Legislature(2003 - 2004)

05/12/2003 05:36 PM House TRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
            HOUSE TRANSPORTATION STANDING COMMITTEE                                                                           
                          May 12, 2003                                                                                          
                           5:36 p.m.                                                                                            
MEMBERS PRESENT                                                                                                               
Representative Jim Holm, Co-Chair                                                                                               
Representative Beverly Masek, Co-Chair                                                                                          
Representative Hugh Fate                                                                                                        
Representative Vic Kohring                                                                                                      
Representative Dan Ogg                                                                                                          
MEMBERS ABSENT                                                                                                                
Representative Mary Kapsner                                                                                                     
Representative Albert Kookesh                                                                                                   
COMMITTEE CALENDAR                                                                                                            
HOUSE BILL NO. 304                                                                                                              
"An Act naming the Jack Coghill Bridge to the Interior."                                                                        
     - MOVED HB 304 OUT OF COMMITTEE                                                                                            
HOUSE BILL NO. 315                                                                                                              
"An Act relating to international airports revenue bonds; and                                                                   
providing for an effective date."                                                                                               
     - MOVED HB 315 OUT OF COMMITTEE                                                                                            
PREVIOUS ACTION                                                                                                               
BILL: HB 304                                                                                                                  
SHORT TITLE:JACK COGHILL BRIDGE TO THE INTERIOR                                                                                 
SPONSOR(S): REPRESENTATIVE(S)COGHILL                                                                                            
Jrn-Date   Jrn-Page                      Action                                                                                 
05/07/03     1416       (H)         READ THE FIRST TIME -                                                                       
05/07/03     1416       (H)         TRA, STA                                                                                    
05/12/03                (H)         TRA AT 5:30 PM CAPITAL 102                                                                  
BILL: HB 315                                                                                                                  
SHORT TITLE:INTERNATIONAL AIRPORTS REVENUE BONDS                                                                                
SPONSOR(S): RLS BY REQUEST OF THE GOVERNOR                                                                                      
Jrn-Date   Jrn-Page                      Action                                                                                 
05/09/03     1518       (H)         READ THE FIRST TIME -                                                                       
05/09/03     1518       (H)         TRA, FIN                                                                                    
05/09/03     1518       (H)         FN1: (REV)                                                                                  
05/09/03     1518       (H)         GOVERNOR'S TRANSMITTAL LETTER                                                               
05/10/03                (H)         TRA AT 9:30 AM CAPITAL 17                                                                   
05/10/03                (H)          -- Meeting Canceled --                                                                     
05/12/03                (H)         TRA AT 5:30 PM CAPITAL 102                                                                  
WITNESS REGISTER                                                                                                              
REPRESENTATIVE JOHN COGHILL                                                                                                     
Alaska State Legislature                                                                                                        
Juneau, Alaska                                                                                                                  
POSITION STATEMENT:  Presented sponsor statement for HB 304.                                                                  
MIKE BARTON, Commissioner                                                                                                       
Department of Transportation & Public Facilities (DOT&PF)                                                                       
Juneau, Alaska                                                                                                                  
POSITION  STATEMENT:   Presented  sponsor  statement  for HB  315,                                                              
which  was sponsored  by  the House  Rules  Standing Committee  by                                                              
request of the governor.                                                                                                        
KEN SURA, Vice President                                                                                                        
Financial Planning & Program Implementation                                                                                     
Landrum & Brown, Inc.                                                                                                           
Chicago, Illinois                                                                                                               
POSITION  STATEMENT:  Testified   on  HB  315,  providing  details                                                              
pertaining to  the Alaska  International Airports System  Business                                                              
Planning Information.                                                                                                           
ACTION NARRATIVE                                                                                                              
TAPE 03-22, SIDE A                                                                                                            
Number 0001                                                                                                                     
CO-CHAIR  JIM  HOLM  called  the   House  Transportation  Standing                                                            
Committee meeting  to order  at 5:36  p.m.  Representatives  Holm,                                                              
Masek, Fate, Kohring, and Ogg were present at the call to order.                                                                
HB 304-JACK COGHILL BRIDGE TO THE INTERIOR                                                                                    
CO-CHAIR HOLM  announced that  the first  order of business  would                                                              
