Legislature(1993 - 1994)
03/16/1994 09:10 AM Senate FIN
* first hearing in first committee of referral
= bill was previously heard/scheduled
= bill was previously heard/scheduled
MINUTES SENATE FINANCE COMMITTEE March 16, 1994 9:10 a.m. TAPES SFC-94, #32, Side 1 (000-end) SFC-94, #32, Side 2 (000-end) SFC-94, #34, Side 1 (000-325) CALL TO ORDER Co-chair Drue Pearce convened the meeting at approximately 9:10 a.m. PRESENT In addition to Co-chairs Pearce and Frank, Senators Kelly, Rieger, and Sharp were present. Senators Jacko and Kerttula arrived soon after the meeting began. ALSO ATTENDING: Senate President Rick Halford; George Utermohle and Jerry Luckhaupt, staff counsel, Legal Services Division, Legislative Affairs Agency; Col. Bill Valentine, Division of Fish and Game Enforcement, Dept. of Public Safety; David Ingram, Commercial Fisheries Entry Commission, Dept. of Fish and Game; Mark Hickey, Contract Lobbyist for the Alaska Railroad; Kelly Goode and Dave Thompson, aides to Senator Halford; and aides to committee members and other members of the legislature. ALSO PARTICIPATING VIA TELECONFERENCE: Mark LoPatin of LoPatin & Company - Detroit, Michigan Ken Vassar of Wohlforth, Argetsinger, Johnson & Brecht - Anchorage, Alaska SUMMARY INFORMATION SB 148 - ALASKA RAILROAD CORPORATION Comments were presented by Dave Skidmore and Mark Hickey. Extended discussion of both SB 148 and SB 338 followed. The bill was subsequently HELD in committee pending receipt of an opinion and proposed new language from legal services as well as testimony from directors of the railroad. SB 266 - DIRECT-ENTRY MIDWIVES/BD & PRACTICES Co-chair Pearce sought and received authority to WAIVE SB 266 from committee. SB 308 - ADMIN ACTION RE LAND/RESOURCES/PROPERTY Co-chair Pearce announced that David Rogers had been hired to meet with land-use entities regarding the bill. Subcommittee work will not commence until recommendations from those meetings have been reviewed and evaluated. SB 316 - FISHING VIOLATIONS:FINES/BURDEN OF PROOF Testimony was presented by Dave Thompson, Col. Bill Valentine, and George Utermohole. CSSB 316 (Res) was REPORTED OUT of committee with a "do pass" recommendation, $10.4 fiscal note from the Dept. of Public Safety, and a $60.1 note from the Dept. of Law. SB 321 - FINGERPRINTING AND CRIME RECORDS Testimony was presented by Kelly Goode. CSSB 321 (Fin) was REPORTED OUT of committee with a "do pass" recommendation and zero fiscal notes from the Dept. of Public Safety. A zero fiscal note from the Dept. of Corrections was later attached to the bill as well. SB 338 - ALASKA RR REVENUE BONDS:SHIP CREEK Discussion was had with Mark Hickey and by teleconference with Mark LoPatin and Ken Vassar. The bill was subsequently HELD in committee pending discussion with directors of the railroad. SB 321 - FINGERPRINTING AND CRIME RECORDS An Act relating to the taking of a legible set of fingerprints when a person is arrested, upon initial appearance or arraignment, upon the conviction of the person, and when the person is received at a correctional facility, and providing that the set of fingerprints shall be provided to the Department of Public Safety; relating to criminal and crime records and information; requiring the reporting of information concerning homicides and suspected homicides to the Department of Public Safety for analysis; requiring the Department of Public Safety to participate in the Federal Bureau of Investigation, Violent Crimes Apprehension Program. Co-chair Pearce directed that SB 321 be brought on for discussion and referenced a draft committee substitute (work draft 8-LS1649\R, Luckhaupt, 3/15/94). KELLY GOODE, aide to Senate President Halford, came before committee. She explained that the proposed bill imposes a statutory requirement that fingerprints be taken upon arrest. It further requires law enforcement agencies, statewide, to participate in the FBI violent criminals apprehension program. That program involves a national data base established for the purpose of locating serial killers nationwide. Ms. Goode next spoke to four changes between the Senate Judiciary version and the draft "R" version: 1. Changes fingerprinting language to Dept. of Law language taken from SB 276. 2. Adopts the transitional period contained in SB 276. The first year felonies would be fingerprinted, and the second year misdemeanants would be fingerprinted. 3. Removes language including violent sexual assault in homicides in the VICAP program. 