Legislature(2005 - 2006)SENATE FINANCE 532
03/14/2006 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| SB303 | |
| SB304 | |
| SB250 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 303 | TELECONFERENCED | |
| + | SB 304 | TELECONFERENCED | |
| + | SB 250 | TELECONFERENCED | |
| + | TELECONFERENCED |
MINUTES
SENATE FINANCE COMMITTEE
March 14, 2006
9:02 a.m.
CALL TO ORDER
Co-Chair Lyda Green convened the meeting at approximately
9:02:39 AM.
PRESENT
Senator Lyda Green, Co-Chair
Senator Gary Wilken, Co-Chair
Senator Con Bunde, Vice Chair
Senator Fred Dyson
Senator Bert Stedman
Senator Lyman Hoffman
Senator Donny Olson
Also Attending: GEORGE WUERCH, Chair, Knik Arm Bridge and Toll
Authority; BILL GREENE, Project Counsel, Knik Arm Bridge and
Toll Authority; RYAN MAKINSTER, Staff to Senator John Cowdery;
TOM MAHER, Staff to Senator Therriault; PAT DAVIDSON, Director,
Division of Legislative Audit; BARBARA MASON, Executive
Director, Alaska Council on Domestic Violence and Sexual
Assault; BRENDA STANFILL, Executive Director, Interior Alaska
Center for Nonviolent Living, and Chair, Alaska Network on
Domestic Violence and Sexual Assault;
Attending via Teleconference: From Anchorage: STEVE WALLACE;
JAMES CANTOR, Chief Assistant Attorney General, Statewide
Section Supervisor, Transportation Section, Civil Division,
Department of Law; From an offnet location: STEPHANIE KESLER,
Government Hills Community Council; DAN COFFEY, Attorney
representing Diamond Parking; JOHN TORGERSON, Deputy
Commissioner, Department of Transportation and Public Facilities
SUMMARY INFORMATION
SB 303-KNIK ARM BRIDGE AND TOLL AUTHORITY
The Committee heard from the Knik Arm Bridge and Toll Authority,
the Department of Transportation and Public Facilities, the
Department of Law, and affected residents. An amendment was
adopted and the bill was reported from Committee.
SB 304-AIRPORT PARKING SHUTTLES/AIRPORT CHARGES
The Committee heard from the sponsor, the Department of
Transportation and Public Facilities and a parking lot vendor.
The bill was reported from Committee.
SB 250-DOMESTIC VIOLENCE/SEXUAL ASSAULT COUNCIL
The Committee heard from the sponsor, the Division of
Legislative Audit, the Council on Domestic Violence and Sexual
Assault, and the Network on Domestic Violence and Sexual
Assault. The bill was reported from Committee.
9:03:05 AM
CS FOR SENATE BILL NO. 303(TRA)
"An Act amending the Knik Arm Bridge and Toll Authority Act
and the powers and authority of the authority to finance
construction and maintenance of the Knik Arm Bridge, to set
and collect tolls, and to carry out its duties, and making
conforming changes to statutes relating to issuance,
renewal, or reinstatement of driver's licenses and to levy
on permanent fund dividends; and providing for an effective
date."
This was the first hearing for this bill in the Senate Finance
Committee.
GEORGE WUERCH, Chair, Knik Arm Bridge and Toll Authority
(KABATA), testified that the legislation passed in 2003
establishing the toll authority was one of the best bills of its
kind in the nation. However, some improvements could be made to
address issues identified in other areas of the country.
Additionally, a provision in the current statute requires the
Authority to obtain from the legislature a "debt ceiling" of a
proposed $500 million, which is requested in this legislation.
9:05:33 AM
BILL GREENE, Project Counsel, Knik Arm Bridge and Toll
Authority, informed he is retained under contract by the Alaska
Attorney General's office. He noted he had provided the
Committee with information pertaining to this bill, including a
statement of the purpose of the bill and a sectional analysis.
Mr. Greene reminded that the Legislature enacted a law in 2003
that created the Authority to construct a bridge across the Knik
Arm, linking the Matanuska-Susitna Borough and the Municipality
of Anchorage to improve the transportation system and
infrastructure in the Upper Cook Inlet area and to support the
growth and development of the state.
Mr. Greene disclosed that over the past two years, KABATA has
consulted with financial consultants, transportation departments
of other states, other toll authorities, the Federal Highway
Administration, and others. The Authority has learned that the
financing sectors require significant specificity, more than is
currently provided in statute. This legislation is the
culmination of these efforts. It is a housekeeping bill intended
to clarify and specify the powers of KABATA.
9:09:10 AM
Mr. Greene acknowledged that federal funding is available for
this project. However, regardless of the amount of that funding,
private sector funds and other public funds would be necessary
to finance the project. KABATA requests the authority to engage
in securing this financing. This bill would provide the
Authority the ability to enter into public and private
partnerships for equity financing and debt financing. KABATA
would also have the ability to establish the amount of the toll
charges and to collect those tolls and other fines.
9:10:45 AM
Mr. Greene stressed the importance of the provision in the bill
that would allow the Authority to set the limit of the amount of
revenue bonds it could issue. Existing statute provides KABATA
must request this authorization from the Legislature.