be HOUSE BILL NO.  304, "An Act naming the Jack  Coghill Bridge to                                                              
the Interior."                                                                                                                  
CO-CHAIR HOLM  began the meeting  by referring to pictures  of the                                                              
bridge  [supplied by  the Department  of  Transportation &  Public                                                              
Facilities (DOT&PF)]  which crosses the  Nenana River at  the area                                                              
called "Rex Crossing."                                                                                                          
Number 0148                                                                                                                     
REPRESENTATIVE  JOHN COGHILL, Alaska  State Legislature,  speaking                                                              
as the sponsor of  HB 304, clarified that the bridge  is currently                                                              
called "Bridge #216."   He said there is a story  behind naming of                                                              
the bridge,  and there is also  a story behind the  bridge itself.                                                              
He  told the  committee of  a conversation  that  his middle  son,                                                              
Joshua, had  with Joshua's  grandpa [Jack Coghill].   One  day, as                                                              
they  were driving  across  this  bridge on  their  way to  Healy,                                                              
grandpa told  the story of  how this bridge  came to be,  and ever                                                              
since  hearing that  story, Joshua  "put it  in his  head that  he                                                              
wanted to  do something about  it" - that  is, to name  the bridge                                                              
after his grandfather.                                                                                                          
Number 0177                                                                                                                     
REPRESENTATIVE COGHILL  then told the committee that  in the early                                                              
1960s,  during the  time  his father  [Jack  Coghill]  was in  the                                                              
Senate,  before  there was  even  a road  coming  to  or from  the                                                              
bridge,  it received  appropriation  under  his guidance.    After                                                              
construction,  there  wasn't a  road  to or  from  the bridge  for                                                              
another  15 months.    He  said that  he's  had a  difficult  time                                                              
finding people  who were in the  legislature during that  time who                                                              
could tell  him more of the story.   He explained that  he doesn't                                                              
have more  of the story  from his dad  because he hasn't  told him                                                              
about HB  304 and is  hoping that the  naming of the  bridge would                                                              
come as a surprise.                                                                                                             
CO-CHAIR HOLM commented  that a lot of the people  who served with                                                              
Jack Coghill  are no  longer with  us.  For  the record,  he noted                                                              
the  passing  of former  Senator  Bill  Waugaman that  morning,  a                                                              
great man who would be missed.                                                                                                  
CO-CHAIR MASEK said  this honoring of the  Representative's father                                                              
was well deserved.                                                                                                              
Number 0501                                                                                                                     
CO-CHAIR  MASEK moved  to  report  HB 304  out  of committee  with                                                              
individual  recommendations  and  the  accompanying  fiscal  note.                                                              
There  being no  objection, HB  304  was reported  from the  House                                                              
Transportation Standing Committee.                                                                                              
HB 315-INTERNATIONAL AIRPORTS REVENUE BONDS                                                                                   
CO-CHAIR HOLM announced  that the next order of  business would be                                                              
HOUSE BILL  NO. 315,  "An Act relating  to international  airports                                                              
revenue bonds; and providing for an effective date."                                                                            
Number 0620                                                                                                                     
MIKE BARTON, Commissioner,  Department of Transportation  & Public                                                              
Facilities (DOT&PF),  presented the sponsor statement  for HB 315,                                                              
which  was sponsored  by  the House  Rules  Standing Committee  by                                                              
request  of the  governor.    He said  the  bill would  raise  the                                                              
bonding  authorization  for  revenue  bonds for  the  Ted  Stevens                                                              
Anchorage International  Airport  and the Fairbanks  International                                                              
Airport   by  $76.6   million  and   that  the   request  is   for                                                              
authorization  to sell  revenue  bonds to  finance the  additional                                                              
costs.  He said  that a briefing of the additional  costs had been                                                              
provided in mid-March.                                                                                                          
COMMISSIONER  BARTON   said  his   intent  was  to   provide  some                                                              
background  information and  that people  were on  line to  answer                                                              
questions  in  greater  detail.    He began  by  saying  that  the                                                              
Fairbanks and Anchorage  airports were operated as a  system.  The                                                              
operation is  governed by  what's known  as an "airport  operating                                                              
agreement," which  is essentially a contract between  airports and                                                              
airlines and establishes  a business relationship  between the two                                                              
parties.   It  obligates  the  airlines to  pay  for  the cost  of                                                              
running and  maintaining the  airport, including capital  projects                                                              
