Legislature(2021 - 2022)SENATE FINANCE 532

05/05/2022 09:00 AM Senate FINANCE

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                 SENATE FINANCE COMMITTEE                                                                                       
                        May 5, 2022                                                                                             
                         9:05 a.m.                                                                                              
9:05:09 AM                                                                                                                    
CALL TO ORDER                                                                                                                 
Co-Chair Bishop called the  Senate Finance Committee meeting                                                                    
to order at 9:05 a.m.                                                                                                           
MEMBERS PRESENT                                                                                                               
Senator Click Bishop, Co-Chair                                                                                                  
Senator Bert Stedman, Co-Chair                                                                                                  
Senator Lyman Hoffman                                                                                                           
Senator Donny Olson                                                                                                             
Senator Bill Wielechowski                                                                                                       
Senator David Wilson                                                                                                            
MEMBERS ABSENT                                                                                                                
Senator Natasha von Imhof                                                                                                       
ALSO PRESENT                                                                                                                  
Senator  Peter Micciche,  Sponsor;  Bill O'Leary,  President                                                                    
and CEO,  Alaska Railroad Corporation;  Representative Grier                                                                    
Hopkins, Sponsor.                                                                                                               
PRESENT VIA TELECONFERENCE                                                                                                    
Brian  Lindamood,  Vice  President, Chief  Engineer,  Alaska                                                                    
Railroad;  Janette  Bower,  City  Manager,  Seward;  Preston                                                                    
Carnahan, Director of  Destination and Business Development,                                                                    
Royal Caribbean Group; Bonne  Woldstad, Self, Fairbanks; Dan                                                                    
Britton, Interior Gas Utility, Fairbanks.                                                                                       
SB 218    LEG. APPROVAL: AK RAILROAD REVENUE BONDS                                                                              
          SB 218 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
HB 307    EXTEND BOND AUTH FOR INTERIOR ENERGY PROJ                                                                             
          HB 307 was HEARD and HELD in committee for                                                                            
          further consideration.                                                                                                
SENATE BILL NO. 218                                                                                                           
     "An Act authorizing the  Alaska Railroad Corporation to                                                                    
     issue revenue  bonds to finance the  replacement of the                                                                    
     Alaska  Railroad   Corporation's  passenger   dock  and                                                                    
     related  terminal  facility   in  Seward,  Alaska;  and                                                                    
     providing for an effective date."                                                                                          
9:06:01 AM                                                                                                                    
Co-Chair  Bishop relayed  it was  the first  hearing for  SB
218. The committee's intent was  to hear a bill introduction                                                                    
and sectional  analysis, take invited and  public testimony,                                                                    
and set the bill aside.                                                                                                         
9:06:29 AM                                                                                                                    
SENATOR  PETER MICCICHE,  SPONSOR, addressed  SB 218,  which                                                                    
pertained  to  the  Alaska Railroad  passenger  terminal  in                                                                    
Seward. The  bill would grant  the railroad  the legislative                                                                    
authority  to issue  bonds of  no more  than $60  million to                                                                    
construct a new passenger terminal.  He commented on the age                                                                    
of the current passenger terminal.  He cited that the region                                                                    
expected 82 cruise  ships in the 2022  season and emphasized                                                                    
the importance  of the project  for Southcentral  Alaska. He                                                                    
explained   that  the   cruise  ships   fed  tourism-related                                                                    
businesses across  the region  from Anchorage  and Fairbanks                                                                    
and down to the Seldovia area.  He cited that the total cost                                                                    
of  the project  would be  $79 million,  which was  a recent                                                                    
figure. The  railroad would use  other funds  in combination                                                                    
with the $60 million proposed in the bill.                                                                                      
Senator Micciche  informed that $60 million  was the lending                                                                    
cap for  the project  to come to  fruition. The  bonds would                                                                    
need to  be paid entirely from  passenger terminal revenues,                                                                    
without any  state liability for  the debts incurred  by the                                                                    
railroad. In order to meet  the 2024 need for replacement of                                                                    
facilities, it  was imperative that the  railroad coordinate                                                                    
public debt funding by mid-2022.  He relayed that there were                                                                    
representatives  from  the   Alaska  Railroad  available  to                                                                    
answer questions.                                                                                                               
Co-Chair Bishop acknowledged that  Senator Olson and Senator                                                                    
Hoffman were present.                                                                                                           
9:09:25 AM                                                                                                                    
BILL   O'LEARY,   PRESIDENT   AND   CEO,   ALASKA   RAILROAD                                                                    
CORPORATION,  introduced himself.  He  thought the  proposed                                                                    
project  was exciting  for the  Alaska Railroad  Corporation                                                                    
(ARC),  the  City  of  Seward,   and  the  Southcentral  and                                                                    
Interior visitor industry.                                                                                                      
Mr. O'Leary discussed a  presentation entitled "Investing in                                                                    