9:11:29 AM
Co-Chair Green recalled discussions in another legislative
committee about the reason this bill is necessary. She requested
an explanation of the "shortcomings or inequities or lack of
authority" of the current statute.
9:11:59 AM
Mr. Wuerch reiterated the proposed changes are the result of
"lessons learned" from the experiences of other toll
authorities. The Federal Highway Administration has enacted a
new financing program, the Transportation Infrastructure Finance
and Innovation Act (TIFIA), to finance loans, lines of credit or
investment equity for projects. Some toll authorities that
received this financing were sued with the charge alleging that
the authorities did not have authorization from their state
legislatures to borrow from the federal government. As a result,
changes to the TIFIA rules now provide that unless a state's
statute specifies the TIFIA program with regard to the toll
authority, the authority's application for funding would not be
accepted.
Mr. Wuerch gave the Tacoma Narrows Bridge in the state of
Washington as an example. Funding for construction of a new span
from private investors was nearly secured when the governing
authority was found to not have authorization from the
Washington Legislature to secure the federal funding also
necessary for the project. He provided other examples with
similar situations.
9:14:27 AM
Mr. Wuerch remarked that the estimated cost of the Knik Arm
crossing is $600 million. Governor Frank Murkowski submitted a
request to the legislature to appropriate $94 million in federal
funding and approximately nine percent of that amount in
matching State general funds to total about $100 million. If
appropriated, the Authority would need to raise the remaining
$500 million to fund the project. Preliminary discussions
indicate this would be possible. If it were found within the
next 12 months to not be possible and that additional public
funding was necessary, an appropriation request would be
submitted the following legislative session.
Mr. Wuerch predicted that a toll fee of $3 would generate $1.5
billion over the 30 years. The revenue stream would justify
financing the $500 million KABATA was requesting the legislature
authorize it to borrow.
9:15:55 AM
Co-Chair Green asked if this legislation would enable KABATA to
"more easily arrange for funding, borrowing and security for the
project."
Mr. Wuerch answered that the assessment was correct.
9:16:07 AM
Senator Hoffman asked the State's liability in the event the
Authority was unable to repay the bonds issued to fund the
project.
9:16:36 AM
Mr. Wuerch deferred to the Department of Revenue.
9:16:54 AM
TOM BOUTIN, Deputy Commissioner, Department of Revenue,
responded that the bonds issued for this project would be "a
typical standalone revenue bond structure". The expectation
would be that no bonds associated with the state of Alaska would
default. This has never occurred. However, protections are
included in the structure such as a requirement for a
feasibility study by a nationally recognized consulting firm
that deals solely with toll road projects. This study would
determine whether adequate revenue would be generated to fund a
debt service reserve, fund operations and other requirements.
Additionally, fund insurance would be purchased from a financial
guarantor to protect, not the State, but rather the bondholders.
This structure is similar to that employed for bonds issued to
fund international airport projects.
9:18:48 AM
Senator Hoffman understood the structure. He again asked that if
the Authority, for whatever reason, was unable to repay the
bonds, whether the State would be liable for the $.5 billion.
9:19:17 AM
Mr. Boutin replied that the bondholders would have no legal
claim on any State resources, apart from the bridge and its
revenues.
9:19:41 AM
Senator Stedman asked if the "financial layout" would include
any provision to protect the purchaser of those bonds.
9:19:59 AM
Mr. Boutin answered yes; that financial guarantee insurance
would likely be purchased utilizing a portion of bond proceeds.
Providers of this insurance would research the project and
determine whether it was an acceptable risk. The project would
be undertaken only after a due diligence was performed.
9:21:24 AM
Senator Bunde understood that the tolls are anticipated to cover
operating costs. However, should the tolls not cover those
costs, he predicted that the State would be under pressure to
supplant the bridge costs under threat that the bondholders
would repossess the bridge.
9:22:11 AM
Mr. Wuerch agreed the concern is to implement a method to insure
that the facility would continue to operate and serve the
public. The bridge would be the asset of KABATA, and therefore
this effort would be essential. Discussions were underway with
the Department of Transportation and Public Facilities to
determine the delineation of the State's responsibility and the
Authority's. The Governor was requesting funding to pave the
road in the Mat-Su Borough leading to Port McKenzie, the
proposed bridge site. This 13 and one-half mile road, owned by
the Borough, would serve the bridge. The Borough has entered
into an agreement with the Department to assume maintenance
responsibilities of the road once it is upgraded. This
arrangement would lessen the burden of the Authority. Similar
arrangements could be discussed for roads on the eastern landing
of the bridge.
9:23:34 AM
Co-Chair Green instructed the Committee to limit questions to
those specific to the legislation, and to not "revisit history".
9:23:52 AM
Co-Chair Wilken characterized the bridge as a "project for the
next generation", which he was "generally" in support. However,
he was concerned that the proposed "massive" bridges would be
constructed at the expense of needed infrastructure in the
remainder of the state.
9:25:25 AM
Co-Chair Wilken had understood that until July 2004, the Knik
Arm Bridge crossing and the Gravina Island Bridge to be located
in Ketchikan would be funded with "added money" not included in
the normal federal allocation for highways. Changes to the
appropriation were made and these funds would be included in the
normal allocation. He asked for clarification that the funds
would be provided "in total" and that the Legislature would have
the responsibility to allocate "as we see fit", as traditionally
done.