4. Provides that local law enforcement agencies be given forms by the Dept. of Public Safety on which to submit discovery homicide information for matching with federal criteria. A further technical change was made changing the word "crimes" to "criminals." Co-chair Pearce voiced her understanding that fiscal notes for the "R" version would remain zero. Ms. Goode concurred and advised that the Dept. of Corrections would also be submitting a zero note. Senator Kerttula MOVED for adoption of CSSB 321 (Fin), "R" version. No objection having been raised, CSSB 321 (Fin) was ADOPTED. Co-chair Pearce called for additional testimony on the bill. None was forthcoming. Senator Kerttula MOVED that CSSB 321 (Fin) pass from committee with individual recommendations. No objection having been raised, CSSB 321 (Fin) was REPORTED OUT of committee with two zero fiscal notes from the Dept. of Public Safety (one for the State Troopers and the other for criminal records). A zero fiscal note from the Dept. of Corrections was subsequently attached to the bill on March 18, 1994. Co-chairs Pearce and Frank and Senators Kelly, Kerttula, and Sharp signed the committee report with a "do pass" recommendation. Senator Rieger signed "no recommendation." SENATE BILL NO. 316 An Act relating to commercial fishing penalties. Co-chair Pearce directed that SB 316 be brought on for discussion and referenced CSSB 316 (Res), a $10.4 fiscal note from the Dept. of Public Safety, a $60.1 note from the Dept. of Law, a sectional analysis, comments from the commercial fisheries entry commission, and information from the Division of Fish and Wildlife Protection regarding the Bristol Bay Enforcement Program. DAVE THOMPSON, aide to Senate President Halford, explained that the proposed bill would tighten commercial fishing penalties and increase the burden of proof on fishermen with respect to evidentiary materials. There has been no stated opposition to the bill up to this time. Data compiled by the Dept. of Public Safety indicates that a small group of fishermen are repeat offenders who make it difficult for honest fishermen to ply their trade. During the 1993 fishing season in Bristol Bay, 90 repeat offenders were cited. In one case the history of offenses went back to 1986. That individual had broken the law 18 times. Data supports the contention that habitual violators cause the bulk of the problems in commercial fishing. The proposed bill targets those individuals. Changes contemplated by the bill would add three new subsections: 1. Allow for suspension of one or more of the individual's commercial fishing privileges for a period of at least two years. 2. Allow for suspension of one or more of an individual's commercial fishing privileges and licenses for a period of at least four years. 3. Allow for forfeiture of commercial or fishing privileges and licenses upon a person's fifth or subsequent conviction in a ten-year period. The bill also doubles the fines and changes the burden of proof from a "preponderance of" to "clear and convincing" evidence with respect to fish found on board a vessel and whether or not they have been taken illegally. Data gathered by the Division of Fish and Wildlife Protection Services shows that in 1993 the Bristol Bay fishery had an all-time high number of violations resulting in 509 criminal charges. Gross fines exceeded $1 million. There was also more than a 100% increase in "closed water" cases, exceeding the previous high by more than 210 cases. In the course of plea bargaining, misdemeanors are reduced to violations. When that occurs, there is no record of the wrong-doing. It is thus difficult to effect subsequent fines, much less attach an individual's fishing permit. The number of cases in Bristol Bay are increasing while the fines per case are decreasing. Both judges and prosecutors are culpable. A fine of $1.0 against an illegal catch of $10.0 creates an economic incentive to break the law. The Division of Fish and Wildlife Protection made a great effort to increase surveillance and "crack down on violators." Senator Rieger inquired concerning the difference between "clear and convincing evidence" and a "preponderance" of the evidence. Mr. Thompson voiced his understanding that the change increases the burden of proof upon the fisherman. BILL VALENTINE, Director, Division of Fish and Wildlife Protection, Dept. of Public Safety, came before committee. He explained that under a preponderance of the evidence, all the fisherman needs to verify his argument is one more bit of evidence than the department has in proof of the violation. An additional crewman who says that the fish were not caught in violation would tip the scale in his favor. Much more would be needed to establish "clear and convincing" evidence. The fisherman would