Alaska's   Travel   and   Tourism   Infrastructure:   Seward                                                                    
Passenger Dock" (copy on file).  He turned to slide 2, "ARRC                                                                    
Terminal Infrastructure in Seward":                                                                                             
     ? ARRC owns 3 docks in Seward                                                                                              
          ?  Passenger      cruise  ship,  other  passenger,                                                                    
          research and more                                                                                                     
          ?  Freight     used  primarily  for  non-passenger                                                                    
          ships and barges                                                                                                      
          ?  Loading    previously  for coal;  now used  for                                                                    
          tie-up & overflow                                                                                                     
     ? Terminal Uplands  support for:                                                                                           
          ? Freight logistics and storage                                                                                       
          ?   Marine   and  other   commercial   activities,                                                                    
          including future visitor business opportunities                                                                       
     ? Passenger Terminal (dock and building on dock)                                                                           
          ?  Receives typically  220,000+ visitors  annually                                                                    
          ? Accommodates  just under  100 cruise  ship calls                                                                    
          per year                                                                                                              
          ?  Important  to ARRC  rail  service  but also  to                                                                    
          visitor industry as a whole                                                                                           
          ? 2/3 to 3/4 of  cruise passengers to Southcentral                                                                    
          Alaska come through Seward                                                                                            
Mr. O'Leary  drew attention  to the  photograph on  slide 2,                                                                    
which  showed  ARCs   freight   dock,  passenger  dock,  and                                                                    
loading facility.  He continued that  ARC also had  over 300                                                                    
acres  of   railroad  land  in   the  area   for  additional                                                                    
development  by   the  private  sector.  He   discussed  the                                                                    
passenger  terminal, which  had been  built originally  as a                                                                    
freight  dock  around  1966.  The   structure  was  a  pile-                                                                    
supported pier dock that had  been affected by saltwater and                                                                    
Mr.  O'Leary  pointed out  the  terminal  facility used  for                                                                    
passenger  processing  on the  north  end  of the  pier.  He                                                                    
explained  that the  dock was  still  safe for  use but  was                                                                    
nearing the  end of  its life. He  emphasized that  the dock                                                                    
was  a key  piece  of infrastructure  for  the railroad  and                                                                    
entire  visitor  industry in  the  region.  The majority  of                                                                    
cruise ship  passengers that came to  Southcentral Alaska in                                                                    
2019 came over  the dock. He discussed  activities of cruise                                                                    
passengers that generated business.                                                                                             
Mr.  O'Leary continued  to address  slide 2  and cited  that                                                                    
there  were 90  ship  calls  for 2022.  He  shared that  the                                                                    
industry thought the area was  well positioned for continued                                                                    
growth  for the  cross-gulf product  that was  increasing in                                                                    
9:13:21 AM                                                                                                                    
Mr.  O'Leary  showed  slide  3,   "ARRC  Invests  in  Seward                                                                    
     ? Alaska Railroad pursuing two near-term, large-scale                                                                      
     capital projects in Seward with positive economic                                                                          
     impacts statewide.                                                                                                         
     ? Passenger Terminal                                                                                                       
         ? Estimated nearly $80 million investment                                                                              
          ? Replace passenger dock by 2024                                                                                      
          ? Replace terminal building by 2025                                                                                   
     ? Freight Terminal                                                                                                         
          ? Est. $25 million investment; 80% funded by                                                                          
          MARAD grant                                                                                                           
         ? Widen and lengthen freight dock by 2027                                                                              
          ? Improve upland transportation corridor by                                                                           
          linking Port and Airport avenues.                                                                                     
Co-Chair  Bishop asked  about the  freight terminal  expense                                                                    
shown on slide  3 and asked if the $25  million would be ARC                                                                    
matching funds.                                                                                                                 
Mr. O'Leary expanded that $25  million was the total project                                                                    
cost,  $20 million  of which  would be  funded by  the MARAD                                                                    
grant while the remaining would be other funds.                                                                                 
Senator Wielechowski  asked if the railroad  ran the freight                                                                    
dock in Seward.                                                                                                                 
Mr. O'Leary answered "yes."                                                                                                     
Senator Wielechowski asked about  the capacity of the Seward                                                                    
freight dock  in the event  that the Anchorage  freight dock                                                                    
suffered a catastrophic failure.                                                                                                
Mr.  O'Leary  relayed  that  the  Seward  freight  dock  was                                                                    
available if  the Port of  Alaska was  unavailable, although                                                                    
it would not be optimal.                                                                                                        
9:15:51 AM                                                                                                                    