9:27:07 AM
Mr. Wuerch emphasized that the State and the Legislature have
complete authority to allocate the funds. The funds originally
"earmarked" for the two bridge projects do not require State
matching funds, under the normal formula system. However, the
Department has opted to request treatment of them as such and
request State general funds to supplant the federal funding.
9:27:48 AM
Co-Chair Wilken announced he had sent a letter to the
Commissioner of the Department of Transportation and Public
Facilities approximately six weeks ago stating he would be
unable to support these projects until he had received a
financial plan indicating how they would be constructed and
financed without diverting funds otherwise intended for projects
located in the Interior for the next five years. Senator Bunde
voiced concerns that if bonds were not sold, expectations would
be to finance these projects at the expense of other needed
projects.
9:29:24 AM
Co-Chair Wilken directed attention to language inserted to AS
19.75.111(a)(8), amended through Section 1 on page 2 of the
bill. He interpreted the original statutory language and the
proposed inserted language to imply that federal funds were not
anticipated when the Authority was established.
9:30:11 AM
Mr. Greene stated that the original bill allowed KABATA to incur
indebtedness. In research undertaken since, it has been
determined that the proposed language is necessary to comply
with the federal TIFIA requirements. The most common problem
encountered by other toll authorities is insufficient statutory
language to specify authority. This legislation would provide
the needed clarity and specificity. It would allow the Authority
to secure financial debt to fund this project.
9:32:28 AM
Senator Stedman counseled on the need for members to deemphasize
the impact on one's election district when setting policy for
statewide infrastructure. A presentation was given by the
Department on the proposed bridges to address the "political
agenda" and to show that the predicted impacts in future years
were "unrealistic" and would not materialize.
Senator Stedman explained that the federal appropriation would
be $112 million more than was provided in the previous year.
These funds are not categorized for surface transportation, nor
are they National Highway System "formula dollars". Rather the
funds are included in the Highway Priority Projects Program, the
Bridge Discretionary Program, the Transportation Improvement
Program, and the National Corridor Infrastructure Improvement
Program.
Senator Stedman stressed the need to obtain a "clear and
accurate representation of what we're faced with" in financing
these proposed bridges. Co-Chair Wilken's assertion that the
Department is furthering a political agenda was incorrect.
Senator Stedman informed that he has contacted the Division of
Legal and Research Services, and the Division of Legislative
Finance to assist in understanding the impacts. The Alaska
Congressional delegation had differed from that of the Alaska
Department of Transportation and Public Facilities in the
assessment of impact. Agreements for most issues have since been
reached. However, if Legislative policies were adopted based on
political agendas "that are driven deep in the bowels of" the
Department, no projects would be undertaken.
9:35:44 AM
Co-Chair Green returned the discussion to this legislation: a
housekeeping bill that would prepare the Authority to enter
discussions with TIFIA personnel and private lenders.
9:36:12 AM
Co-Chair Green referenced inserted language to AS 19.75.111(7)
amended through Section 1 of the bill on page 2, line 21 that
would extend authority to issue "and refund" bonds. She asked if
this is similar to refinancing of bonds.
Co-Chair Green's assessment was confirmed.
Co-Chair Green next directed attention to subparagraphs (11) and
(12) of the same section on page 3, lines 10 through 18. She
asked if these provisions were specific to the toll and bridge
facilities or whether the Authority's ability to bring civil and
criminal actions to collect tolls or fees, and obligate revenue
generated from the facilities, could be extended to assets not
related to the bridge.
9:37:30 AM
Mr. Wuerch replied these provisions apply solely to the proposed
bridge.
9:37:40 AM
Co-Chair Green asked if other authorities in the state have this
ability, such as the Alaska Railroad Corporation.
9:37:54 AM
Mr. Wuerch clarified that the Alaska Railroad is an entity of
the State government. The provision in this legislation is
similar to that employed by the Railroad, although the Knik Arm
Bridge and Toll Authority would have more "independence" in
bonding activities. This is because KABATA would oversee
primarily an infrastructure facility whereas the Railroad
entails more operational functions.
9:38:32 AM
Co-Chair Green asked about the treatment of any excess toll
revenues.
9:38:53 AM
Mr. Wuerch responded that the funds would remain in the
possession of the Authority for expenditure on future expansions
or major repairs.
9:39:11 AM
Senator Bunde remarked that KABATA would not pay a dividend to
the State. Additionally, adoption of this bill would not commit
any federal funding to the project.
Co-Chair Green affirmed.
9:39:43 AM
Senator Olson asked if this legislation would allow the
Authority to change the toll rate. He questioned the conclusion
that $3 would be sufficient to generate revenue to repay debt
and fund maintenance and operations. The appropriate toll fee
for the Whittier Tunnel was originally calculated at $1.50;
however, the toll is currently $12.
9:40:33 AM
Mr. Wuerch responded that lenders and investors are concerned
about which entities could change a toll structure. This
legislation would provide that only the Authority's board of
directors could make such changes.
Mr. Wuerch agreed that $3 would be inadequate. That figure was
calculated using an assumption that $200 million of public
funding would be provided rather than the currently requested
$100 million.