need the testimony of workers on a tender, other fishermen, etc., individuals other than those crewing his boat. Senator Rieger noted that language speaks not only to fish found aboard a vessel but also fish "found at the fishing site." He then inquired as to the extent of existing language. Mr. Valentine advised that current language speaks to "the preponderance at the site or on board the vessel." He added that he had not been party to a scenario in which a whole season's worth of fish would be at a particular site. In the Bristol Bay salmon fishery, fish are generally delivered daily to preserve freshness. Senator Rieger next pointed to language in Sec. 3, relating to forfeiture of fish taken as a result of commission of a violation. He then asked if failure to have one's identification aboard the vessel would constitute a violation. Mr. Valentine acknowledged that it would be but stressed that lower-level, small violations are covered by the uniform bail schedule. That is similar to a traffic ticket involving an established fine and "mail-in bail." Those offenders cannot be charged at a higher level. Senator Rieger voiced his understanding that uniform bail provisions would override forfeiture. Mr. Valentine concurred. He clarified that no forfeitures or loss of fishing privileges are associated with small violations. That is the distinction between a violation and a misdemeanor. Senator Rieger referenced Sec. 3 language calling for forfeiture for violations and again raised questions. Mr. Valentine explained that the language in question relates to higher violations for commercial fishing in closed waters, commercial fishing during a closed period, etc. Those violations have a direct impact on the fishery. GEORGE UTERMOHLE, Legislative Counsel, Legal Services, Legislative Affairs Agency, came before committee. He said that preponderance of the evidence standards require that the evidence be more likely than not that the evidence supports a particular conclusion. Clear and convincing evidence is a higher standard requiring more than just a reasonable probability. It must create in the fact finder a clear conviction that the facts exist. The highest standard is "beyond a reasonable doubt." Senator Jacko MOVED that CSSB 316 (Res) pass from committee with individual recommendations. No objection having been raised, CSSB 316 (Res) was REPORTED OUT of committee with a $10.4 fiscal note from the Dept. of Public Safety and a $60.1 note from the Dept. of Law. Co-chairs Pearce and Frank and Senators Jacko, Kelly, and Sharp signed the committee report with a "do pass" recommendation. Senators Kerttula and Rieger signed "no recommendation." SENATE BILL NO. 148 An Act relating to the Alaska Railroad Corporation; and providing for an effective date. Co-chair Pearce directed that SB 148 be brought on for discussion. She noted that it was introduced by committee in the first session of the current legislature, and she referenced 1993 adoption of work draft CSSB 148 (Fin) (8- LS0583\X, Utermohle 4/12/93) and Amendments 1 through 3. Co-chair Pearce next directed attention to an updated work draft (8-LS0583\I, Utermohle 3/11/94) which she explained incorporates the previously adopted amendments. Co-chair Frank MOVED for adoption of CSSB 148 (Fin), "I" version in place of the previously adopted "X" version. No objection having been raised, CSSB 148 (Fin), "I" version, was ADOPTED. Co-chair Pearce referenced a pending Amendment No. 4 and a March 11, 1994, memorandum (copy on file) thereto. DAVID SKIDMORE, aide to Senator Frank, came before committee. He explained that the proposed bill would bar the chief executive officer of the Alaska Railroad Corporation from serving as the member of the railroad board of directors required by statute to have certain types of railroad experience. If the bill were to become effective immediately, it would render Mr. Hatfield's position on the board illegal. Amendment No. 4 creates a transition period to delay the effective date of that provision of the bill until the Governor appoints a board member who fills the railroad experience qualification. The Amendment states that the Governor is to appoint an individual with the necessary qualifications, this fall, should either Mr. Chapados or Mr. Lounsbury fail to continue to serve on the board. Co-chair Pearce noted that Amendment No. 4 was drafted for incorporation within the previously adopted version "X" which has since been replaced by version "I." She then voiced need to conceptually adopt the amendment for inclusion in the proper place within CSSB 148 (Fin), "I" version. Co-chair Frank MOVED for adoption of Amendment No. 4. No objection having been raised, Amendment No. 4 was CONCEPTUALLY ADOPTED into CSSB 148 (Fin). MARK HICKEY, next testified on behalf of the Alaska Railroad Corporation. He remarked that the newly-adopted draft addresses a number of concerns raised by the railroad, but three areas of concern remain: 1. Sec. 7, page 3, contains language allowing participation by board members by teleconference. This is current practice. Sec. 7 may not be necessary. 