Co-Chair  Stedman  relayed  that   the  committee  had  been                                                                    
looking at several  ports across the state and  asked if Mr.                                                                    
OLeary  could  provide information  about tariffs  for goods                                                                    
that  crossed the  dock.  He  referenced multiple  container                                                                    
ports  in  Southeast, Kodiak,  and  the  Aleutian Chain.  He                                                                    
wanted  to  hear  more information  regarding  further  port                                                                    
expansions.  He wanted  to discuss  expansions and  have the                                                                    
presenter address  growth in  the industry  and electrifying                                                                    
docks  for cruise  whip use.  He mentioned  carbon emissions                                                                    
issues  with cruise  ships, and  the need  for ships  to use                                                                    
alternate  power sources.  He thought  that the  project was                                                                    
the  beginning  of  a multi-year  expansion  that  would  be                                                                    
taking place around the coast of the state.                                                                                     
Senator Olson dovetailed  on Senator Wielechowski's question                                                                    
regarding the  hypothetical failure  of the  Anchorage port.                                                                    
He  wondered about  the military,  which used  the port  for                                                                    
supplies  and  heavy  equipment.  He mentioned  the  war  in                                                                    
Ukraine and additional needs.                                                                                                   
Mr. O'Leary affirmed that the  Seward dock did work with the                                                                    
military but  thought the  majority of  traffic went  to the                                                                    
Port  of Alaska.  He offered  to get  back to  the committee                                                                    
with further  information. He did  not think there  would be                                                                    
that much of  an issue using the freight  dock as described.                                                                    
He noted  that the  Vice President  for Engineering  for ARC                                                                    
was available to comment.                                                                                                       
Senator Olson repeated the question  about the Seward docks                                                                     
capacity in the  case that there was  a catastrophic failure                                                                    
with the  port in  Anchorage. He referenced  global conflict                                                                    
and  asked how  long it  would take  to revamp  the dock  to                                                                    
handle the additional load.                                                                                                     
9:20:33 AM                                                                                                                    
BRIAN  LINDAMOOD,  VICE  PRESIDENT, CHIEF  ENGINEER,  ALASKA                                                                    
RAILROAD  (via teleconference),  answered  that the  freight                                                                    
dock with  expansion would be  able to handle the  same sort                                                                    
of ships that currently called  on the Port of Anchorage. He                                                                    
cited that the cruise dock would  be able to do the same. He                                                                    
noted  that the  two marine  lines that  served the  port in                                                                    
Anchorage came at the same time.                                                                                                
Mr. Lindamood continued that the  land transportation to and                                                                    
from Seward would  be strained in the  scenario described by                                                                    
Senator  Olson,  by  a  limit  of  available  equipment  and                                                                    
drivers. He thought  it would be feasible if  the matter was                                                                    
looked into and additional investment made.                                                                                     
Senator Olson  asked what  kind of  time frame  was involved                                                                    
for dock  work being done  to utilize the dock  as described                                                                    
if there was an issue with the Port of Alaska.                                                                                  
Mr.  Lindamood shared  that the  current schedule  estimated                                                                    
completion of the  cruise dock by 2024 and  the freight dock                                                                    
by 2025 or 2026.                                                                                                                
Senator  Hoffman asked  about  the bonding  capacity of  the                                                                    
Mr. O'Leary  explained that the railroad  had not identified                                                                    
a  maximum for  bonding  capacity, and  stated  it was  very                                                                    
comfortable  with the  up  to $60  million  proposed in  the                                                                    
bill. He  continued that generally  the railroad was  a low-                                                                    
debt operation. He  cited that there was  roughly $8 million                                                                    
in debt that  had recourse and $ 30 million  of debt secured                                                                    
by federal monies that would be paid off in the next year.                                                                      
Senator  Hoffman asked  about if  any ARC  land was  used as                                                                    
collateral for the bonds.                                                                                                       
Mr. O'Leary  answered "no." He  noted that the  railroad had                                                                    
some debt  that was secured  by lease revenues from  some of                                                                    
the lands, but he believed it would be paid off shortly.                                                                        
Senator Hoffman asked how much land the railroad had.                                                                           
Mr. O'Leary cited  that the railroad had  about 36,000 acres                                                                    
total, half of which was  used for operations through right-                                                                    
of-way, yards  and facilities,  and the  remainder available                                                                    
for lease or permitting.                                                                                                        
9:24:22 AM                                                                                                                    
Co-Chair Stedman  directed a question  to Mr.  Lindamood. He                                                                    
mentioned the Port of Whittier  and thought it would be nice                                                                    
to  get a  briefing from  the railroad  on the  capacity. He                                                                    
thought  if  the  state was  going  to  considering  putting                                                                    
hundreds of millions  into a port, it should  be the correct                                                                    
port. He wondered if there  should be investment in multiple                                                                    