9:42:14 AM
Senator Olson noted that other cost projections for this bridge
estimate the amount would be greater than $1.5 billion rather
than the $600 million claimed by KABATA. Cost overruns incurred
during the expansion and upgrade of the Ted Stevens
International Airport amount to "hundreds of millions" of
dollars more than anticipated. He asked how he could assure his
constituents that the project would not stop with the bridge
only halfway constructed.
9:43:43 AM
Mr. Wuerch disclosed that the Board "wrestles with" the issue of
whether the cost estimates are accurate. Three engineering firms
have been hired and economist projections of population growth
have been consulted to achieve the revised $600 million
estimate. This estimate includes $100 million specifically for
inflation. Attempts were made to anticipate and avoid problems.
The "investment community" would not participate in this project
without sufficient assurances.
9:46:03 AM
Co-Chair Wilken pointed to language in the bill pertaining to an
individual's inability to obtain or renew a driver's license if
unpaid tolls or fees were owed. He suggested that the imposition
of this provision of 30 days after the due date of the fee or
toll should be 60 or 90 days. The shorter time frame could
result in undue bureaucracy. Two or three months of overdue
remittance would demonstrate intent to avoid payment.
9:47:02 AM
Mr. Wuerch did not object to extending the period to 60 days.
9:47:38 AM
Amendment #1: This amendment deletes "30" and inserts "60" to
subsection (c) of Sec.19.75.915. Liability for payment of
tolls., inserted through Section 9 on page 10, line 22. The
amended language reads as follows.
(c) Upon agreement between the authority and the
commissioner of administration, a vehicle owner liable for
an unpaid toll or fee due the authority may, after 60 days
after the due date, be barred from obtaining or renewing a
driver's license or a vehicle registration or license,
regardless of whether the vehicle was used at the
authority's facilities or incurred the toll or fee, until
the toll or fee is paid in full.
Co-Chair Wilken moved for adoption.
There was no objection and the amendment was ADOPTED.
9:48:00 AM
STEVE WALLACE testified via teleconference from Anchorage that
he owns a house located at Erickson Street on Government Hill in
Anchorage, which is the proposed site of the eastern landing of
the bridge. He is dependant on the expeditious progress of this
project to determine whether his property would be condemned and
purchased by the Authority. Meanwhile, he is unable to sell his
home at a time of high real estate values. KABATA's cost
estimates could not be verified; rather a study commissioned by
the Department of Transportation and Public Facilities estimates
the cost could be as high as $1.9 billion. The $600 million
projection includes only the bridge and does not include the
cost of road infrastructure on both shores.
9:51:52 AM
Co-Chair Green interrupted to direct the witness to limit his
comments to this bill.
9:52:03 AM
Mr. Wallace stressed that this legislation would make KABATA
more independent. The Committee should review the "underlying"
cost of the project before granting "free reign" to secure
financing. The Authority would be "completely independent" and
without "political oversight".
9:52:58 AM
JAMES CANTOR, Chief Assistant Attorney General, Statewide
Section Supervisor, Transportation Section, Civil Division,
Department of Law testified via teleconference from Anchorage
that he was available to answer questions.
It was determined that the Committee had no questions for this
witness.
9:53:14 AM
STEPHANIE KESLER, Government Hills Community Council, testified
via teleconference from an offnet location, that the Legislature
has a fiduciary obligation to understand the "true" cost of the
proposed bridge. A "fair" comparison must be made of the current
estimates to previous estimates, including the differences and
items omitted in the updated version.
9:55:20 AM
Co-Chair Green asked whether any Member had reason to hold the
bill in Committee.
9:55:28 AM
Senator Stedman offered a motion to report CS SB 303 (TRA), as
amended from Committee with individual recommendations and
accompanying fiscal notes.
Without objection CS SB 303 (FIN) was MOVED from Committee with
zero fiscal notes #1 from the Department of Transportation and
Public Facilities, and #2 from the Department of Natural
Resources.
9:55:49 AM
SENATE BILL NO. 304
"An Act relating to the privileges of airport parking
shuttles and to fees or charges imposed on a person who is
not a lessee or holder of a privilege to use the property
or a facility of an airport."
This was the first hearing for this bill in the Senate Finance
Committee.
RYAN MAKINSTER, Staff to Senator John Cowdery, paraphrased the
sponsor statement, which reads as follows.
Under Alaska law, commercial vehicles that deliver people
to the airport fall into one of six general categories:
limos, tour buses, standard bus service, off airport
shuttles, off airport car rental shuttles and courtesy
vehicles. Depending upon the vehicle's classification, a
fee is charged for what is essentially use of the airport's
curb and roadway. The authority for the setting of these
specific rates can be found in AS 02.15.090, which requires
the fees charged to be "reasonable and uniform for the same
class of privileges and services… and (to be established)
with due regard to the property and improvements used and
the expense of operation by the state."
At present, the rates charged by the Department of
Transportation [and Public Facilities] for these different
vehicles to utilize the airport curb at the Anchorage
International Airport varies from $50 per year for a
courtesy vehicle, taxi, or limo, to $100 per year for a
tour passenger vehicle, up to a maximum of $1000 per year
for a regularly scheduled bus.