and  bonded indebtedness,  through the  fees that  are charged  at                                                              
the  airport.    It  also  obligates   the  airport  to  a  secure                                                              
agreement on costs including capital projects.                                                                                  
COMMISSIONER  BARTON said  that  in 1997  the  airlines agreed  to                                                              
fund the  terminal re-development projects.   Two sets  of revenue                                                              
bonds were  previously issued,  one in 1999  and one in  2002, and                                                              
HB  315 is  somewhat similar  in that  it does  not constitute  an                                                              
obligation to  the state, the bonds  are insured, and it  does not                                                              
involve general fund monies.                                                                                                    
COMMISSIONER  BARTON continued  that there  have been  discussions                                                              
with  the   airlines  since  January   about  how  to   cover  the                                                              
additional costs and  agreements have been reached on  a number of                                                              
things.   One  is that  Concourse  C needs  to  be completed;  the                                                              
airlines  agree with  that.  The  department  has agreed to  defer                                                              
$60  million  in capital  projects  to  later  years in  order  to                                                              
minimize  the  impact  of  this  on the  airlines,  and  has  also                                                              
agreed to continue  with capital projects that  are largely funded                                                              
by  federal  money.    Commissioner  Barton  mentioned  that  Dave                                                              
Eberle  [DOT&PF]  was  on  line,  and  could  walk  the  committee                                                              
through  the  "Legislative  Briefing"  in  the  committee  packet,                                                              
although it  would largely be a  repetition of what  was presented                                                              
in mid-March.                                                                                                                   
CO-CHAIR HOLM  responded that  it wasn't  necessary to  review the                                                              
briefing, as  it was  presented during  a subcommittee  meeting as                                                              
well as at an [overview on March 13, 2003].                                                                                     
COMMISSIONER  BARTON then  referred to  the "Alaska  International                                                              
Airports  System Business  Planning Information"  included in  the                                                              
committee   packet  that   was   put  together   by  a   financial                                                              
consultant,  and  in particular,  Ken  Sura  of Landrum  &  Brown,                                                              
Inc.,  in Chicago,  a company  that's been  involved with  various                                                              
airport  projects,   including   projects  in  Chicago,   Toronto,                                                              
Cleveland, San  Jose, and  San Diego.   He directed  the committee                                                              
to  page  18,  indicating  the request  for  a  bonding  authority                                                              
amount of  $76.6 million.   He  pointed out  that of that  amount,                                                              
$48.0 million  is for the terminal  project, $10.0 million  is for                                                              
the capital  improvement  project (CIP) for  Anchorage for  fiscal                                                              
year 2004  (FY 04) - and  is the match  money for federal  funds -                                                              
and $3.5 million  is for CIP funding for Fairbanks,  which is also                                                              
match money  for federal  funding, and  there are other  financing                                                              
costs for the bond package, which is $15.1 million.                                                                             
Number 1048                                                                                                                     
COMMISSIONER  BARTON explained  the context  for the bond  request                                                              
and  the expectations  regarding economic  activity and  continued                                                              
airport operations over  the next several years.  He  said that no                                                              
general fund monies  are involved, nor is the credit  of the state                                                              
involved;  the bonds  are  secured by  the  revenues generated  by                                                              
Anchorage  and  Fairbanks,  and   the  insurance  company  is  the                                                              
ultimate payor in the event of a problem.                                                                                       
CO-CHAIR HOLM  inquired about  [previous] testimony  regarding net                                                              
revenues  amounting  to  1.25 times  [the  Aggregate  Annual  Debt                                                              
COMMISSIONER  BARTON responded  that  the airport  is required  to                                                              
collect from the airlines 1.25 times the annual debt service.                                                                   
CO-CHAIR HOLM  asked if this amount  - 1.25 times the  annual debt                                                              
servicing  - includes, with  projections,  the $76.6 million  that                                                              
is being requested.                                                                                                             
COMMISSIONER BARTON confirmed that this was the case.                                                                           
CO-CHAIR  HOLM thereby  confirmed that  projections indicate  that                                                              
the amount  can  be managed.   He then  referred  to the [House  &                                                              
Senate joint  overview meeting of  March 13, 2003] in  which fees,                                                              
including   landing   fees,   were  indicated,   and   asked   why                                                              
Anchorage's  fees  were  so  low,   noting  that  the  amount  was                                                              
significantly lower than that for Seattle or Los Angeles.                                                                       
COMMISSIONER BARTON  commented that the Anchorage  airport is very                                                              
efficient, is well run, and is a reasonably low-cost operation.                                                                 
Number 1236                                                                                                                     
