Legislature(2011 - 2012)SENATE FINANCE 532
02/23/2011 09:00 AM Senate FINANCE
| Audio | Topic |
|---|---|
| Start | |
| Overview of Statewide Port and Harbor Projects: Skagway; Port Mackenzie; Anchorage Port | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
February 23, 2011
9:02 a.m.
9:02:10 AM
CALL TO ORDER
Co-Chair Stedman called the Senate Finance Committee
meeting to order at 9:02 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Lesil McGuire, Vice-Chair
Senator Johnny Ellis
Senator Dennis Egan
Senator Donny Olson
Senator Joe Thomas
MEMBERS ABSENT
None
ALSO PRESENT
Karen Rehfeld, Director, Office of Management and Budget;
Governor Bill Sheffield, Port Director, Port of Anchorage;
Representative Bill Stoltze; Todd Cowles, Port Engineer,
Port of Anchorage; Emily Cotter, Director of Marketing &
Public Affairs, Port of Anchorage; Elizabeth Gray, Acting
Borough Manager, Matsu Borough; Joe Perkins, Executive
Project Manager, Port Mackenzie Rail Extension; Dr. Paul
Metz, Professor of Geological Engineering, University of
Alaska; Chris Aadnesen, Chief Executive Officer, Alaska
Railroad Corporation; Tom Cochran, Mayor, Skagway; Paul
Taylor, Selwyn-Chihong Mining; Mark Davis, Economic
Development, Alaska Industrial Development and Export
Authority
SUMMARY
^Overview of Statewide Port and Harbor Projects: Skagway;
Port Mackenzie; Anchorage Port
9:04:21 AM
KAREN REHFELD, DIRECTOR, OFFICE OF MANAGEMENT AND BUDGET
(OMB) stated that there was $360 million in the governor's
budget for the three ports.
Co-Chair Hoffman stated that there was a project in his
district that would provide jobs: the Don Creek project. He
stated that they had worked to develop projects. He
wondered if the size of the project was large enough for
the state for develop that resource. He wondered why a
project that would provide 800 jobs would not be
considered. Ms. Rehfeld stated that OMB had not received a
request, but remarked that it was an important project for
the region.
Co-Chair Hoffman felt that the project was important for
the state. Ms. Rehfeld agreed.
Co-Chair Stedman stated that the hearings did not include
all the ports in the state, and there was only so much
money that could be used.
9:10:43 AM
Senator Olson wondered if the members should focus on the
three ports in the presentation. Co-Chair Stedman stated
that he understood that there were many projects, but the
three ports were the focus of the presentation.
GOVERNOR BILL SHEFFIELD, PORT DIRECTOR, PORT OF ANCHORAGE,
presented a PowerPoint Presentation: "Port of Anchorage"
(copy on file). He highlighted slide 2, and stated that the
map displayed the impact of the Port of Anchorage.
Governor Sheffield highlighted slide 3: "Cargo at a
Glance." He stated that the port saw 120,000 containers
annually and 11 million barrels of fuel annually.
Governor Sheffield displayed slide 4: "Military Support."
He stated that the port was designated by the Department of
Defense and a nationally strategic seaport.
9:16:10 AM
Governor Sheffield discussed slide 5: "Revenue and
Operating Projections." He explained that the was from $5.8
million in 2011 to 10.6 million in 2021.
Governor Sheffield highlighted slide 6: "Project History."
He explained that when he joined the port, it was very
dilapidated. It was still fairly safe, but needed more
money for upkeep.
Governor Sheffield displayed slide 7: "Intermodal Expansion
Project." He stated that the slide displayed a before and
after projection.
Governor Sheffield discussed slide 8: "Phasing Plan." He
explained that the greatest challenge was to be under
construction and open for business at the same time.
9:23:00 AM
Co-Chair Hoffman requested the process for getting design
input from shippers that were utilizing the facility.
Governor Sheffield replied that there were meetings and
consultations pertaining to their needs.
Co-Chair Hoffman furthered that he was curious as to if the
meetings were incorporated into the design and need for
expansion. Governor Sheffield responded that those meetings
were utilized.
Co-Chair Hoffman wondered if the improvements were
documented. Governor Sheffield affirmed that there was
documentation..
Co-Chair Stedman requested analysis of customer
involvement. Governor Sheffield agreed to provide that
information.
Governor Sheffield continued to discuss slide 8. He stated
that construction would begin in the blue area of the map
in 2018, and would be complete in 2021.