In early 2005, the Department of Transportation [and Public
Facilities] proposed regulations, which would charge "off-
airport valet parking services" a tax equal to 8% of their
gross revenues. This change would constitute a drastic
shift from the statutory language, which requires that the
fees charged be "reasonable and uniform for the same class
of privileges and services." While other courtesy services
such as free hotel shuttles are charged a $50 per vehicle
fee, the proposal would charge free parking shuttles 8% of
gross sales or $250 annual minimum (whichever is greater).
The two services are essentially the same class because
both are "a free courtesy"; both offer an airport patron an
off-site service and both require the same amount of
accommodations on [the] part of the Airport.
The purpose of SB 304 is to clarify the law with regard to
the charging of off-airport businesses who simply drop
patrons a the curb or pick them up upon return and reflects
the sentiment that the Department should set rates, which
are based on use and not as a percentage of gross revenues.
SB 304 simply and specifically directs the Department that
charges for usage must be consistent with other services
that receive similar privileges and accommodations, may not
be on a gross revenue basis and shall not have the effect
of singling out one type of accommodations because it may
currently or in the future compete with the airport.
9:58:45 AM
Senator Bunde asked if the theory that off-airport parking
competes with on-site parking was a factor in this situation.
9:59:12 AM
Mr. Makinster responded that the Sponsor surmised this could be
so. The Department of Transportation and Public Facilities has
also suggested that ramp fees and fees assessed on concessions
located on-site could increase to offset the loss of revenues to
off-site parking facilities. The intent of this bill is to
provide equality for all commercial curbside users, regardless
of whether the users directly compete with the airport.
9:59:33 AM
Senator Bunde expressed that if additional costs were incurred,
perhaps the fees for all commercial curbside users should be
increased.
9:59:50 AM
Mr. Makinster remarked that regardless of whether the rates are
considered too high, those rates should be uniform for all
users.
10:00:07 AM
Senator Olson asked if this issue pertains in any way to federal
regulation of international airports.
10:00:25 AM
Mr. Makinster was unaware of any federal rules related to this
issue. State statute provides the airport authority the ability
to set fee rates, although statute does not require additional
fees be established. Ramp fees must be assessed in an amount
adequate to cover bonding fees used to fund the on-site parking
structure.
10:01:13 AM
Senator Olson asked whether additional maintenance costs are
incurred from the commercial use of the airport by off-site
businesses.
10:01:30 AM
Mr. Makinster was unsure. The Department had not indicated any
specific expenses. The intention of this bill is that if such
use incurred additional costs, a reasonable rate should be
assessed for all users.
10:02:03 AM
Co-Chair Wilken asked how the issue of commercial use by off-
site businesses is addressed at other airports, such as the
Seattle-Tacoma International Airport.
10:02:16 AM
Mr. Makinster replied that the fees are assessed differently at
different airports. Some levy different fees to off-site parking
vendors; others have determined that a tax of the percentage of
gross sales is an acceptable practice. This legislation proposes
to levy a uniform rate on services. Court rulings have found
that an assessment of a percentage of gross sales for off-
airport parking operations is allowable.
10:03:08 AM
Co-Chair Green clarified these court cases were filed in other
states.
10:03:11 AM
Mr. Makinster affirmed.
10:03:15 AM
Senator Dyson relayed concerns about the rate structure
expressed by small businesses that transport customers between
the Ted Stevens International Airport and outlying communities,
such as Eagle River. He asked whether this legislation would
alleviate those concerns.
10:03:47 AM
Mr. Makinster responded that a business that provides parking in
such a community and transportation to and from the airport
would be subject to the percent of gross sales fee. This
legislation would not address the current fee structure of $50 -
$1000 based generally on vehicle size. It would make the
targeting of certain user groups more difficult and would
provide bargaining power for all groups.
10:04:42 AM
Senator Bunde noted the fiscal note for this bill mentions the
possibility of increased costs in the event the percent of gross
sales were not permitted. He questioned the impact of the off-
site parking shuttles to the airport facilities, unless the
impact is calculated as a loss of parking revenues to the
airport from competition.
10:05:15 AM
Mr. Makinster stated that this legislation would incur no cost,
as the percent of gross tax has not been implemented to date.
The explanatory statement accompanying the fiscal note pertains
to the anticipated cost of this bill if the proposed regulation
was adopted.
10:05:37 AM
Senator Bunde concluded, "A decrease of an increase is a cut."
10:05:51 AM
Co-Chair Wilken hypothesized a businessperson contemplating
establishing an off-site parking facility. This entrepreneur
would likely develop a business plan incorporating the fee
structure of the nearby airport. Co-Chair Wilken requested the
fee structure for the airports in Portland, Oregon and Seattle,
Washington.
10:06:33 AM
Mr. Makinster indicated he would provide this information.
10:06:36 AM
MIKE NEELY, Regional Vice President, Diamond Parking, testified
that the former Mayor Wuerch of the Municipality of Anchorage
had been instrumental in facilitating a land swap in which
Diamond Parking obtained the site of the Spenard community dump.
Although rehabilitated, the use of this land is limited
primarily for parking.
