want  to sell  tourists and  get into  the                                                               
     international  marketplace, you  must be  able to  tell them                                                               
     two years in  advance what your sailing schedule is.   It is                                                               
     absolutely  impossible for  a wholesaler  in Germany  to put                                                               
     brochures in  the marketplace without  knowing two  years in                                                               
     advance  when he's  going to  get  on that  vessel with  his                                                               
     customers and BC Ferries have done  that.  In the absence of                                                               
     that, quite frankly,  the tour market coming  in and through                                                               
     our community, up into Alaska  is dying, straight up.  There                                                               
     is  a fraction  of the  tourism [indisc.].   There  are some                                                               
     other  issues   that  have  to  do   around  scheduling  and                                                               
    everything else but that's one of the issues I can see.                                                                     
                                                                                                                                
11:12:57 AM                                                                                                                   
                                                                                                                                
MAYOR POND continued:                                                                                                           
                                                                                                                                
     There are some  tremendous opportunities in front of  us.  I                                                               
     want to  say to you I  think there are two  things that jump                                                               
     out at  me.  One is  this whole trade route,  the commercial                                                               
     connection in transportation  - what can you  make in Alaska                                                               
     that might go  into those containers that will  go to China?                                                               
     JC  is absolutely  right.   The marketplace  with containers                                                               
     traveling  back and  forth kind  of works  like this.   It's                                                               
     about  3 to  1.   Andrew  is here  from the  Port of  Prince                                                               
     Rupert.   He can answer all  of the questions in  the world.                                                               
     He  is  kind of  specialized  on  doing business  here  with                                                               
     Alaska companies.   But it's  roughly 3 to  1.  For  every -                                                               
     the containers  are 100  percent full  coming from  Asia but                                                               
     about one-third  to half of  them are  going back full.   So                                                               
     guess  what?   The  rates  going back  are  about the  third                                                               
     because people  discount them  to try  and find  products to                                                               
     move  back  in  those  empty containers.    There  are  huge                                                               
     opportunities for  fish and potentially timber  products and                                                               
     other things that you can put in those cans and send back.                                                                 
                                                                                                                                
     And  then,  of  course,   there's  the  opportunity  to  fly                                                               
     domestic goods  into Alaska from  that container  port, from                                                               
     the  Chicago  heartland areas  and  others.   And  then,  of                                                               
     course,  there's  the  opportunity  to  send  your  finished                                                               
     products into the heart of the  United States.  So there are                                                               
     all  these opportunities  and that's  all  around the  trade                                                               
     route.                                                                                                                     
                                                                                                                                
     But there's a  second opportunity that I think  that we have                                                               
     somewhat missed  and that is  your pipes, like our  pipes on                                                               
     the BC  ferry system,  are full.   The input  opportunity is                                                               
     full.   We are lobbying  BC Ferries for daily  ferry service                                                               
     because they  run a vessel  into Prince Rupert  every second                                                               
     day.  Through  the summer it's full.  Once  it's full - once                                                               
     the car deck,  in fact, is full, we have  now capped out the                                                               
     number  of visitors  that can  come  on a  circle tour  into                                                               
     Prince Rupert.  It doesn't  matter how much marketing we do.                                                               
     It doesn't  matter how  many hotel  rooms we  have available                                                               
     and  at what  price.   If  a passenger  can't  get into  the                                                               
     system, they can't experience what we have.                                                                                
                                                                                                                                
     I know  from talking  up and down  Southeast over  the years                                                               
     that  one of  the visitor  opportunities that  Southeast has                                                               
     always felt  was underrepresented is those  people that stay                                                               
     overnight.  You're doing a  great job in the cruise industry                                                               
     but where  are the people that  are going to fill  the hotel                                                               
     rooms, the  restaurants?  I was  absolutely astonished, I've                                                               
     got to tell you, when with  about a week's notice I was able                                                               
     to get  10 rooms  in Kake in  the middle of  summer.   I was                                                               
     absolutely  astonished.    That   shouldn't  be.    It  just                                                               
     shouldn't be.   Yet if your  pipeline is full, if  the ferry                                                               
     out of  Bellingham is full,  if the  ferry coming in  out of                                                               
     Rupert is at  capacity because of the  schedule or whatever,                                                               
     then your ability  to fill the ferry in  Petersburg and your                                                               
     ability to  fill your ferry  anywhere else in your  system -                                                               
     it's full.   You capped it.   Your ability to  put people in                                                               
     hotel  rooms and  your  ability to  sell  those extra  meals                                                               
     after  the cruise  ships, it's  all gone.   In  our case,  I                                                               
     think  we should  widen the  pipeline.   I  think we  should                                                               
     [indisc.] the pipe  that actually feeds the  system and then                                                               
     we wonder why  the system is actually  having some problems.                                                               
     Open up the pipe and the whole system starts to gain.                                                                      
                                                                                                                                