ports.  He   considered  modifications  whereby   Seward  or                                                                    
Whittier would need to handle  additional goods and wondered                                                                    
what  capital  goods  would  be  needed.  He  pondered  rail                                                                    
capacity  out  of  Whittier and  mentioned  road  issues  in                                                                    
Seward. He wanted more information  on railroad upgrades and                                                                    
thought there was  a much larger subject  matter to consider                                                                    
than merely  the topic of  the bill. He was  concerned about                                                                    
the global position of the three ports.                                                                                         
Mr. O'Leary relayed  that ARC would be happy  to discuss the                                                                    
issues mentioned by Co-Chair Stedman.                                                                                           
9:26:45 AM                                                                                                                    
Co-Chair Bishop  asked if there  was hydro-rail  capacity in                                                                    
Mr.  O'Leary affirmed  that there  was a  rail barge  system                                                                    
that worked in conjunction with Lynden Companies.                                                                               
Co-Chair  Bishop asked  if Seward  had roll-on  and roll-off                                                                    
hydro-train capacity.                                                                                                           
Mr. O'Leary answered in the negative.                                                                                           
Co-Chair  Bishop  thought  it  was a  two-step  process  for                                                                    
Seward, where goods would have to be handled twice.                                                                             
Senator Wielechowski  asked if  the railroad had  an opinion                                                                    
as  to whether  the  state  should be  funding  the Port  of                                                                    
Alaska in Anchorage, and if so to what degree.                                                                                  
Mr. O'Leary  emphasized that the  Port of Alaska was  a very                                                                    
important port for  the railroad. He continued  that ARC did                                                                    
an  extraordinary  amount  of business  with  the  port  and                                                                    
shared  customers.  He  commented   on  a  positive  working                                                                    
relationship  and that  ARC was  supportive of  ensuring the                                                                    
infrastructure was available for customers.                                                                                     
Co-Chair  Bishop  referenced  committee  conversation  about                                                                    
redundancy. He asked  which ports in Alaska  had the highest                                                                    
volume of casing and frack sands going to the North Slope.                                                                      
Mr.  O'Leary knew  the railroad's  Seward  freight dock  had                                                                    
been very active  in receiving frack sand  over the previous                                                                    
two  years. He  thought  the activity  had  worked well  and                                                                    
anticipated additional cargoes coming.                                                                                          
Co-Chair  Bishop  asked  which   docks  the  materials  came                                                                    
Mr. O'Leary guessed that the  materials came to the Whittier                                                                    
dock but agreed to get back  to the committee with a precise                                                                    
9:29:37 AM                                                                                                                    
Mr.  O'Leary  turned  to slide  4,  "ARRC  Seward  Passenger                                                                    
     ? Passenger Dock Status                                                                                                    
          ? Built in 1966                                                                                                       
            736' x 200'                                                                                                         
          ? Terminal Building on dock                                                                                           
          ? Nearing End of Useful Life                                                                                          
     ? ARRC project to rebuild pier and building                                                                                
     ? $79 million project on tight timeframe to be ready                                                                       
     for 2024 cruise season.                                                                                                    
     ? Sources: $60 million in ARRC revenue bonds (no                                                                           
     recourse to state), $19 million in ARRC cash                                                                               
     ? $62 million for dock, $17 million for building                                                                           
     ? Continuing to look for other options to optimize                                                                         
     financing  federal grants or other mechanisms                                                                              
Mr.  O'Leary  commented that  the  railroad  had a  plan  to                                                                    
rebuild  the pier  and building,  modernizing  both to  meet                                                                    
current and  future demands.  The new  dock would  be longer                                                                    
and  the building  would provide  an  opportunity to  handle                                                                    
 triple ship days  where three  ships might call on the port                                                                    
at the same times. He  commented on the aggressive timeline.                                                                    
He thought  it was critical  to understand that  the revenue                                                                    
bonds would be supported by  dock revenues, and there was no                                                                    
liability  or  recourse  for the  state.  He  reminded  that                                                                    
issuance of public debt required legislative authorization.                                                                     
Co-Chair Bishop referenced the timeframe  of the project and                                                                    
asked if the railroad had all the materials secured.                                                                            
Mr. Lindamood answered "no," and  informed that ARC intended                                                                    
to do a long-lead items purchase over the upcoming summer.                                                                      
Co-Chair Bishop  had learned that steel  procurement was two                                                                    
years out  and wondered how  much steel was in  the project.                                                                    
He  questioned  the  cost  estimates  and  wondered  if  Mr.                                                                    
Lindamood  was still  confident  in the  numbers because  of                                                                    
project escalation costs.                                                                                                       
Mr. Lindamood stated that the  estimate ARC was working from                                                                    
was  four  to  five  months  old. He  stated  that  ARC  was                                                                    
carrying a  bit of  contingency. He continued  that assuming                                                                    