Co-Chair Stedman encouraged a focus of financial requests,
construction, and timelines of the project.
9:28:41 AM
Governor Sheffield displayed slide 9: "Employment and
Payroll." He pointed out that there were between 600 and
3,600 vehicles a day.
Governor Sheffield highlighted slide 10: "Companies
involved in Expansion Project." He pointed out that 200
companies were involved in the port.
Governor Sheffield displayed slide 11: "Land Use." He
displayed slide 12: "Port Expansion Team."
Governor Sheffield highlighted slide 13: "Funding." He
explained the funds received to date were $279 million:
$138.7 in federal funds, $91.3 million in state funds, and
$49.1 million in port of Anchorage funds.
Co-Chair Stedman referred to slide 12 and requested the
tie-in of the responsibilities of the project with the
Integrated Concepts and Research Corporation. Governor
Sheffield responded that he would highlight that issue in a
future slide. He explained that MARAD hired a contractor
for the development.
Governor Sheffield discussed slide 14: "State Funds
Received to Date." He stated that the total funds that the
port had received to date were $91.290 million.
Governor Sheffield displayed slide 15: "Federal Funds
Received." He stated that the port had received $138.676
million in federal funds.
Co-Chair Stedman quiered the expectation of federal funding
for the port Governor Sheffield replied with slide 19:
"Projected Expenditures and Funding." He stated that the
top box displayed the expenditures. He specicifically
pointed out the North End line. He stated that the North
and South End would be done at the same time. He furthered
that the total expenditure cost would be $922 million. He
remarked that that total did not include costs incurred
from faulty work in 2009.
Co-Chair Stedman wondered if the $20 million was in the
governor's capital budget. Governor Sheffield replied that
they had requested $320 million in order to start the south
end project. He pointed out that they had not requested any
federal funds for 2012 and 2013, because of government cut
backs. He stated that they would ask for more, when they
became available.
9:37:29 AM
Co-Chair Stedman queried the fund balance of the cash carry
forward. He wondered what would happen if they did not get
the $300 million additional request. Governor Sheffield
replied that they would be behind schedule.
Co-Chair Stedman wondered if they would be in a negative
balance. Governor replied that money was not spent.
Co-Chair Hoffman looked at slide 19, and wondered if port
funds were expended on the project prior to 2011. Governor
Sheffield replied that they had a line of credit plus $50
million.
Co-Chair Hoffman wondered why port funds were not
anticipated from 3012 to 2017. Governor Sheffield responded
that the funds were available, but were kept in the trust
account.
Co-Chair Hoffman wondered why port funds were not included
under commercial paper. Governor Sheffield stated that they
could only borrow a certain amount.
9:42:09 AM
Co-Chair Stedman requested further explanation regarding
commercial paper. Governor Sheffield replied that it would
be rolled over every 30 days.
Co-Chair Hoffman wondered if any federal funds had been
earmarked prior to 2011 and wondered how certain Governor
Sheffield was in budgeting money after 2012. Governor
Sheffield replied that the project was of national
significance, and was confident that they could receive
money through other departments like the Department of
Defense (DOD).
Co-Chair Hoffman pointed to slide 15, and remarked that no
funds were received from DOD. He wondered if he had
received communications from the federal agencies implying
a plan to designate funds for the project. Governor
Sheffield responded that money was designated, but when
Congress changed parties, they lost their $10 million.
9:49:06 AM
Governor Sheffield highlighted slide 16: "Funds Expended on
Project." He explained that $265 million had been expended
to date.
Governor Sheffield discussed slide 17: "Budget Comparison."
he noted the influx of $674 million from 2005.
Co-Chair Hoffman wondered what work had been done for
projects that did not meet requirements and duplicative
work. Governor Sheffield remarked that there was not an
accurate accounting of the duplicates.
Co-Chair Hoffman queried the time frame for providing the
information. Governor Sheffield replied that he was unsure.
Co-Chair Hoffman looked at slide 19, and wondered if the
plan had been adopted by the Municipality of Anchorage.
Governor Sheffield affirmed that the plan had been adopted
by the Municipality of Anchorage.
9:56:47 AM
Governor Sheffield discussed slide 20: "2011 Construction
Details." He stated that the current year jumped from $37.7
million to $51.2 million with initiated design.