     And  so those  are the  opportunities.   That's why  I think                                                               
     that  what's  happening in  our  little  neck of  the  woods                                                               
     matters to Alaska.   Thank you for this  opportunity to kind                                                               
     of paint that picture for you  and, as I say, Andrew is here                                                               
     from  the Port.  ...The guys  from the  casino are  here and                                                               
     they'll gladly  book you  down there and  you also  have the                                                               
     hotel in Prince  Rupert so....  Anyway, if we  can help with                                                               
     anything,  let  us know.    That's  really why  we're  here.                                                               
     Thank you.                                                                                                                 
                                                                                                                                
CHAIR JOHANSEN thanked Mayor Pond and asked Captain Falvey to                                                                   
address the committee.                                                                                                          
                                                                                                                                
11:17:09 AM                                                                                                                   
                                                                                                                                
JOHN FALVEY, Captain, General Manager, Marine Highway System                                                                    
(AMHS), Alaska Department of Transportation & Public Facilities                                                                 
(DOT&PF), stated the following:                                                                                                 
                                                                                                                                
     I don't  have a PowerPoint  but what I  would like to  do is                                                               
     talk a little  bit from a technical standpoint  since I have                                                               
     a pretty  good handle on  how things go  day by day,  day in                                                               
     and day out, and the technical  aspects of things.  What I'd                                                               
     like to talk about is  the Southern Gateway Shuttle project.                                                               
     I  want to  talk about  that  a little  bit.   We'll talk  a                                                               
     little bit about  SOLAS [Safety of Life at Sea]  and then we                                                               
     can go from there.                                                                                                         
                                                                                                                                
     I'd like  to start by saying  in November of 2004  the state                                                               
     commenced  what  is  called  a design  study  report  for  a                                                               
     Southern  Gateway Shuttle.   This  was  federally funded  so                                                               
     there  was  a  federal   bidding  process  and  Glosten  and                                                               
     Associates,  a very  capable firm,  they've actually  done a                                                               
     lot of work  for us.  They designed the  fast ferries.  They                                                               
    won the bid and they commenced the design study report.                                                                     
                                                                                                                                
     What a design study report  does is it makes our recommended                                                               
     design recommendations - it doesn't  actually come up with a                                                               
     drawing that  you can bring to  a shipyard and say  go ahead                                                               
     and build the boat, but it comes  up with a concept.  It's a                                                               
     pretty  detailed process.   They  take all  kinds of  things                                                               
     into account.   This report  is 60 or  70 pages long.   They                                                               
     look  at different  vessel types,  different vessels,  maybe                                                               
     two  vessels going  end to  end, day  boats, 24/7  boats, it                                                               
     goes on and on.   It also provides the necessary preliminary                                                               
     engineering  needed for  environmental documentation.   They                                                               
     develop a  cost estimate.   We have  a rough  cost estimate.                                                               
     They  recommend   the  best  acquisition  type   process  to                                                               
     physically go out and purchase the boat.                                                                                   
                                                                                                                                
     Mayor Weinstein was correct in  saying there was $27 million                                                               
     of federal money  in a pot.  That money  is no longer there.                                                               
     I  guess  what  I  can  say is  federal  dollars  -  Shakwak                                                               
     [Project]  dollars [a  highway  construction funding  accord                                                               
     between the  United States and  Canada] - it's  very complex                                                               
     the way that  money gets spent.  I'm just  going to leave it                                                               
     at that.                                                                                                                   
                                                                                                                                
11:19:50 AM                                                                                                                   
                                                                                                                                
CAPTAIN FALVEY continued:                                                                                                       
                                                                                                                                