inflationary pressures  began to  return to  historic levels                                                                    
soon,  he thought  it  was okay,  but  he believed  Co-Chair                                                                    
Bishop's question  was well-timed. He thought  inflation was                                                                    
among the top three risks to the project.                                                                                       
9:34:59 AM                                                                                                                    
Mr. O'Leary continued to address  slide 4 and commented that                                                                    
the   construction  time   frame  was   the  reason   behind                                                                    
requesting   legislative   authorization  in   the   current                                                                    
Co-Chair  Bishop  asked if  the  photo  on  slide 4  was  an                                                                    
artist's rendition or an actual photo.                                                                                          
Mr. OLeary affirmed that the graphic was a photo.                                                                               
Mr.  O'Leary  spoke  to  slide  5,  "ARRC  Seward  Passenger                                                                    
     Project    and     Investment    have    Time-sensitive                                                                    
     ? Aging Facility must be replaced ASAP                                                                                     
          ? Need new facility for 2024 season                                                                                   
          ? Timeline requires start in 2022                                                                                     
     ? $60 million ARRC bonds                                                                                                   
          ? Requires legislation                                                                                                
         ? Legislative action needed this session                                                                               
     ? Royal Caribbean Group                                                                                                    
          ? Key strategic partner                                                                                               
          ? Anchor tenant with a long-term arrangement for                                                                      
          asset use.                                                                                                            
Mr. O'Leary  emphasized that the fiscal  stability of having                                                                    
the  Royal  Caribbean  Group (RCG)  as  a  long-term  anchor                                                                    
tenant would aid in financing the project.                                                                                      
Mr. O'Leary  summarized that the  project fit  nicely within                                                                    
the railroads   wheelhouse and would  help to keep  it self-                                                                    
sustaining.  He thought  the project  fit  ARCs  mission  of                                                                    
economic development for the state.                                                                                             
Co-Chair Stedman  wanted to hear  from RCG about  the carbon                                                                    
emission issue, and the challenges  facing the industry with                                                                    
regard to  ships and  getting them  plugged in  to shoreside                                                                    
power. He  thought the project  was good but wondered  if it                                                                    
should be larger in scope.                                                                                                      
9:38:01 AM                                                                                                                    
Senator Wilson asked Mr. O'Leary  what the railroad could do                                                                    
for  the  Matanuska-Susitna   (Mat-Su)  area.  He  mentioned                                                                    
Infrastructure Investment  and Jobs  Act (IIJA)  funding and                                                                    
pondered freight capacity of the  railroad and the future of                                                                    
the  railroad.  He mentioned  a  snow  machine path  in  his                                                                    
district and expansions in the Interior.                                                                                        
Mr.  O'Leary emphasized  the  equal  importance of  freight,                                                                    
passenger,  and  real  estate   activities.  He  noted  that                                                                    
freight  activities had  been growing  and noted  that barge                                                                    
service out  of Whittier  had been extraordinarily  busy the                                                                    
previous six months and was  expected to continue. He stated                                                                    
there  was  still  capacity  on the  rail.  There  was  high                                                                    
density during the summer months.                                                                                               
He referenced  the Port MacKenzie rail  extension, which was                                                                    
a  Mat-Su  Borough  project  that   the  railroad  had  been                                                                    
integrally  involved in.  He shared  an estimate  that there                                                                    
was  $175 million  to $190  million needed  to complete  the                                                                    
rail extension.  He mentioned greater  momentum in  2014 and                                                                    
2015 and  that prospective customers had  been quieter since                                                                    
the  amount  of  work  had  died down.  He  noted  that  the                                                                    
railroad had  worked cooperatively  with the  Mat-Su Borough                                                                    
and  the  Fairbanks  North  Star  Borough  and  one  of  the                                                                    
utilities  in Fairbanks  to  pursue  grant opportunities  to                                                                    
benefit  the Interior  Energy Project  but could  complete a                                                                    
portion of the project.                                                                                                         
Mr. O'Leary continued to  address Senator Wilson's question.                                                                    
He summarized  that the railroad believed  in infrastructure                                                                    
and thought infrastructure was lacking  in the state but did                                                                    
not have  the capacity  to move  forward with  projects that                                                                    
could not make  a "business case." He  identified that ARCs                                                                     
cash flow  would not support  either rail  extension project                                                                    
without  identified  customers  or without  having  external                                                                    
9:42:20 AM                                                                                                                    
Senator Wilson  asked if the  railroad was  actively seeking                                                                    
funds  from federal  infrastructure  packages  to help  fund                                                                    
Mr.   O'Leary  informed   that   the   railroad  was   still                                                                    
"unpacking" the  infrastructure bill. He continued  that ARC                                                                    
was  finding  that  there were  lots  of  opportunities.  He                                                                    