Governor Sheffield highlighted slide 21: "2011
Construction." He pointed out that the left displayed the
wet-dock area and the right side represented the wall of
sheet pile and the tail walls needed to be inspected behind
the tail walls. He stated that the bottom picture
represented what the port would look like later in the
year.
Co-Chair Stedman asked for further description of the
difference in the construction diagrams. He wanted to know
if it was a $20 million appropriation or a $320 million
appropriation. TODD COWLES, PORT ENGINEER, PORT OF
ANCHORAGE, responded that the change would have a
significant effect. He stated that the undertaking would
prove the insulation and delay the project.
Co-Chair Stedman surmised that the $20 million request from
the governor would provide only demolition and
reconstruction. Mr. Cowles agreed.
Co-Chair Hoffman pointed out that the municipality of
Anchorage requested $20 million, not $320 million. Mr.
Cowles agreed.
10:00:39 AM
Governor Sheffield displayed slide 23: "The Expansion
Project is moving forward with clear changes in place." He
pointed out the specific changes: A new Project Oversight
Committee has been formed to provide clear and timely
direction to the Contractors and quickly address issues as
the project moves forward. The Committee consists of key
decision makers from MARAD, the Municipality and the Port,
with participation by ICRC, the project design team PND,
the Corps of Engineers and others as needed.
• Additional financial protection will be in place to
assure the work is completed on time with high quality
workmanship.
• An entirely new Quality Assurance and Quality Control
process will be implemented to catch problems early and
guarantee high quality workmanship.
• A detailed evaluation of the contract structure between
MARAD, ICRC, PND and subcontractors will be undertaken to
insure there are clear lines of responsibility and
accountability.
• The nature and extent of the affected areas will be
documented, analyzed and subjected to an
independent/forensic review.
• The Port will implement an annual accounting of all
expansion funds and associated work that will be published
on our website.
10:03:56 AM
Governor Sheffield commented that the ports are essential
to Alaska's economic future. The finance plan is aggressive
but necessary. He pointed out that the port of Alaska is
the hub of the state. He noted that the system works, and
failure was not an option.
Senator Olson wondered why the customers were not pushing
their ability to use the port. Governor Sheffield responded
that the tariff reflects increases in real estate. No
burden on initial costs.
Senator Olson wondered if the customers might fund the
project. Governor Sheffield mentioned AIDEA and others who
can help.
Senator Olson asked about the Kabata Bridge. He wondered if
the land use and development of the bridge would see.
Governor Sheffield answered that a permit from the corps of
engineers would be necessary.
10:09:55 AM
AT EASE
10:14:39 AM
RECONVENED
Co-Chair Stedman welcomed the presentation of the Port
Mackenzie Rail Extension.
ELIZABETH GRAY, ACTING BOROUGH MANAGER, MATSU BOROUGH, that
the extension of the Mackenzie rail would diversify
Alaska's economy. She stated that there were 3000 direct
and indirect in induced jobs projected from construction of
the railway. She stated that 4000 jobs would be added to
the mining development along the rail line. She furthered
that 3500 jobs would be added in the industry-development
of Port Mackenzie. She hoped to receive an additional 35
million in the current budget, so there an aggressive
construction schedule could continue.
JOE PERKINS, EXECUTIVE PROJECT MANAGER, PORT MACKENZIE RAIL
EXTENSION, presented a PowerPoint Presentation: "Port
Mackenzie Rail Extension." He showed slide 1, which
represented an aerial view of the Port Mackenzie. He stated
that there was an eight area extension that had been added
since the photo was taken. He stressed that the Port
Mackenzie extension was a project of statewide significance
and benefit. It would provide additional employment to many
Alaskans, and would allow industry to development resources
which would help diversify the Alaska economy.
10:18:44 AM
Mr. Perkins displayed slide 2: "Mission." He stated that
the mission of the project was to contribute to the
diversification of Alaska's economy; provide interior
Alaska with a closer, less expensive outlet to tidewater
for export of natural resources; and develop a new
industrial and economic engine for the Alaska economy.
Mr. Perkins showed slide 3: "How to Implement the Mission":
provide less expensive, more efficient rail transportation
to deep water port, 147 miles closer to tidewater;
effectively use rail loop, road, conveyor, barge dock, deep
water dock, terminal/offices building infrastructure to
provide for export of bulk materials; and wisely use and
develop the Port Mackenzie Industrial District, which was
8,940 of industrial zoned land adjacent to 1,130 acres of
Borough owned tidelands for commodity transport, storage
and related services.