     Now, as I  say, this process began in November  of 2004.  In                                                               
     May  of  2005 Glosten  did  deliver  to  us a  design  study                                                               
     report.  They came up with  what we'd call a forward concept                                                               
     vessel.    In  essence,  this  vessel  is,  in  their  final                                                               
     analysis,  after a  lot of  analysis, a  steel hulled  long,                                                               
     slender  vessel.   It's not  a  vessel that  would need  the                                                               
     horsepower, per se, to reach  a speed of approximately 24 to                                                               
     25 knots.   That would  allow us  to run from  the Ketchikan                                                               
     terminal to Prince Rupert as a  day boat with a capacity for                                                               
     250  people  approximately,  and 60  large  Alaska  standard                                                               
     vehicles.   It also has got  to have the capacity  to handle                                                               
     vans,  which  there  are  quite a  few  of,  because  that's                                                               
     important.   In July of  2006 this project  became inactive.                                                               
     Probably we  don't want to  go into  details on that  but it                                                               
     became inactive due  to a lack of activity  with the project                                                               
     and  money,  funding  sitting  in that  project  pot.    The                                                               
     Federal Highway  [Administration] will not allow  us to have                                                               
     a project that,  in essence, sits inactive and  money is not                                                               
     being spent on the project.                                                                                                
                                                                                                                                
     In February of 2007 I reactivated  the project.  There was a                                                               
     process we had to go through  to reactivate the process.  So                                                               
     the Southern  Gateway Shuttle  is back on  the books.   It's                                                               
     back  on the  rolls and,  as  of just  a few  days ago,  the                                                               
     Federal  Highway  [Administration]   folks  talked  to  both                                                               
     myself and  my director of  engineering and indicated  to us                                                               
     that you  need to  get some  more money in  the pot  and you                                                               
     need to start  doing something or it can't stay  active.  So                                                               
     that's where we're at with the Southern Gateway [Shuttle].                                                                 
                                                                                                                                
     I  guess, logically,  the first  question that  comes to  my                                                               
     mind, being a technical guy here,  is with the folks in this                                                               
     room and the  thought process that will go on  again after I                                                               
     get done  talking, Is there  some concept that this  may not                                                               
     be the vessel  we want?  I think that  to proceed ahead with                                                               
     the  vessel  we do  want,  we  need  to have  pretty  strong                                                               
     guidance  from  somewhere.   We've  heard  about  Metlakatla                                                               
     possibly being  involved.  This  would not be the  vessel to                                                               
     go on to Metlakatla, most likely.   So I think we need to be                                                               
     very careful.   We need to  get some good solid  guidance as                                                               
     to  how we're  going to  go forward  and then  move forward.                                                               
     Very roughly,  this is an  $80 million boat. That's  a rough                                                               
     figure  but  those  are  the  kind  of  figures  that  we're                                                               
     [indisc.].  That's a lot of money.                                                                                         
                                                                                                                                
     To go  from where we  are now,  we probably need  another $1                                                               
     million so  we can actually draw  a design that we  can take                                                               
     to a shipyard [indisc.] build it.   Then you'd probably be a                                                               
     few years away from actually  building something.  As far as                                                               
     new construction,  what has happened  is the  hurricane that                                                               
     hit New  Orleans did  so much damage  to marine  vessels and                                                               
     barges  and  all of  that,  that  the shipyards  are  facing                                                               
     backlogs.   These  companies  that  manufacture engines  and                                                               
     provide parts and pieces for ships are really backlogged.                                                                  
                                                                                                                                
     So that's what  we have for the  Southern Gateway [Shuttle].                                                               
     I  would  say that  technically  we're  going to  need  some                                                               
     guidance as to  is this the boat for us  because I've got on                                                               
     a  piece of  paper a  concept of  what it  should be.   It's                                                               
     pretty quick  and pretty easy  to physically design it.   So                                                               
     that's step one.                                                                                                           
                                                                                                                                
11:23:20 AM                                                                                                                   
                                                                                                                                
CAPTAIN FALVEY continued:                                                                                                       
                                                                                                                                