continued that the railroad  was resource-constrained in the                                                                    
ability to  go after many  of the  grants, and it  was doing                                                                    
its  best to  expand its  capability. He  thought the  funds                                                                    
could be great for the railroad and for the state.                                                                              
Co-Chair Bishop asked Mr. O'Leary  to expound on how ARC was                                                                    
resource-constrained in going after IJJA grants.                                                                                
Mr.  O'Leary   thought  being  a   grant  writer   or  grant                                                                    
administrator  was  a  good position  to  be  in  currently,                                                                    
because  there  was a  lot  of  grant monies  available.  He                                                                    
thought it  was challenging to find  resources and mentioned                                                                    
difficulty filling positions.                                                                                                   
Co-Chair    Bishop   mentioned    that   there    were   two                                                                    
infrastructure grants out  at the moment for  $4 billion for                                                                    
ports, rail, and passenger service.                                                                                             
9:44:33 AM                                                                                                                    
JANETTE  BOWER, CITY  MANAGER, SEWARD  (via teleconference),                                                                    
believed  the proposed  project  was vital  to  the City  of                                                                    
Seward. She expanded  that the closure of  the dock facility                                                                    
would eliminate cruise ship dollars  from local business and                                                                    
city and borough.  The closure would also  affect the marine                                                                    
industry. She noted  that the dock and  cruise ship terminal                                                                    
were used  year-round, and many  community events  were held                                                                    
in  the terminal.  She discussed  the positive  relationship                                                                    
between the  city and  the railroad.  She asserted  that the                                                                    
RCG had  proven their  commitment to the  city as  an anchor                                                                    
tenant  and  past  activities. She  spoke  to  the  positive                                                                    
economic impact  the project would  bring to Seward  and the                                                                    
Ms. Bower  addressed earlier comments and  noted that Seward                                                                    
had  been contemplating  electrification  of  the docks  and                                                                    
wanted to partner  with the railroad. She  expanded that the                                                                    
city  was doing  a  major electric  upgrade  project of  its                                                                    
systems.  She noted  that the  city owned  and operated  its                                                                    
electricity in Seward,  and it was aware of  what was needed                                                                    
to be  in compliance.  She addressed the  hypothetical event                                                                    
of catastrophic failure of the  port in Anchorage. She noted                                                                    
some  tenants  in  Anchorage  had  looked  at  Seward  as  a                                                                    
possible option. She mentioned  that the United States Coast                                                                    
Guard  had received  $13.5 million  for  housing in  Seward,                                                                    
which  indicated  growth. She  asserted  that  the port  was                                                                    
active and had a lot of capacity.                                                                                               
Senator  Wielechowski  asked  if  the  City  of  Seward  was                                                                    
contributing financially to the  construction of the project                                                                    
proposed in the bill.                                                                                                           
Ms. Bower answered "no."                                                                                                        
Co-Chair  Bishop  asked if  the  City  of Seward  was  still                                                                    
overrun with feral rabbits.                                                                                                     
Ms. Bower had not seen any rabbits.                                                                                             
9:48:33 AM                                                                                                                    
PRESTON  CARNAHAN,  DIRECTOR  OF  DESTINATION  AND  BUSINESS                                                                    
DEVELOPMENT,  ROYAL  CARIBBEAN GROUP  (via  teleconference),                                                                    
explained that RCG had 60  ships globally, and would have 10                                                                    
in Alaska  this year. He  mentioned that access to  a modern                                                                    
and capable dock in Seward  was critical to RCGs  ability to                                                                    
bring   passengers  to   the  Interior.   Additionally,  the                                                                    
Southeast  Alaska   communities  relied  heavily   on  RCGs                                                                     
ability  to  continue  calling into  Seward,  as  the  ships                                                                    
stopped in  Southeast communities  on the way.  He discussed                                                                    
working with  ARC and the  City of Seward. He  affirmed that                                                                    
RCG would be  the main user of the new  facility and planned                                                                    
to be there for decades in the future.                                                                                          
9:50:37 AM                                                                                                                    
Co-Chair Stedman referenced  environmental "winds of change"                                                                    
that  were approaching  and mentioned  carbon emissions.  He                                                                    
mentioned communities  he represented and  significant docks                                                                    
in  Ketchikan,  Sitka,  and  Hoonah.  He  wanted  an  update                                                                    
regarding  the carbon  emissions issue,  and the  industry's                                                                    
plan  to electrify  the  docks  that ships  tied  up to.  He                                                                    
thought the plan was a win-win for everyone.                                                                                    
Mr.  Carnahan  relayed  that  one of  the  drivers  for  the                                                                    
project in  Seward was  a larger dock  that would  allow for                                                                    
larger ships.  The ships  were on average  15 to  20 percent                                                                    
more efficient  than past generations  and would  cut carbon                                                                    
emissions.  He  mentioned  dock electrification,  and  noted                                                                    
that the  larger ships  were capable  and had  the necessary                                                                    
hardware to plug  in. He mentioned the impact  of the number                                                                    