Mr. Neely asserted that Diamond Parking sells a service. In this
location, customers park their vehicle and Diamond Parking
transports them and their luggage to the airport terminal. While
not as convenient as parking on-site, the cost is lower. The
parking facility is staffed 24 hours a day, 365 days a year by
25 to 30 total employees.
Mr. Neely stated that Diamond Parking must purchase an annual
ramp pass for each of the five vehicles at total cost of $2,500
a year. Now the Airport intends to collect a percentage of the
company's revenue as well. This would make the operation
unprofitable. Other commercial users are only charged for the
ramp pass and the parking businesses would be treated
differently. He understood that Diamond Parking must pay
something.
10:10:34 AM
Mr. Neely informed that other airports, primarily located on the
East Coast and the Midwest levy a fee on the percentage of
income. The airport in Spokane, Washington charges $400 per bus.
Most airports in the Pacific Northwest charge per trip, based on
the size of the vehicle and the number of passengers the vehicle
is equipped to transport.
10:11:39 AM
Mr. Neely had proposed two options to airport officials. One
suggestion was to levy a fee for each vehicle parked at the
Diamond Parking facility. A customer parking at the facility
would be transported once to the airport and once from the
airport upon their return, regardless of the number of days
their vehicle was on the lot.
Mr. Neely told of another suggestion to charge the company a
toll for each trip to the airport. The airport at Salt Lake
City, Utah utilizes a system in which transponders installed on
each vehicle emit a signal to a receiver located at the gate to
the airport terminal. At the end of each month the total number
of trips is calculated and the carrier is assessed a charge
based on the number of times its vehicles traveled to the
airport. Diamond Parking offered to fund installation of such a
system at the Anchorage airport with the capital expenditure
deducted from its toll charges until the debt was paid.
10:13:56 AM
Senator Olson asked if Diamond Parking is being "singled out" or
whether other entities would be levied a fee of eight percent of
revenues.
10:14:19 AM
Mr. Neely replied that his company is the only business involved
in off-site parking for this airport. It therefore appears that
Diamond Parking is targeted. Airport officials claim that the
fee would also apply to new similar commercial ventures.
However, several hotels located near the airport reserve parking
spaces for travelers but would not be subjected to the same
charges. If the percent of revenue fee were assessed to these
hotels, Diamond Parking would not be singled out.
10:15:26 AM
Co-Chair Wilken asked if the affect of this legislation would
place off-site parking with valet services into the same
category as off-airport shuttle services, rather then with off-
airport car rentals.
10:16:20 AM
Mr. Makinster clarified the proposed regulation would categorize
off-airport parking and valet services with the off-airport car
rental fee structure. The intent of this bill would be to retain
off-airport valet parking separately from the car rental group.
The legislation would not specify that the parking services
would be categorized with the shuttle services, but would
provide that the parking services could not be treated
significantly differently than other commercial operators.
10:17:05 AM
Co-Chair Wilken understood that the Department of Transportation
and Public Facilities had recommended in "early 2005" that
Diamond Parking and other off-site parking facilities should pay
fees in the same manner levied to off site car rental
businesses.
10:17:32 AM
Mr. Makinster affirmed.
10:17:35 AM
DAN COFFEY, Attorney representing Diamond Parking, testified via
teleconference from an offnet location about an effort made by
the Airport several years ago to impose a tax on the percentage
of receipts of car rental businesses. Dollar Rental and other
small companies were located off the Airport premises and could
not be levied this fee. A "more reasonable" alternative was
considered in which a charge was imposed for shuttle services
between the airport and the off-site car rental locations. The
level and volume of business was so minimal that a flat fee was
instead adopted. Currently, off-site car rental companies are
the only businesses subject to a percentage of gross revenue
charge.
Mr. Coffey stated that at the time of the land trade between the
Municipality of Anchorage and Diamond Parking, the Airport
determined it would be unable to generate revenue from Diamond
Parking operations. Rather than attempt to utilize its on-site
parking facilities to compete with the private business, the
Airport "went after Diamond" and proposed extending the
percentage of revenue charge to parking facilities as well as
the car rental businesses. This fee would be "huge" in relation
to the curbside access.
Mr. Coffey remarked that Airport officials contend this Diamond
Parking facility is dependant upon the Airport. He rejected this
argument, stating that off-site parking operators should not be
required to subsidize the cost of the entire Airport if they are
only utilizing the access roads and curb.
Mr. Coffey requested that off-site parking operators be treated
the same as other commercial curbside users. Fees should be
commensurate with other off-site airport use.
10:22:49 AM
JOHN TORGERSON, Deputy Commissioner of Aviation, Department of
Transportation and Public Facilities, testified via
teleconference from an offnet location that this issue is not
new. The US Supreme Court ruled in 1998 that the methodology of
fees assessed on a percentage of revenue is legal. Other
airports nationally and in other countries practice this. Annual
operating costs of the airports in Anchorage and Fairbanks are
approximately $65 million. Carriers contribute to funding this
expense as leaseholders and through terminal rentals, landing
fees and other charges.