     I guess  the other thing I  want to talk about  is, as Mayor                                                               
     Pond had  mentioned, is SOLAS.   SOLAS is Safety of  Life at                                                               
     Sea, it's international regulations,  so these aren't United                                                               
     States  or Canada's  rules; these  are international  rules.                                                               
     Basically they are  set in place for vessels  going from one                                                               
     country to another calling on a  foreign port.  Where we are                                                               
     now  is because  these regulations  are tiered  regulations,                                                               
     we've been dealing  with this for years,  getting botched up                                                               
     with  it, and  we  continue  to deal  with  it.   It's  very                                                               
     expensive.   We make these modifications  during our federal                                                               
     projects.   During  the  CIP  [Capital Improvement  Project]                                                               
     federal overhauls, we do a little at a time.                                                                               
                                                                                                                                
     So what  I understand  now is we've  got three  vessels that                                                               
     are SOLAS  certified as we speak  today - 2010 is  not a big                                                               
     benchmark for us - the [MV]  Matanuska and the [MV] Taku and                                                               
     the [MV] Kennecott.   The Kennecott's in  pretty good shape.                                                               
     She  is a  [indisc.].   When they  built the  Kennecott they                                                               
     knew  that  this was  coming  2010  out  in the  future  and                                                               
     prepared for that.   So we're really, money  wise, in pretty                                                               
     good shape with the Kennecott.   As far as the Matanuska and                                                               
     the Taku are concerned, we are  in the groove with that.  We                                                               
     know what  we have to  do.  I  don't know whether  I'll bore                                                               
     everybody with  the different requirements.   It's technical                                                               
     stuff.  But,  as far as the Matanuska is  concerned, we need                                                               
     by 2010 to put another $6  million or so into that boat just                                                               
     for SOLAS,  let alone  anything else that  we might  need to                                                               
     keep  the  boat running  and  believe  me, the  big  federal                                                               
     projects are what keeps these  boats running, not the state.                                                               
     [indisc.].  As  far as the Taku is concerned,  by 2010 we're                                                               
     looking at  about 4.6 million.   We  have that money  set in                                                               
     place and we are  in the groove, we have a plan.   We have a                                                               
     process to get  the money and we know the  money is going to                                                               
     be there.                                                                                                                  
                                                                                                                                
     So as  far as  we're concerned, those  three boats  with the                                                               
     money  that  I  just  mentioned will  meet  the  2010  SOLAS                                                               
     requirements.   Now  that's important  because  I would  say                                                               
     technically, no  matter how hard  we push, we'd  probably be                                                               
     hard-pressed to  have a [Southern] Gateway  Shuttle by 2010.                                                               
     That's only three  years away.  So we  can't leave ourselves                                                               
     holding the  bag with no  boats [indisc.] at  Prince Rupert.                                                               
     So, we've got that covered.   There's a plan and that's what                                                               
     it's going to cost.                                                                                                        
                                                                                                                                
11:26:26 AM                                                                                                                   
                                                                                                                                
     As far as Prince Rupert  itself, as the Mayor had mentioned,                                                               
     there   are   issues   but  none   of   these   issues   are                                                               
     insurmountable.  We plan to move  ahead and discuss a lot of                                                               
     these  issues,  things  like  the  actual  dock  itself  and                                                               
     transfer bridge.   We need  to talk about  lease agreements,                                                               
     SOLAS, which I've  just discussed.  We've  got that covered.                                                               
     Customs issues -  that's a big one for us,  probably for you                                                               
     too.  That not only involves  our crews coming and going out                                                               
     of Canada  but our batches.   We need  to talk about  all of                                                               
     that.   Captain  [George] Capacci  and I,  being busy  guys,                                                               
     have  failed twice  now to  meet.   George has  attempted to                                                               
     come  to  Ketchikan twice  but  either  his schedule  or  my                                                               
     schedule didn't  dovetail and  the idea  behind that  was to                                                               
     start   some  discussions   on   mutually  sharing   docking                                                               
     arrangements.   So we  are going  to try  to side  bar today                                                               
     with Deputy Commissioner Hardy,  Captain Capacci, and myself                                                               
     regarding that.   We  will start  those talks  and hopefully                                                               
     they'll be fruitful.                                                                                                       
                                                                                                                                