of  passengers  and  ship size  relative  to  the  community                                                                    
assets.  He cited  that RCG  took the  available electricity                                                                    
into account,  which was often  from hydropower.  He thought                                                                    
it might  not currently  make sense to  plug in  ships given                                                                    
the current  infrastructure. He  considered that  RCG needed                                                                    
to  work  with communities  to  assess  the power  grid  and                                                                    
whether there  were projects to upgrade  the infrastructure.                                                                    
He noted  that RCG  was equipping  its ships  to be  able to                                                                    
plug in where it was available.                                                                                                 
Co-Chair  Stedman commented  that he  thought Ketchikan  was                                                                    
gearing up and  moving forward to power ships  in the summer                                                                    
and locals would use the power  in the winter. He noted that                                                                    
the electricity was from hydropower.  He thought it was true                                                                    
that  electrification   of  four  to  five   ships  was  not                                                                    
possible, but he  thought the more docks  that could benefit                                                                    
from electrical expansion was a benefit to everyone.                                                                            
9:54:18 AM                                                                                                                    
Co-Chair Bishop OPENED public testimony.                                                                                        
BONNE WOLDSTAD, SELF,  FAIRBANKS (via teleconference), spoke                                                                    
in support  of SB  218. She  supported maintenance  of state                                                                    
infrastructure.   She   mentioned    comments   by   Senator                                                                    
Wielechowski, Co-Chair  Stedman, and Senator  Olson relating                                                                    
to a backup  for the Port of Alaska. She  wanted to see some                                                                    
form  of commitment  from the  Alaska Railroad  to recognize                                                                    
prior existing  rights as documented  under Section  1203 of                                                                    
the Alaska  Railroad Transfer Act  (ARTA) and the  return of                                                                    
full rights  to adjacent  property owners.  She acknowledged                                                                    
that the bill would not  be the correct mechanism to address                                                                    
the matter,  but encouraged the  committee to work  to solve                                                                    
issues between ARC and property owners.                                                                                         
9:55:41 AM                                                                                                                    
Co-Chair Bishop CLOSED public testimony.                                                                                        
SB  218  was  HEARD  and   HELD  in  committee  for  further                                                                    
HOUSE BILL NO. 307                                                                                                            
     "An  Act  relating to  the  financing  and issuance  of                                                                    
     bonds  for a  liquefied natural  gas production  system                                                                    
     and natural gas distribution  system; and providing for                                                                    
     an effective date."                                                                                                        
9:55:48 AM                                                                                                                    
Co-Chair Bishop  relayed that it  was the first  hearing for                                                                    
HB 307.  The committee  would hear  a bill  introduction and                                                                    
sectional  analysis  and  would   take  invited  and  public                                                                    
9:56:21 AM                                                                                                                    
REPRESENTATIVE GRIER  HOPKINS, SPONSOR, relayed that  HB 307                                                                    
was   a   simple  bill   that   would   start  a   long-term                                                                    
comprehensive solution to a difficult  problem that had been                                                                    
worked  on  in Fairbanks  for  a  decade.  He spoke  from  a                                                                    
Sponsor Statement (copy on file):                                                                                               
     In  2009,  the  U.S.  Environmental  Protection  Agency                                                                    
     (EPA)  designated the  more populated  portions of  the                                                                    
     Fairbanks North Star Borough  (FNSB) as a nonattainment                                                                    
     area  for  air quality  related  to  PM2.5. Since  that                                                                    
     time,  the communities  of  Fairbanks  and North  Pole,                                                                    
     State of  Alaska, and Interior  Gas Utility  (IGU) have                                                                    
     been  actively engaged  in  expanding the  availability                                                                    
     and use  of natural  gas through the  implementation of                                                                    
     the Interior  Energy Project (IEP), a  project designed                                                                    
     to  bring   lower-cost  energy  to  as   many  Interior                                                                    
     residents  and businesses  as possible,  as quickly  as                                                                    
     A key to reducing PM2.5  air pollution in the long term                                                                    
     is  expanding  the  availability of  affordable,  clean                                                                    
     burning natural  gas. A critical  component of  the IEP                                                                    
     is financing  for the development  of a  unified public                                                                    
     gas utility  with competitive rates. SB  23 (chapter 26                                                                    
     SLA 13)  was passed by  the 28th Alaska  Legislature in                                                                    
     2013   giving   the   Alaska   Industrial   Development                                                                    
     Authority  (AIDEA)  the  ability to  provide  financing                                                                    
     tools for the development of the IEP.                                                                                      
     Among the financial tools granted  to AIDEA for the IEP                                                                    
     was the ability to issue  up to $150 million in conduit                                                                    
     revenue  bonds to  help develop  an integrated  natural                                                                    
     gas supply  chain, including  expansion of  natural gas                                                                    
     liquefaction   facilities   in  the   Matanuska-Susitna                                                                    
     Borough and expansion of natural  gas mains and service                                                                    