KEN   SURA,  Vice   President,   Financial   Planning  &   Program                                                              
Implementation,  Landrum  &  Brown,  Inc.,  said  that  primarily,                                                              
landing  fees are a  function of  the structure  of the  operating                                                              
agreement  as well  as a  function of  where the  airports are  in                                                              
their particular  development  cycles - that  is, the  investments                                                              
being made in capital  programs.  He said that the  taking of such                                                              
a  "snapshot"  presents  an uneven  comparison  of  Anchorage  and                                                              
Fairbanks with other airports.                                                                                                  
CO-CHAIR HOLM replied  that this did not answer  his question, and                                                              
asked  if a "snapshot  in time"  was taken  with given  parameters                                                              
set, so  that apples  were being  compared to  apples rather  than                                                              
comparing applies  to oranges.  He  asked why the landing  fees in                                                              
Anchorage are so much less than those of other airports.                                                                        
MR. SURA  said this was  due in part  to the take-off  weight from                                                              
cargo carriers because  that helps to reduce the  landing fee, and                                                              
is  a  function  of  how  the  agreement   with  the  airlines  is                                                              
COMMISSIONER BARTON  offered that  Anchorage is the  busiest cargo                                                              
airport in the country.                                                                                                         
CO-CHAIR  HOLM  added  that in  addition  to  acknowledging  that,                                                              
Alaskans  pay the  highest  amount in  the  country for  traveling                                                              
from points  a-to-b.  He questioned  why the landing fees  were so                                                              
low and what the  correlation might be between these  fees and the                                                              
high costs  of travel in Alaska.   He noted that a  one-way ticket                                                              
from Fairbanks  to Anchorage was  $170, while flying  from Seattle                                                              
to San Diego could be as low as $99.                                                                                            
MR. SURA  responded that these prices  were not a function  of the                                                              
landing  fees, terminal  rentals,  or other  charges,  but were  a                                                              
function  of  what  the  market   would  bear.    Because  of  the                                                              
necessity to  have air service from  Alaska to the Lower  48, in a                                                              
capitalistic  market,  the  airlines  will charge  what  they  can                                                              
CO-CHAIR HOLM  responded that he  was aware of that,  but wondered                                                              
if the  cost of  transportation  in Alaska was  being elevated  by                                                              
virtue  of   subsidizing  the  landing   and  take-off   fees  for                                                              
commercial  freight handling  and wondered  what the  relationship                                                              
was between that  and the cost of passenger travel.   He mentioned                                                              
that he just  flew roundtrip and the TSA  [Transportation Security                                                              
Administration] fees  were $52.  He asked if there  should be some                                                              
commensurate  increase in the  landing fee  to offset  some costs,                                                              
and asked if this had been addressed.                                                                                           
MR. SURA  said this  had not  been addressed.   He indicated  that                                                              
across the  country there is a  lot of conversation  regarding how                                                              
the new  TSA security requirements  would be funded,  and airports                                                              
are working  to get  additional funding.   Currently, there  is no                                                              
funding specifically identified by the TSA or the DOT.                                                                          
Number 1548                                                                                                                     
COMMISSIONER  BARTON told the  committee that  $20 million  of the                                                              
added  cost  is  a  result  of   TSA  security  requirements,  and                                                              
referred  to  page  20  [of  the  "Alaska  International  Airports                                                              
System  Business   Planning  Information"]  which   addresses  the                                                              
[Alaska  International  Airport  System (AIAS)  Plan  of  Finance,                                                              
Landing  Fees], according  to the  anticipated  completion of  the                                                              
whole  terminal  project as  well  as  some capital  projects  and                                                              
future  bonding.   To  recapture  the $20  million  that has  been                                                              
invested in  Anchorage for TSA  requirements; that is  captured in                                                              
this  landing  fee.   He  said  that the  department  is  pursuing                                                              
direct reimbursement  with the TSA as  well, and that a  number of                                                              
airports  across the  country are  doing that,  however, not  very                                                              
successfully, so far.                                                                                                           
REPRESENTATIVE OGG asked about the timeframe involved.                                                                          
COMMISSIONER BARTON  answered that the bonds would be  paid off in                                                              
25 years.                                                                                                                       
CO-CHAIR HOLM referred  to the [AIAS Plan of Finance]  on page 20,                                                              
commenting  that there  is a  significant  difference between  the                                                              
feasibility  study  and  the  plan  for  financing  by  nearly  50                                                              
MR.  SURA  replied  that  the  2002   feasibility  study  did  not                                                              