2. Sec. 8, page 4, lines 8 through 12, raises concern regarding the debt limit, particularly in light of SB 338. There appears to be a problem between these two pieces of legislation. Although non- recourse revenue bonds are proposed, debt of the railroad will be issued and the railroad will already have exceeded "the total aggregate limit." A possible fix might involve exemption of non- recourse revenue bonds from this language. The language was included as a way to deal with equity participation in non-transportation activities. Since that is addressed by subsection (6), another means of curing the problem would be deletion of subsection (3) (lines 8 through 12). 3. Sec. 8, page 4, line 18, contains a limitation to prevent the railroad from obtaining an equity position in a non-transportation activity. The board of directors adopted a policy that the railroad would not enter such an arrangement. That policy remains in effect. Placing this language in statute may create potential for litigation. Mr. Hickey next referenced provisions relating to the Nenana land fill and informed members that the railroad is no longer pursuing the project. Parties involved found that it was not financially feasible, and there was local opposition. Speaking to the above-noted limitation on debt, Co-chair Frank explained that it arose from the fact that statutes presently require that the railroad receive legislative approval prior to issuance of bonds. The Senator acknowledged numerous methods of issuing debt. It was the intent of the legislature, when it authorized acquisition of the railroad from the federal government, to include the legislature "in the loop" when the railroad issued debt. Mr. Hickey noted that the original bill required that debt exceeding $1 million be approved by the legislature. Discussion followed between Co-chair Frank and Mr. Hickey regarding language associated with issuance of debt rather than bonds. The Co-chair said he would not support allowing the railroad to issue debt of any kind while maintaining a limitation on bonds. Senator Rieger advised of his preference for incorporation of the railroad as a stock corporation and issuance of all shares of common stock to the state. That represents a step toward independence and eventual privatization of the railroad. He observed that the proposed bill provides a good vehicle for development of that structure. Chapter 40 would then become the by-laws of the corporation, instead of statute. Mr. Hickey explained that, at the time of purchase, there was discussion of a similar arrangement. One of the principal concepts involved the permanent fund, and that raised many concerns. That approach was subsequently dismissed, and the state conducted a "straight purchase." The railroad board has not devoted time to this issue. The approach raises many questions "about how this would ultimately work down stream." Senator Kelly voiced his understanding that selling the railroad would be in direct conflict with the intent of the proposed bill. He suggested that entities seeking to purchase the railroad would not buy it "to run trains" but to develop railroad land. That is where the value is. Co-chair Frank observed that "that would be fine" if the entities were private. Senator Rieger concurred, advising that if the railroad was private, the legislature would not be adjudicating endless issues relating to competition with truckers, land developers, etc. Privatization would relieve 20 to 40 hours of finance committee time per session. He suggested that that effort be set in motion. End: SFC-94, #32, Side 1 Begin: SFC-94, #32, Side 2 Mr. Hickey stressed need to consider transportation services provided by the railroad and the importance of that service. He concurred that private entities would be "very interested in portions of the real estate . . . ." A mechanism has yet to be developed that would ensure continuation of transportation services under privatization. That is what precipitated purchase of the railroad by the state. The transportation services save the state considerable moneys in terms of what moves on the railroad versus on the highway system. Real estate