     lines  in  the  FNSB.  Authorization under  SB  23  for                                                                    
     issuing these bonds was  originally scheduled to expire                                                                    
     June 30, 2018.  Through the passage of  HB 119 (chapter                                                                    
     64  SLA 18)  in 2018,  the Alaska  Legislature extended                                                                    
     access  to AIDEA  bonding an  additional five  years to                                                                    
     June 30, 2023.                                                                                                             
     Given  market conditions  and  turmoil  related to  the                                                                    
     COVID-19 pandemic, IGU has  paused the final investment                                                                    
     decision on  its Titan liquid  natural gas  (LNG) plant                                                                    
     expansion project located in  the Mat-Su Borough, which                                                                    
     will necessitate  access to AIDEA bonds.  Bonds of $136                                                                    
     million of the original  $150 million authorized may be                                                                    
     issued to provide up to  the $275 million financing cap                                                                    
     authorized under SB23.                                                                                                     
     HB  307 extends  the authorization  for AIDEA  to issue                                                                    
     IEP-related bonds for an additional  five years to June                                                                    
     30, 2028.                                                                                                                  
Representative  Hopkins cited  that  there  were letters  of                                                                    
support from  the Alaska  Industrial Development  and Export                                                                    
Authority  (AIDEA), the  City  of  Fairbanks, the  Fairbanks                                                                    
Economic   Development   Corporation,  and   the   Fairbanks                                                                    
NorthStar Borough (copy on file).                                                                                               
Senator Wilson thought  the Titan Facility was  good to have                                                                    
in the  borough and he would  love to see its  expansion. He                                                                    
asked  about how  the additional  bonding capacity  would be                                                                    
used. He referenced the capacity  of the railroad and moving                                                                    
gas containers.                                                                                                                 
Representative Hopkins understood that  the funds would just                                                                    
be for the facility. For  specific plans, he deferred to the                                                                    
Interior Gas Utility.                                                                                                           
10:00:35 AM                                                                                                                   
DAN   BRITTON,   INTERIOR   GAS  UTILITY,   FAIRBANKS   (via                                                                    
teleconference),  stated  that  the current  plans  did  not                                                                    
include any  specific investment for rail  infrastructure as                                                                    
the Interior  Gas Utility (IGU) worked  towards expansion of                                                                    
liquefaction. He  continued that  IGU continued to  look for                                                                    
opportunities to  do so, but  the bonding  authorization had                                                                    
not identified a specific investment in rail.                                                                                   
Co-Chair Bishop asked if Mr. Britton had anything to add.                                                                       
Mr. Britton  noted that  in 2022, it  was estimated  that an                                                                    
additional  600 customers  would  be  converting to  natural                                                                    
gas. The funds  would be used for  expanding availability of                                                                    
gas,   through  the   distribution   system  expansion   and                                                                    
installation of new services as customers were interested.                                                                      
Co-Chair   Bishop   referenced  the   anticipated   600-unit                                                                    
expansion and asked if it was above or below estimates.                                                                         
Mr. Britton  stated the number  was slightly above  the pro-                                                                    
forma for  the current year of  approximately 457 customers.                                                                    
He  continued that  IGU had  reached over  300 approved-for-                                                                    
construction service lines already and  it was well ahead of                                                                    
the previous years progress.                                                                                                    
10:02:29 AM                                                                                                                   
Co-Chair Bishop OPENED public testimony.                                                                                        
10:02:40 AM                                                                                                                   
Co-Chair Bishop CLOSED public testimony.                                                                                        
Co-Chair  Bishop relayed  that  the  amendment deadline  was                                                                    
Friday, May 6 at 5 oclock p.m.                                                                                                  
HB  307  was  HEARD  and   HELD  in  committee  for  further                                                                    
10:03:12 AM                                                                                                                   
The meeting was adjourned at 10:03 a.m.                                                                                         

Document Name Date/Time Subjects
SB 218 AAT AKRR Support Letter.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218 AKRR Bonding Dock Letter of Suport.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218 AKRR LOS on Letterhead.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218 AKRR Support Letter for Bonding.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218 Explore Fairbanks Letter of Support.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218 AlaskaTourTravel-ARR-SewardDock-LetterofSupport.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218 JAG AK Support Letter.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218 Seward City Council Resolution of Support.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218 Sponsor Statement.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218 Seward dock letter of support.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218Letter of Support_Alaska Railroad_AWA_2.16.22.docx.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218 Seward Bonding Presentation.pdf SFIN 5/5/2022 9:00:00 AM
STRA 3/1/2022 1:30:00 PM
SB 218
SB 218 2022_Seward_Dock_Presentation_Senate-Finance_May5.pdf SFIN 5/5/2022 9:00:00 AM
SB 218
SB 218 Support Letter_JAG AK.pdf SFIN 5/5/2022 9:00:00 AM
SB 218
SB 218 Support Letter_ASLC.pdf SFIN 5/5/2022 9:00:00 AM
SB 218
SB 218 Support Letter_Premier AK Tours.pdf SFIN 5/5/2022 9:00:00 AM
SB 218
HB 307- Sectional Analysis 3.7.2022.pdf HFIN 4/4/2022 1:00:00 PM
SFIN 5/5/2022 9:00:00 AM
HB 307
HB 307 - Research - Interior Energy Project January 2022 Update to Legislature 2.23.2022.pdf HFIN 4/4/2022 1:00:00 PM
SFIN 5/5/2022 9:00:00 AM
SFIN 5/11/2022 1:00:00 PM
HB 307
HB 307 - Sponsor Statement 4.25.2022.pdf SFIN 5/5/2022 9:00:00 AM
HB 307
HB 307 - Letters of Support 4.25.2022.pdf SFIN 5/5/2022 9:00:00 AM
HB 307
SB 218 FW_ ARRC responses to Senate Finance questions.pdf SFIN 5/5/2022 9:00:00 AM
SB 218