     That's really about what I have.   I want everybody to fully                                                               
     understand what the Southern Gateway  [Shuttle] is.  I think                                                               
     that if  there's one  direction this group  needs to  try to                                                               
     take us in,  Is what we have on paper  now, conceptually, is                                                               
     this the  way we're  going to  go?   JC had  mentioned South                                                               
     Mitkof.   This boat could  do something about that.   You've                                                               
     got some draft  problems there but this boat  would be okay.                                                               
     So we need  some good guidance.  That's what  we need.  It's                                                               
     unfortunate that this  project was swept but I  got it back.                                                               
     It's back,  it's there.   I would say the  biggest challenge                                                               
     is getting the  money to build it.  So,  that's what I have.                                                               
     If there  are questions, I'd be  more than happy -  I've got                                                               
     some  more  staff  here  too  if I  can't.    I've  got  our                                                               
     accountant here and our ops engineer here so.                                                                              
                                                                                                                                
CHAIR  JOHANSEN  announced   that  he  wanted  to   hold  off  on                                                               
questions.  He noted the  House Transportation Standing Committee                                                               
would be  meeting in Juneau  in January or early  February [2008]                                                               
and wanted members  to start thinking about  these issues between                                                               
now and then.                                                                                                                   
                                                                                                                                
CAPTAIN FALVEY  repeated that DOT&PF  has a very  detailed report                                                               
that provides a concept.                                                                                                        
                                                                                                                                
11:29:39 AM                                                                                                                   
                                                                                                                                
CHAIR  JOHANSEN asked  participants to  look at  DOT&PF's report.                                                               
He said  the bottom  line is  to connect  these communities.   He                                                               
asked  the  community  leaders to  communicate  their  needs  and                                                               
desires to Deputy Commissioner Hardy and Captain Falvey.                                                                        
                                                                                                                                
CAPTAIN  FALVEY said  he will  not let  the project  die at  this                                                               
point.                                                                                                                          
                                                                                                                                
11:31:05 AM                                                                                                                   
                                                                                                                                
REPRESENTATIVE NEUMAN  said he looks  forward to working  on this                                                               
issue  and   doing  what  is   necessary  to  help   support  the                                                               
communities involved.                                                                                                           
                                                                                                                                
REPRESENTATIVE JOHNSON added that  the Southern Gateway [Shuttle]                                                               
is a very interesting concept.                                                                                                  
                                                                                                                                
REPRESENTATIVE  DOOGAN  said  he  is interested  in  seeing  more                                                               
details  and has  some  sympathy  for people  who  can see  their                                                               
neighbors but  can't quite get  to them, so  he will be  happy to                                                               
look at this issue further.                                                                                                     
                                                                                                                                
The committee took an at-ease from 11:33:15 AM  to 11:33:15 AM.                                                             
                                                                                                                                
CHAIR JOHANSEN  called the  meeting back to  order and  asked Mr.                                                               
Miller to begin his presentation.                                                                                               
                                                                                                                                
KENT MILLER, a  private industrial economist, said  he has worked                                                               
on  transportation  projects  over   the  years,  beginning  with                                                               
container barge service  in the 1960s.  He said  he would present                                                               
a private  sector option for  addressing a portion of  the market                                                               
for  passenger and  vehicle ferry  service between  Ketchikan and                                                               
Prince Rupert.  He continued:                                                                                                   
                                                                                                                                
     The logic  of this project  is that historically  about half                                                               
     of  the ferry  traffic between  Ketchikan and  Prince Rupert                                                               
     has been local,  that is between the two ports.   About half                                                               
     has  been   long  haul  between  Prince   Rupert  and  ports                                                               
     [indisc.].   During  the past  20 years,  all components  of                                                               
     marine   highway  traffic   between  Southeast   Alaska  and                                                               
     Ketchikan have declined very substantially,  on the order of                                                               
     50  percent.    The  Alaska  Sea  Road  Project,  which  I'm                                                               
     proposing  to  develop,  addresses  local  traffic  that  is                                                               
     between  Ketchikan  and   Prince  Rupert,  specifically  the                                                               
     portion of the local traffic that  has been lost in the last                                                               
     20  years.   This  is  not intended  to  be  a project  that                                                               
     competes  with  any other  development  objectives.   It  is                                                               
     intended specifically  to restore traffic that  the existing                                                               
     [indisc.]  no longer  carries and  to complement  the marine                                                               
     highway main lines and service Metlakatla [indisc.].                                                                       
                                                                                                                                