10:20:11 AM
Mr. Perkins discussed slide 4: "Port Mackenzie." He stated
that the slide displayed a view of the Port Mackenzie
district. He stated that there would not be a conflict of
residential development with port operations. He stated
that it was important for the land to be dedicated to the
port district.
Mr. Perkins displayed slide 5: "Business Objectives." He
stated that the port business objectives were to develop
infrastructure to support the mission. He specifically
highlighted the status of projects within the port
development. He furthered that it was important to complete
the port master plan, and pointed out that the borough
assembly had adopted the master plan in January 2011, and
the streamlined lease procedure would be complete in June
of 2011.
Mr. Perkins showed slide 6: "Barge Dock Expansion." He
pointed out the area above the building pictured, and
stated the area was dedicated to an 8-acre barge facility.
Sixteen acres would be utilized, because of a $3 million
EDA grant and the borough provided over $1 million worth of
material. He also pointed out that the legislature had
appropriated $750,000 in the year prior to complete the
dock. He stressed that Port Mackenzie could be expanded
further up the channel, if there was a need to do so in thr
future.
Mr. Perkins discussed slide 7: "Business Objectives,
Continued." He pointed out some more business objectives,
which included marketing the port, developing a customer
base, and establishing a solid export base by rail through
the port.
10:24:41 AM
Co-Chair Stedman requested a highlight of the business
commitments. Mr. Perkins replied that very few people would
commit money, when the project is not yet solidified. He
stated out that the commitments were not solid in paper,
but felt that a group of people had shown interest in
leasing land. He stressed that the land would not be worth
much until there was a rail extension. He furthered that
once people saw that there was development in progress,
they would commit to business.
Co-Chair Stedman wondered if the customers might commit to
business, if they saw that there was a commitment to
complete the rail extension. Mr. Perkins replied that lease
holders already exist, but felt that two more firms would
sign leases with the borough. He did not know for sure if
the firms would export goods, but expressed that their
decision to export goods would be contingent on rail
extension construction.
Co-Chair Stedman wondered if Mr. Perkins could obtain
written commitments from customers. Mr. Perkins replied
that he would try to obtain that documentation, but felt
unsure as to how many customers would agree.
Co-Chair Stedman stressed that the committee would like to
see that type of documentation.
10:29:22 AM
Co-Chair Hoffman wondered what potential customers were in
mind. Mr. Perkins stated that he had a list of potential
customers. Co-Chair Stedman requested correspondence
between potential customers and the borough or the
committee.
Senator Egan wondered if the Healy coal was going to
Seward. Mr. Perkins replied that Seward Port would be maxed
out in coal, and it was the hope that the rail extension
would allow for an extra 2 million tons of coal to be
exported.
Co-Chair Stedman stressed that the railroad might be able
to give more specifics to the concern of coal transport.
Mr. Perkins displayed slide 8: "Imports and Exports.
Winter/Summer Operations." He stated that the port was a
12-month port.
Mr. Perkins showed slide 9: "Existing Customers." The
customers that have already leased land include Alutiiq
Manufacturing, module construction; Klondike Concrete,
cement import; NPI, bulk natural resource export; Tri-Metal
International, metal export; PacArctic/Koniag,
transportation logistics; and Central Alaska Energy, fuel
farm.
Mr. Perkins displayed slide 10: "Current Business." He
stated that current port business dealt with modular homes,
cement, and test loading of coal.
10:31:48 AM
Mr. Perkins discussed slide 11: "Examples of Interested
Customers." Some examples of interested customers included
Usibelli Coal; Exxon; Conoco Phillips; British Petroleum;
Trans Alaska Pipeline; JP Power, Japan; NANA; CH2MHill;
Fort Knox, gold mine; Shorty Creek, copper mine; Livengood
Gold; Prospect Copper; Nenana Native Corporation; Doyon
Limited; and the United States Military.
Co-Chair Stedman requested a chart detailing the potential
uses, capital expenditures, construction schedule, an
estimated time of completion, and other documents that
would assist the committee in understanding the full cost
of the port and its revenue generation.
Senator McGuire added that she would like to see an
estimated cost to bring the current infrastructure up to
standard. Mr. Perkins replied that they were specifically
requesting money for a railroad.
Co-Chair Stedman stressed that there was always a concern
of cost when using money from the state treasury.