assets are key to continuance of the transportation role. Freight was an overall loss during the past year. That service, even when well run, in marginal. Senator Rieger commented on inability to secure tariff charges to evaluate the economics of railroad freight service with respect to the private sector. Senator Kelly suggested that lack of competition to railroad transportation would result in problems were the railroad privatized. He pointed to lack of airline competition between Juneau and Anchorage as an example. Co-chair Pearce referenced page 4, line 9, noted provisions precluding aggregated debt exceeding $50 million, and concurred that passage of SB 338 would "arguable put them over that limit." Senator Kelly suggested that addition of "excluding non-recourse revenue bonds" would cure the problem. Co-chair Pearce voiced her understanding that the proposed language would preclude the railroad from issuing bonds of more than $50 million for its own use, but the current "federal window of opportunity" could be exploited. In response to a question from Senator Kelly, Mr. Hickey explained that the state wrote the majority of the transfer act. It sought to ensure that the railroad would have a wide range of authority, equal to public entities elsewhere, to engage in railroad related projects to support the goals and viability of the railroad without a state subsidy. Co-chair Frank advised that his staff had been working with legal services on issues relating to legislative approval. Mr. Utermohle has said, and will provide written confirmation, that subsection (3) ceilings set forth at page 4, lines 8 through 12, would not apply to debt specifically authorized by the legislature. Co-chair Frank suggested that language offered by Senator Kelly would provide an exclusion from legislative approval for all non-recourse bonds. Both Co-chair Pearce and Senator Kelly noted language within Sec. 8 (2) requiring legislative approval prior to issuing bonds. Co-chair Frank raised concern that another form of debt would be utilized. Co-chair Frank stressed need to work with legislative attorneys on development of workable language. Senator Kelly voiced committee intent to ensure that if the railroad issues the $55 million in non- recourse revenue bonds, the issue is excluded from the debt cap. Senator Rieger voiced his belief that draft "I" language is sufficient to accomplish committee intent, and no amendment would be necessary. Co-chair Pearce asked that Mr. Utermohole provide a written opinion. Senator Rieger inquired concerning the net profit for the railroad over the past year. Mr. Hickey advised of a net loss of $2.6 million comprised of $800.0 in freight and a one-time write down of $1.8 based on reorganization and early-out retirement payments to reduce the work force. Senator Rieger remarked that the railroad should pay a dividend similar to AHFC. Mr. Hickey spoke briefly to continued losses in passenger services. Since that service returns a considerable dividend to the state, the railroad has covered the loss from operating moneys rather than seeking a subsidy. Senator Sharp voiced his understanding that the transfer act provided tax exempt status for financing of railroad upgrades and railroad related activities. He then suggested that the tax exempt benefit might be lost if it is used for other financing. Mr. Hickey noted that railroad real estate (and flexibility in its development) was critical to purchase of the railroad and its viability. Senator Sharp voiced need for testimony from the chief executive officer and railroad board of directors on both SB 148 and SB 338. Discussion of the relationship of the two bills and the railroad's position on them followed. Co-chair Frank directed attention to Sec. 10 provisions relating to the regional land fill at Nenana and noted earlier comments that it could be removed from the bill. He expressed reluctance to do so without consultation with legislators from that area. Mr. Hickey voiced his understanding that there is a possibility discussion of the landfill will resume in the near term, at the proposed site. There is potential over the next two to five years that the project might make sense. Senator Rieger pointed to information from the railroad charting the corporation's real estate revenue plan projected for 1993 through 1998 and cautioned that until the railroad is privatized, the legislature will "have many more hours at this table discussing the equity of each of those projects . . . ." SENATE BILL NO. 266 An Act extending the termination date of the Board of Certified Direct-Entry Midwives; relating to the scope