     As Mayor Pond said, when  we talk about Prince Rupert, we're                                                               
     not  talking about  just the  city.   We're talking  about a                                                               
     region.   The sea road concept,  addressing improved service                                                               
     between Ketchikan  and Prince Rupert [indisc.]  local region                                                               
     consisting  of   the  Skeena  and  Nass   Valleys  and  more                                                               
     extensively [indisc.] north into  the Cassiar and addressing                                                               
     the  Cassiar  physically  with a  connection  to  Hyder  and                                                               
     Stewart.   Beyond that, the  sea road concept sees  the need                                                               
     for   a   market   for  access   to   major   transportation                                                               
     infrastructure at both Prince  Rupert and Hyder and Stewart,                                                               
     mainly via rail and the Highway 16.                                                                                        
                                                                                                                                
     The  concept for  a passenger  vehicle ferry  service starts                                                               
     with  a definition  of service  needs of  the program.   The                                                               
     boat doesn't exactly  come first but, on the  other hand, in                                                               
     presenting  the  concept  of   a  passenger  vehicle  ferry,                                                               
     certainly the  picture of the  boat is worth  many thousands                                                               
     of words.                                                                                                                  
                                                                                                                                
11:51:20 AM                                                                                                                   
                                                                                                                                
     So, to make  the presentation as brief as  possible, this is                                                               
     the conceptual  design for  a vessel  that would  serve both                                                               
     Prince  Rupert and  Hyder's  local  passenger vehicle  ferry                                                               
     needs.   It's a less than  150 passenger boat.   It would be                                                               
     certificated under  46 CFR  subchapter (K).   It would  be a                                                               
     SOLAS  vessel,  capable  of service  between  the  U.S.  and                                                               
     Canada.   It has a capacity  of under 150 passengers  and 24                                                               
     vehicles.  Vehicles  are defined as standard  vehicles.  The                                                               
     standard  is the  Ford Expedition,  essentially,  17 foot  3                                                               
     inch, six  foot 8 [inches]  wide, 5800 pound vehicle.   That                                                               
     would be the average.   These vehicles are accommodated on a                                                               
     car deck that  is partly covered and partly open.   The open                                                               
     section  of the  car deck  aft  is capable  of carrying  the                                                               
     largest personal  use vehicles on the  road today, typically                                                               
     Winnebago ... and Class A motor  homes or a larger number of                                                               
     Class C vehicles,  also motor homes or  the equivalent small                                                               
     to medium  truck.   The passenger  cabin is  set up  for, in                                                               
     this rendering  in a  very rudimentary way,  as you  can see                                                               
     [indisc.] definition  of spaces, into a  forward observation                                                               
     lounge,  a central  recliner lounge,  and  coffee shop,  bar                                                               
     area with about  176 feet.  There's the solarium  on the top                                                               
     deck,  which would  have additional  coverage  but open  air                                                               
     seating.                                                                                                                   
                                                                                                                                
     It's a  conventional 173 foot  long, 34 foot wide,  steel 16                                                               
     knot ferry.   It's designed for  economical construction and                                                               
     operation, construction  on a budget  less than  $8 million,                                                               
     well precedented for  a [indisc.] operation with  a day crew                                                               
     of four or five and,  for extended operation over the longer                                                               
     day  necessary for  the trips  it is  programmed for  with a                                                               
     double day crew  of eight.  The  crew on a 100  ton boat, of                                                               
     course, the  crew operates the  boat and  provides passenger                                                               
     services, including food and beverage.                                                                                     
                                                                                                                                
     So, there's the  vessel concept going on to  really the more                                                               
     important  features of  the project,  the definition  of how                                                               
     the service  would work.  This  is a summary of  the service                                                               
     characteristics.  Beginning  in 2009, we would  operate a 22                                                               
     week  season  ending  November  1.   Its  routing  would  be                                                               
     Sunday, Tuesday, Thursday, Prince  Rupert and Ketchikan, and                                                               
     Monday,  Wednesday, Friday,  Hyder,  Ketchikan, Rupert,  and                                                               
     Saturday  Prince Rupert,  Ketchikan, Prince  Rupert.   Daily                                                               
     service between Ketchikan and the  terminal at Prince Rupert                                                               
     and  Hyder  with  four [indisc.]  Prince  Rupert  and  Hyder                                                               
     [indisc....]                                                                                                               
                                                                                                                                