10:35:50 AM
Co-Chair Hoffman queried anticipated tonnage and product
for the potential interested customers. Mr. Perkins agreed
to provide that information.
10:37:20 AM
Mr. Perkins showed slide 12: "Deepest Draft Vessel Ever in
Cook Inlet." He stated that there was a test shipment of
coal that Usibelli Coal Mine participated in. He explained
that the cape-sized vessel came from Seward to Port
Mackenzie to test the conveyor system.
Co-Chair Stedman wondered if it was at low-low tide or
mean-low tide. Mr. Perkins replied that it was at mean-low
tide.
Co-Chair Stedman wondered if there were any silting issues
at the port. Mr. Perkins replied that the current port
precluded siltation, and no dredging was required.
Co-Chair Stedman wondered if the corps of engineers was
involved in modeling. Mr. Perkins replied that the corps of
engineers had looked at it, but the depth has not changed.
Co-Chair Stedman requested a letter from the corps of
engineers verifying the depth of the port. Mr. Perkins
agreed to provide that information.
10:39:51 AM
Mr. Perkins discussed slide 13: "Rail Extension uses During
First Decade." He stated that rail extension uses would
include coal exports; sand and gravel aggregates; petroleum
products; natural gas pipeline; lime; wood products;
military transport; and minerals.
Mr. Perkins displayed slide 14: "Prominent Alaska
Projects." He stated that the Port Mackenzie Rail Extension
supported the Susitna Dam; World Class Fairbanks/Livengood
Cement Plant; any natural gas pipeline alternative; and and
upgrade to Interior and South Central Railbelt intertie.
Mr. Perkins showed slide 15, and explained that the rail
loop would look similar to the loop showed at Healy. He
pointed out that coal could be stored in the middle or on
either side of the rail.
Mr. Perkins discussed slide 16: "Project is on Schedule and
Under Budget." He explained that the total capital invested
would be $62.5 million, and the funds needed for the
current year were $55 million. He furthered that the
estimated funds needed to complete the rail extension
project was $156 million, and the total estimated cost of
the rail extension was $218.5 million with a potential
return to the state of over $16 billion.
Co-Chair Stedman wondered how much money was in the current
governor's proposed budget. Mr. Perkins replied that there
was $20 million in the budget.
Co-Chair Stedman wondered how much additional money was
requested. Mr. Perkins clarified that there was a request
of $35 million to stay on schedule.
Co-Chair Stedman surmised that there was a need for $55
million in the current year. Mr. Perkins furthered that
there was a need for $60 million in the following year's
budget to complete the embankment, and $41 million in the
next year. He concluded that the total cost to the was
$218.5 million, with current funds of $62.5 million, so
there was approximately $156 million needed to complete the
process.
10:44:19 AM
Mr. Perkins showed slide 17, and explained that the rail
loop would be completed by fall 2011, and the first five
miles of rail extension would begin construction in late
summer 2011.
Co-Chair Stedman wondered that if the railroad would be
used upon completion. Ms. Gray replied that Mr. Aadneson
would be able to answer that question.
Mr. Perkins discussed slide 18: "ISER Benefit Cost
Assessment of Rail Extension." He stated that ISER had
completed the cost/benefit analysis of the project in 2008.
He stated that there was a $275 million cost, rather the
present cost of $218 million. He stated that the analysis
was based on transportation cost, with no consideration for
jobs or community input. He stated that the cost was at
$301 million with the benefit of $572 million, with a
cost/benefit ratio of 1.7. He stressed that many entities
would be pulled out, with the cost/benefit still exceeding
one.
10:47:04 AM
DR. PAUL METZ, PROFESSOR OF GEOLOGICAL ENGINEERING,
UNIVERSITY OF ALASKA, discussed slide 19. He stated that
the slide displayed mineral occurences along the route of
the existing rail line.
Co-Chair Stedman stressed that he wanted information about
whether mining companies would use the rail. Dr. Metz
referred to some historical data and stated that mining
data from the rail belt was examined in the 1970s. He
stressed that world class gold mine was discovered near
Fairbanks in 1980, and stressed that the mining industry
had spent millions of dollars in development and
exploration. He furthered that without Fort Knox, there
would be little development in that region. He stressed
that 85 percent of the gold was not in production, because
there was no infrastructure.
Co-Chair Stedman stressed the need for documentation from
the companies declaring the use of the rail extension, if
it were built.