Mr. Torgerson informed that the proposed percent of revenue fees
that would be imposed on the off-site parking facilities would
have no fiscal impact to the Airport. The issue is not between
government and the private sector but rather between the private
vendors utilizing the airport facilities. The regulations were
actually adopted in 1995 and have been subject to administrative
appeal. The process was underway to select a hearing officer to
determine if the Airport is constitutionally permitted to
collect this fee. Twenty-five airlines participated in the
residual agreement to establish the fee structure and several
other businesses service the airport. Due to time constraints it
was unlikely that representatives of these interests would be
testifying at this hearing.
Mr. Torgerson reported that while maintenance costs of the
commercial curbside use would be negligible, Diamond Parking
operations would result in a loss of revenue to the Anchorage
airport. The sponsor of this bill claims it would treat all
businesses equally. Instead, businesses located on-site would be
required to contribute more to the repayment of the bonds issued
for expansion and renovations to offset the lost parking fee
revenues. Diamond Parking is the only business to charge
customers for off-site airport parking. He agreed that some
hotels advertise airport parking, but provide this service free
to paying guests.
10:33:02 AM
Senator Bunde empathized with the private businesses and asked
if additional income must be generated to operate the airports
why all shuttle operations should not be charged.
10:34:05 AM
Mr. Torgerson surmised that at the time the classifications were
established, Airport and Department officials recognized the
uses of the airport facility, including maintenance, as well as
loss of revenue to the airport, and set fees accordingly.
10:34:48 AM
Co-Chair Green asked whether the witness supported or opposed
this bill.
10:34:55 AM
Mr. Torgerson responded that the Department, "on behalf of the
airlines" was opposed to the bill.
10:34:57 AM
Senator Olson asked why an eight-percent charge of gross
revenues was not levied on all commercial airport users, such as
the airline carriers, if such a fee were imposed on off-site
parking operations.
10:35:32 AM
Mr. Torgerson informed that the Airport Board was currently in
negotiations with airlines over the fee amounts. Air carriers
pay the entire $65 million in annual operating expenses. As
these expenses increase, the fees must be increased as well.
Alaska Airlines is the "highest payer" at the Anchorage airport.
All carriers contribute to the operating and bond repayment
costs.
10:36:20 AM
Senator Olson then asked why hotels and other businesses that
provide airport shuttle service, in addition to parking vendors,
would not be assessed a charge based on a percent of revenues.
10:37:08 AM
Mr. Torgerson replied that hotels are categorized in a
"different class" and are charged for their use of the airport
facilities differently. There is no intention to charge hotels a
percent of revenue fee.
10:37:34 AM
Senator Olson expressed concern about expecting "successful"
businesses to pay for the cost overruns incurred in the
expansion and reconstruction of the Airport. This was unfair to
small businesses.
10:38:22 AM
Mr. Torgerson responded that the proposed percent of revenue
fees pertains to operating expenses and has little relation to
construction costs. Repayment of the bonds issued to fund the
expansion and reconstruction is included in the landing fees and
other fees levied to leased space within the terminal. He
anticipated the leases would increase to $52 per square foot for
space within the terminal.
Mr. Torgerson stressed the issue of equalization. Recipients of
the "benefits that the Airport provides" should contribute. Car
rental agencies located on the Airport premises pay ten percent
of gross revenue to help support the operating costs of the
Airport. If all the car rental companies relocated to off-
airport sites, the operating costs must still be paid.
10:39:48 AM
Senator Olson understood, yet questioned the imposition of high
fees on businesses that cause little "wear and tear" to the
Airport.
10:40:10 AM
Senator Olson asked the number of businesses that would be
affected by the proposed eight percent of gross revenue fee, and
what businesses would not be affected. He also questioned how
the Department would audit the records of the affected companies
to verify the amount of gross revenue reported. He asked if a
search warrant would be required.
10:41:08 AM
Mr. Torgerson explained that the Department charges on fair
market value across Alaska. This is accomplished either through
a flat fee or a percentage of gross revenues fee. The federal
government allows these different methodologies.
10:42:22 AM
Senator Olson told of a small business that offers pizza
delivery from Anchorage to Bush communities via small air
carriers.
10:43:07 AM
Mr. Torgerson stated that the figure of eight percent is levied
on commercial users of all airports in the state.
10:43:48 AM
Co-Chair Green ordered the bill HELD in Committee.
10:44:06 AM
HOUSE CS FOR SENATE BILL NO. 250(STA)
"An Act extending the termination date of the Council on
Domestic Violence and Sexual Assault."
This was the first hearing for this bill in the Senate Finance
Committee.
TOM MAHER, Staff to Senator Therriault, read the sponsor
statement into the record as follows.
This legislation stems from recommendations contained in
the Legislative Audit Report entitled, "Council on Domestic
Violence and Sexual Assault Sunset Audit", dated September
23, 2005.
Legislative Audit also recommended that the Legislature
amend Council statutes related to the appointment of
Council members. Current law requires the Network on
Domestic Violence and Sexual Assault (Network), a non-
profit corporation, to submit a list of recommended
candidates to the Governor for appointment when a vacancy
occurs. Further, statutes require that the Governor fill
any unexpired term of a Council member after consultation
with the Network.
The Network annually receives a grant from the Council for
a legal advocacy project and the appearance of conflict
exists when a Council member reviews, evaluates, approves
and monitors a grant to the same nonprofit organization
that may have been responsible for recommending that
individual be appointed to the Council. SB 250 deletes both
statutory references that produce this appearance of
conflict.