contemplate this  particular bond issue  or the other  bond issues                                                              
seen in this  presentation.  The 2002 feasibility  study was based                                                              
on what  at that  time was  a negotiated  agreement between  AIAS,                                                              
the airport  system, and  the airlines, to  fund a $333  (indisc.)                                                              
five-year CIP.   He reiterated that the feasibility  study numbers                                                              
reflect  the negotiated  agreement  between the  airlines and  the                                                              
airport  system that  was to fund  $333 million  over a  five-year                                                              
period.   The  AIAS revised  forecast includes  the completion  of                                                              
Concourse C  as well  as the expected  funding for the  completion                                                              
of Concourses A and  B and the completion of the  CIP program.  He                                                              
said,  "That's why  the numbers  vary in the  years beyond  what's                                                              
Number 1781                                                                                                                     
REPRESENTATIVE  KOHRING  asked if  the  original  amount that  was                                                              
authorized   by   the   legislature    several   years   ago   was                                                              
approximately one-quarter million dollars.                                                                                      
COMMISSIONER  BARTON   said  that  $330  million   was  originally                                                              
REPRESENTATIVE  KOHRING,  commenting that  this  amount was  about                                                              
1/3  of  $1 billion,  questioned  why  more  was needed  than  was                                                              
originally   requested,   asking   if   it  was   due   to   major                                                              
modifications  made  to  the  original  design  as  well  as  from                                                              
accommodation overruns.                                                                                                         
COMMISSIONER  BARTON  replied  that   the  additional  monies  are                                                              
needed  for the TSA  requirement,  in the amount  of $20  million,                                                              
and  that  $30 million  is  for  redesigning  the structure  as  a                                                              
result of some  differences in the early stages  in interpretation                                                              
of seismic  codes; the  delay in  resolving that,  as well  as the                                                              
changes, resulted  in $30 million.   He also said there  were some                                                              
added space requirements that have been financed.                                                                               
REPRESENTATIVE  KOHRING  asked,  given  the  size  of  this  major                                                              
project  and  the   amount  of  debt,  if  the   commissioner  was                                                              
confident that the projected revenues would be available.                                                                       
COMMISSIONER BARTON confirmed that the risk would be minimal.                                                                   
REPRESENTATIVE KOHRING  then asked what assurances  were available                                                              
to indicate that the revenues would be adequate.                                                                                
COMMISSIONER  BARTON replied  that the  bulk of  the revenue  from                                                              
the  airport  comes from  cargo  carriers,  and the  cargo  market                                                              
looks  good,  with  the forecast  for  the  improvement  of  cargo                                                              
looking good,  as well.   The Asian cargo  market is  projected to                                                              
be the leader of  that increase.  He said that  there will be some                                                              
increase  in passenger  traffic.    He referred  to  page 5  [AIAS                                                              
Business  Planning  Information]  indicating  a  trend  line  that                                                              
shows what has happened  over the past 40 years  regarding how the                                                              
system has responded  to various shocks; the trend  line has grown                                                              
from  60  million  [U.S.  Revenue   Enplanements]  in  1960  to  a                                                              
projection of about 650 million in 2001.                                                                                        
COMMISSIONER BARTON  then referred to  page 6, which  shows what's                                                              
happening  in the  Asia  cargo market,  and  page  8, which  shows                                                              
cargo  projections  [Total  Gross   Take  Off  Weight]  and  lists                                                              
amounts such as 5 percent, or 3.4 percent.                                                                                      
REPRESENTATIVE  KOHRING  said he  heard the  original  legislation                                                              
several  years ago,  perhaps  in  1999, and  that  although he  is                                                              
disappointed that  the cost is greater, he recognizes  the reasons                                                              
for  the increase.   He  referred  to the  original design,  which                                                              
called  for a  connection  with  the International  Terminal,  and                                                              
wondered why this had been changed.                                                                                             
COMMISSIONER BARTON  responded that this  was deferred as  part of                                                              
a capital  project deferral  in order to  minimize the  impact [of                                                              
the increase].   He confirmed that this connection  remains a plan                                                              
for the future.                                                                                                                 
Number 2174                                                                                                                     
CO-CHAIR  MASEK moved  to  report  HB 315  out  of committee  with                                                              
individual  recommendations  and  the accompanying  fiscal  notes;                                                              
she requested  unanimous consent.   There  being no objection,  HB
315   was  reported   from  the   House  Transportation   Standing                                                              
There being  no further business  before the committee,  the House                                                              
Transportation  Standing Committee meeting  was adjourned  at 6:20                                                              

Document Name Date/Time Subjects