10:56:50 AM
AT EASE
2:01:50 PM
RECONVENED
Co-Chair Stedman welcomed everyone back, and stressed the
desire to review and highlight the financial implications
of the appropriation requests. He felt some of the
presentation would be more appropriate for the Resources
Committee.
CHRIS AADNESEN, CHIEF EXECUTIVE OFFICER, ALASKA RAILROAD
CORPORATION (AARC) showed slide 21: "Port Mackenzie Rail
Extension Costs." He explained that the fixed baseline
maintenance costs of the project would be about $150,000
per year. He stated that the variable costs would be
covered by the freight rate. He explained that the capital
replacement costs would be properly constructed, and
capital costs would be low in the initial years on a new
track structure; the capital renewal cycle would begin in
20 to 30 years for ties, and it would be longer for rail
depending on traffic volume.
Mr. Aadnesen discussed slide 22: "ARRCs Support for Port
Mackenzie." He explained that AARC supported the Port
Mackenzie Rail Extension Project.
Co-Chair Stedman queried the Usibelli Mine interest, and
whether or not they are contributing any money to the
project. He wondered if there were firm commitments from
Usibelli Mine. Mr. Aadnesen replied that Usibelli was
currently attempting to gain permitting in Healy, and have
an active capital program to build their capability of out-
loading of trains towards Fairbanks. He added that Usibelli
had a feasibility study to start running coal out Wishbone
of over 500 tons per year. He added that Usibelli was
planning to truck coal to Port Mackenzie.
2:09:05 PM
Co-Chair Stedman wondered why Usibelli did not have AARC
finance the extension. Mr. Aadnesen replied that AARC was
not able to finance the project.
Co-Chair Stedman noted that he saw no private entity that
had offered to finance the extension. He expressed concern
that there might not be customers, because there was no
independent financial backing. Mr. Aadnesen replied that
Usibelli was the only client that expressed immediate
desire to use the Port. He felt that the volume from
Usibelli was not enough for the AARC to finance the
project, but the maintenance cost on AARC was acceptable.
Co-Chair Hoffman referred to page 18 and felt that a
cost/benefit assessment was very positive from ISER, and
felt that Mr. Aadnesen's interpretation was not accurate.
Mr. Aadnesen replied that he did not know about any other
commitment, other than Usibelli.
2:17:33 PM
Co-Chair Hoffman noted that it was not known when the mines
would be opening, but remarked that $150,000 with further
costs of $150 million.
Co-Chair Hoffman remarked that there would be "great
uncertainty," not "uncertainty."
Co-Chair Stedman requested further information regarding
detailed commitments and financial considerations.
2:22:17 PM
Senator Thomas understood the need for infrastructure, and
queried issue of Wishbone Hill. He remarked that there was
a possibility of displacing the trucks, and wondered if the
improvements were connected to the existing spur. Mr.
Aadnesen stressed that the line would not be built, unless
there was a guarantee of coal.
Senator Thomas wanted more information regarding trains and
ships. Senator Thomas agreed to develop that analysis with
the borough
Mr. Aadnesen stated that trains could easily replace the
trucks.
Senator Olson wondered if the communities had expressed
support for the project. Mr. Berkin replied that support
was widespread.
Co-Chair Stedman wondered, of the supporters, who had
financial impact. Mr. Berkin replied with none.
2:30:58 PM
Co-Chair Stedman understood that there was an issue of time
sensitivity related to building a rail for military
purposes. Mr. Aadnesen replied that there were time
constraints in funding: $44 million.
Senator Thomas queried the cost benefit analysis of the Red
Dog mine. Dr. Metz replied that he was not aware of any
study.
Mr. Aadnesen stated that AARC supports the project, and the
railroad had the capacity to absorb traffic currently going
to Port Mackenzie. He added that AARC had been tracking
other sorts of economic opportunities related to rail.
Co-Chair Stedman remarked that other mines had been built
after rail had been and wondered if it would survive on
strictly grant money. Mr. Aadnesen did not know enough
about how AIDEA worked to answer the question.
Senator Thomas queried any large rail expansions in the
lower 48 that were funded by the federal government. Mr.
Aadnesen replied that there were all kinds of funding over
history, and there were many public and private
partnerships in history.
2:36:04 PM
AT EASE
2:37:39 PM
RECONVENED
TOM COCHRAN, MAYOR, SKAGWAY, presented a PowerPoint
presentation "Why the time is now" (copy on file).