This audit was conducted under revisions made last session
to the sunset process. The standard sunset period for
occupational boards and non-occupational boards was changed
from "not to exceed four years" to "not to exceed eight
years". Additionally, to better measure operational
performance, two new criteria were added to statute that
must be considered in the course of a sunset review by the
auditors:
· The extent to which the board, commission, or agency
has effectively attained its objectives and the
efficiency with which it has operated.
· The extent to which the board, commission, or agency
duplicates the activities of another governmental
agency or the private sector.
Mr. Maher noted that the Senate Health, Education and Social
Services Committee reported this legislation from its committee
with no changes. The fiscal note for this bill reflects that
implementation would incur no additional costs.
10:47:44 AM
Senator Hoffman asked about the aforementioned conflicts.
10:47:55 AM
PAT DAVIDSON, Director, Division of Legislative Audit, responded
that the statutory language is "relatively soft"; the governor
is required to accept the list of recommendations submitted by
the Network. This legislation would not require the governor to
select from those nominees for appointment to the Council on
Domestic Violence and Sexual Assault (CDVSA). The governor could
appoint others.
Ms. Davidson expressed concern that the Network is a grantee,
specifically some of the discretionary grants it receives. A
non-profit organization codified in statutes makes that
organization "first among equals" and does not appear to be
necessary.
10:49:13 AM
BARBARA MASON, Executive Director, Alaska Council on Domestic
Violence and Sexual Assault, provided an overview of the CDVSA
as follows.
The Mission of the Council on Domestic Violence and Sexual
Assault is to implement a statewide system of services for
the protection of individuals and families affected by
domestic violence and sexual assault.
The Council is a Governmental entity housed in the
Department of Public Safety.
· The Council is made up of seven members consisting of
representatives from the departments of Public
Safety, Law, Education and Early Development, Health
and Social Services, and three public members
appointed by the Governor.
As the Executive Director it is my job to move
forward the work of the Council.
· One of our tasks is to administer the funds received
from the State of Alaska and the Federal Government.
· We administer the state certified Batterer
Intervention Program (BIPS).
· We also use a proprietary database to capture
information from funded CDVSA programs in order to
comply with the data requirements from our funding
sources.
In conclusion I would like to state that the Council
supports SB 250 as written.
Difference between the Council and the Network is really
very simple.
CDVSA
· Administers the State and Fed. Funds
· Is a government entity
Network
· Represents the programs receiving the funds
· Is a private non-profit
The common goal between the two is to provide safety and
intervention for those affected by DV/SA.
10:50:46 AM
PEGGY BROWN, Executive Director, Alaska Network on Domestic
Violence and Sexual Assault, testified that the nonprofit
statewide organization represents over 20 member programs. The
Network has historically had a viable working relationship with
the CDVSA. Neither the Council nor the Network disputed the
"value" of the proposed provision that would allow the Network
to provide a list of nominees for the public seats of the
Council to the governor.
Ms. Brown quoted testimony provided by the commissioner of the
Department of Public Safety to the Senate Health, Education and
Social Services Committee: "As a matter of practicality, the
governor should consult with the Network before appointing
public members to CDVSA."
Ms. Brown asserted the Network should remain codified in
statute. The governor "is in no way, shape or form bound by any
recommendation" made by the Network. Rather, of the past five
recommendations, two had been selected. Additionally, the
Network is "first among equals". It is the "expert in this
field" for the State, the "voices of the victims" it serves, and
provides a service to the governor in making recommendations of
knowledgeable persons who are not perpetrators for Council
seats. The Network undertakes a screening process in selecting
those it recommends for appointment to the Council. In choosing
those to recommend, the Network attempts to provide "adequate
representation" of rural and urban residants; survivors of
domestic violence or sexual assault and those who provide
services to victims.
10:55:01 AM
Ms. Brown pointed out that in addition to the Network and the
Council not opposing the nomination process, the governor has
not identified a problem either.
10:55:52 AM
Senator Olson asked if the witness supported or opposed the
bill.
10:56:08 AM
Ms. Brown was against the removal of the Network from statutory
language.
10:56:22 AM
BRENDA STANFILL, Executive Director, Interior Alaska Center for
Nonviolent Living, and Chair, Alaska Network on Domestic
Violence and Sexual Assault, testified in Juneau that Ms. Brown
spoke of behalf of others present at this hearing. Victims must
be "heard" on the Council. Because the Council itself is not
authorized to appoint public representatives to its Board, the
Network provides recommendations of qualified candidates.
Ms. Stanfill requested amending the bill in the event the
Network was removed from statute, to provide clear definition of
qualifications and representations of the public members.
10:57:36 AM
Co-Chair Green referenced the recommendations of the Division of
Legislative Audit and requested updates on the implementation of
these changes.
10:58:35 AM
Co-Chair Wilken offered a motion to report the bill from
Committee with individual recommendations and accompanying
fiscal note.
There was no objection and SB 250 was MOVED from Committee with
zero fiscal note #1 from the Department of Public Safety.
ADJOURNMENT
Co-Chair Lyda Green adjourned the meeting at 10:58:47 AM
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