     So  this  doesn't  include  discounts,  it  doesn't  include                                                               
     premiere  fares for  certain seasons  or  travel in  certain                                                               
     travel markets but  the average fare revenue  would be about                                                               
     $60 initially for  a one-way passenger fare,  and about $130                                                               
     for the standard Ford Expedition  fare.  And then for larger                                                               
     vehicles $215, these would be  vehicles of the Class C motor                                                               
     home  size.   Of  course  there  would  be lower  fares  for                                                               
     compacts  and  higher  fares  still  for  the  very  largest                                                               
     vehicles.                                                                                                                  
                                                                                                                                
     Prince Rupert  and Hyder would  be level rated, that  is the                                                               
     fares would be the same  even though the running distance is                                                               
     50  percent  greater  to Hyder  and  there  are  incremental                                                               
     costs,  such  as fuel  in  particular.   The  service  could                                                               
     nevertheless  be  optimized  based   on  a  quite  intensive                                                               
     utilization  of  the  vessel   on  these  combined  routings                                                               
     between  Prince  Rupert,  Ketchikan, Hyder,  and  then  back                                                               
     again.                                                                                                                     
                                                                                                                                
11:56:43 AM                                                                                                                   
                                                                                                                                
     Looking at the time table  for the service, the timetable is                                                               
     intended to  provide daylight service between  Ketchikan and                                                               
     Prince Rupert.  It's a timetable  that is the same for every                                                               
     trip.   It  repeats weekly  through  the 22  weeks and  it's                                                               
     intended to interface with  [Alaska] Marine Highway [System]                                                               
     service to Metlakatla and IFA  service to and from Prince of                                                               
     Wales.  Our view of  Ketchikan is expensive too, considering                                                               
     the entire 20,000 population of  the Ketchikan and Prince of                                                               
     Wales -  the outer Ketchikan  areas put together.   The boat                                                               
     Sunday, Tuesday, Thursday would  leave Prince Rupert, having                                                               
     overnighted  there at  7 AM,  reach Ketchikan  at 11:45  AM,                                                               
     taking into account the time  change, leaving again at 12:15                                                               
     PM and  arriving in Hyder  at 10:00  PM.  The  next morning,                                                               
     having  overnighted at  Hyder, it  would leave  at 7:00  AM,                                                               
     arrive in  Ketchikan at 2:45,  leave Ketchikan at  3:15, and                                                               
     arrive at  Rupert at 10.   On Saturday it would  make a trip                                                               
     only  between Prince  Rupert and  Ketchikan, leaving  Prince                                                               
     Rupert  in  the morning  and  following  the same  schedules                                                               
     north  and  back, just  omitting  the  connection to  Hyder,                                                               
     which it's not capable of doing in a single day.                                                                           
                                                                                                                                
     The  vessel,  of course,  is  intended  as a  profit  making                                                               
     project.   It would  have to make  money under  the criteria                                                               
     outlined  and  the business  plan  seems  very promising  of                                                               
     that.  I  promised ten minutes and I hope  I haven't overrun                                                               
    so I'll be glad to answer questions when the time comes.                                                                    
                                                                                                                                
11:58:41 AM                                                                                                                   
                                                                                                                                
CHAIR  JOHANSEN  remarked that  Mr.  Miller's  point is  that  if                                                               
options  other than  the  AMHS are  considered,  other folks  are                                                               
interested  in  providing  service.    He  suggested  Mr.  Miller                                                               
contact Captain  Falvey and reminded everyone  that other options                                                               
exist.  He thanked participants for attending the meeting.                                                                      
                                                                                                                              
ADJOURNMENT                                                                                                                   
                                                                                                                                
There being no further business before the committee, the House                                                                 
Transportation Standing Committee meeting was adjourned at 12:00                                                                
p.m.                                                                                                                            

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