of practice of certified direct-entry midwives; and providing for an effective date. Co-chair Pearce referenced a request from Senator Leman that Senate Finance Committee waive referral of SB 266. The bill issued by the Senate Labor and Commerce Committee simply extends the board from 1994 to 1998. Senator Kelly requested that Senator Leman be asked to ensure that additional language incorporated within the original bill, allowing midwives to regulate themselves, is not reinserted when CSSB 266 (L&C) reaches the House. Co-chair Pearce said she would advise Senator Leman of the request. No objection having been raised, Senate Finance Committee referral of SB 266 was WAIVED. SENATE BILL NO. 338 An Act relating to the issuance of revenue bonds for acquisition and construction of the Alaska Discovery Center for the Ship Creek Project in Anchorage; relating to a study of the feasibility and financial viability of the Alaska Discovery Center; relating to construction of the Alaska Discovery Center; and providing for an effective date. Co-chair Pearce directed that SB 338 be brought on for discussion, referenced correspondence of this date from Wohlforth, Argetsinger, Johnson & Brecht as well as a copy of the 1984 session law establishing the railroad, and noted the teleconference participation of Ken Vassar from Anchorage and Mark LoPatin from Detroit. The Co-chair next directed attention to CSSB 338 (L&C), page 1, line 7, and noted need to correct the session law citation from sec. 1(a) to sec. 1(b). NOTE - The proper citation was subsequently determined to be sec. 1(a)(1)(B). Senator Kelly MOVED to effect the technical change. No objection having been raised, IT WAS SO ORDERED. MARK LoPATIN, of LoPatin & Company, spoke via teleconference from Detroit, Michigan. He concurred in dovetailing aspects of SB 148 and SB 338. He stressed need to ensure that the railroad understands that approval of SB 338 as a legislative action should not impinge on the $10 million and $50 million limitations set forth in SB 148. Addressing concerns raised by Senator Sharp regarding use of tax exempt financing for other than railroad related purposes, Mr. LoPatin acknowledged that the benefit is a quirk in federal law which was part of the original transfer act. He stressed that the federal government has no ability to prevent the railroad, as an agency of the state, from selling tax exempt bonds for railroad purposes. That includes rolling stock, track, storage, etc. That right will not be impacted by "our using it." If the benefit was abused or disappeared, the railroad would continue to have the federal right to sell tax exempt bonds for public purposes/railroad purposes. Mr. LoPatin acknowledged that the federal government could eliminate the benefit, but, in doing so, it would be eliminating the benefit for all public agencies. He advised that he could not conceive of a situation where it would "just apply to the railroad." The railroad receives this benefit because it is owned by the State of Alaska. The benefit allows the railroad to "go out and do non-railroad purposes." The transfer act contemplated non-railroad oriented activities that would generate revenue to support railroad oriented activity. In response to questions from Co-chair Frank, Senator Kelly advised that provisions of CSSB 338 (L&C) were intended to guard against "a half built building." The bottom line is that if the project does not work, the railroad has a building which can be used for something. Discussion followed regarding lease arrangements and owner, bondholder, and railroad interest in the project in case of default. Mr. LoPatin acknowledged that the bondholders would stand in primary position to take over operation of the facility. They would not do so without assurance of a return on capital. They would, however, continue to pay rent to the railroad, or they too would be in default, and the railroad would own the facility, free and clear. The railroad's interest is prior to and superior to other interests. Discussion followed concerning lease terms for the 120 acres. Mr. LoPatin explained that the owner of the project is responsible for rent payments to the railroad. Should the owner default, the bondholders have a period of time to cure the default. If they decline to do so, their interest is extinguished. The railroad, state, and municipality would be under no legal or moral obligation to make payments. He further advised that he would have no objection to language, suggested by Co-chair Frank, that the state and/or the railroad would be under no obligation to cure the default. End: SFC-94, #32, Side 2 Begin: SFC-94, #34, Side 1 Co-chair Frank inquired concerning fair market aspects of the rental agreements with the railroad. Mr. LoPatin explained that as each piece of land is "carved out," there is a new appraisal, and a new rental rate is structured. Discussion of lease assignments followed. Senator Sharp noted that it appears that, statutorily, the board of directors of the Alaska Railroad is required to exercise substantial discretionary power over the project in review of studies to determine whether the center is feasible and financially viable, etc. He then suggested that the foregoing exudes a sense of direct project involvement and responsibility. He further questioned language at page 2, line 3, stating that the "Alaska Railroad Corporation may loan the proceeds from the sale of revenue bonds . . . ." Mr. LoPatin directed attention to correspondence (copy appended as Attachment A) from Wohlforth, Argetsinger, Johnson & Brecht and noted that requirements for a feasibility study make a strong case for the fact that the railroad has no obligation to repay these bonds. They are purely revenue bonds. KEN VASSAR, Wohlforth, Argetsinger, Johnson & Brecht, next testified via teleconference from Anchorage. He acknowledged the connection between the railroad and the project but stressed that the connection does not translate to a legal or moral obligation with respect to the bonds. The legislation is extremely clear on that point. The bonds are payable solely from revenues pledged for the bonds and not from any other source. Railroad control of aspects of the project does not impact that issue. As background information, Mr. Vassar explained that in order for the bonds to be tax exempt, they must be issued by the railroad. The proceeds of bond sales will accrue to the railroad which will, in turn, lend the proceeds to the developer. Repayment of the loan and land lease payments will be made from revenues from the project. The loan payments will then repay the bonds. Mr. Vassar stressed that the proposed bonds will not create state debt. Senator Sharp again voiced need to hear from the railroad. Co-chair Pearce asked if the railroad board had taken action on the project. Mr. Hickey responded negatively. He said the board had reviewed the project, and there is support for the overall proposal. The board has not yet made a decision as to whether or not the railroad will issue the bonds. That decision will not be made until a number of thing happen, including the independent feasibility study. Senator Kelly asked if the board was "gun-shy." Mr. Hickey acknowledged that since the proposed project represents "the first use of this authority," the board has reservations. In response to questions from Co-chair Frank, Mr. Vassar described the sequence of events should the project be approved. The railroad corporation would issue its bonds, and underwriters selected by the corporation would buy the bonds. Proceeds from the sale of bonds would flow to a trustee--a large bank with trust powers, capable of handling the accounts and doing the paperwork. The trustee would deposit the proceeds of the bond sale into an account that would be used to make the loan to the developer. Mr. Vassar voiced his belief that the bank would handle the loan similar to a construction loan with release of funds upon completion of phases until the project is complete. Following distribution of the loan, the trustee would thereafter be responsible for collection of revenues to pay back bond holders. Co-chair Pearce noted that the board must feel a certain level of comfort with the LoPatin proposal since the railroad hired Mr. LoPatin to "do the development" over strenuous objections by AEDC and others in Anchorage. She then directed that SB 148 and SB 338 be HELD in committee pending future discussion with Mr. Hatfield and members of the board of directors of the railroad. SENATE BILL NO. 308 An Act modifying administrative procedures and decisions by state agencies that relate to uses and dispositions of state land, property, and resources, and to the interests within them, and that relate to land, property, and resources, and to the interests within them, that are subject to the coastal management program; and providing for an effective date. Co-chair Pearce noted that the committee had hired David Rogers to work on oil and gas issues associated with SB 308. He is presently in Anchorage meeting with land-use entities. Subcommittee work on the bill will not commence until recommendations from the Anchorage meetings have been reviewed and evaluated. ADJOURNMENT The meeting was adjourned at approximately 11:10 a.m.