Mr. Cochran began with slide 1. He stated that the slide
displayed a prediction of the 14.2 percent decline in
population in Southeast Alaska. He pointed out that there
should be economic development in Southeast Alaska.
Mr. Cochran presented slide 2. He stated that the slide
represented an AIDEA facility that was completed in 2008.
Mr. Cochran displayed slide 3. He pointed out that there
was an old wooden pier, and a cruise-ship dock. He stated
that 2010 saw 42 cruise-ship calls in Skagway.
Mr. Cochran discussed slide 4. He stated that the conveyor
belt in the photo was built in the 1960s. He continued to
discuss slides 5 through 9.
Co-Chair Stedman requested further explanation of slide 9.
Mr. Cochran explained that the green portion of the slide
represents the area that the municipality proposed a 50
percent match of $5 million to the state's funds. He stated
that White Pass and Yukon Route Railroad had committed $2
million to the red portion. He explained that the purple
area represented AIDEA.
2:42:51 PM
Mr. Cochran displayed slide 10. He explained that the
purpose of the project was to accommodate two industries:
the cruise industry and the mineral industry. The project
would allow a cruise ship and a berth ship to berth
simultaneously.
Mr. Cochran stated that there were some plans for mega
cruise ships that would be docking in Alaska in 2012, and
the project would allow more space for those ships.
Co-Chair Stedman requested a synopsis. PAUL TAYLOR, SELWYN-
CHIHA MINING referred to slide 9, and stated that yellow
and purple areas were his focus of interest. He explained
that since those facilities were owned by AIDEA, the deal
was to be made with AIDEA. He stated that negotiations were
in place for $40 million capital improvements.
Co-Chair Stedman wondered when the firm was expecting
construction to begin and end. Mr. Taylor replied that the
first permits would be filed 10 months from this time. He
anticipated construction to begin in late 2012, for
production in early 2014.
Co-Chair Stedman clarified that AIDEA would be financing
the project. Mr. Taylor replied that AIDEA owned the
properties, and AIDEA would be reimbursed for modernizing
the buildings. He stated that they would also pay a tonnage
tax.
2:46:28 PM
Co-Chair Hoffman stated that the state's budget request
only included a one-time increment of $10 million. He
wondered if Mr. Cochran agreed with that. Mr. Cochran
agreed.
Co-Chair Hoffman also pointed out that the total costs were
outlined at $44.4 million, and wondered if the rest would
be sought from how the additional money would be collected.
Mr. Cochran replied that the money would be from municipal
bonds or private-public partnerships.
Co-Chair Hoffman wondered if the financial commitments were
already in place. Mr. Cochran replied that there were not
current commitments, but some interested customers.
Co-Chair Stedman wondered where the remaining funds would
come from. Mr. Cochran looked at slide 9, and stated that
the green area represented $15 million with a $10 million
appropriation that the municipality from the state. He
stated that Skagway was currently looking for much less
than $44.4 million.
Co-Chair Stedman queried AIDEA involvement. MARK DAVIS,
ECONOMIC DEVELOPMENT, ALASKA INDUSTRIAL DEVELOPMENT and
EXPORT AUTHORITY stated that AIDEA believes that their
portion of the project would be in the range of $65
million. He stated that there were many conversations about
financing.
2:50:29 PM
Co-Chair Stedman wondered the status of the $44.4 million
grant. Mr. Davis replied that the grant was not granted to
Skagway.
Co-Chair Stedman wondered if there were any issues without
that grant. Mr. Davis felt that a business plan could be
built with the cooperation of the mines, and it would pay
for the improvements.
Senator Olson wondered what the history of the businesses
AIDEA had been involved in. Mr. Davis replied that there
was a bond that was issues in anticipation of the mine
opening with the agreement that the mine would use the
facility.
Co-Chair Stedman wondered if Port Mackenzie had approached
AIDEA for help with their project. Mr. Davis replied that
there was no formal request from Port Mackenzie.
Co-Chair Hoffman wondered if the new make-up of the AIDEA
board had every seat filled. Mr. Davis did not know.
2:55:22 PM
Senator Olson wondered if the port was not developed, there
could be issue of how the ore would get out, and he queried
other options. Mr. Taylor replied that they would look at
Haines and Stewart.
Co-Chair Stedman requested letters of support from the
community of Skagway. Mr. Cochran agreed to provide that
information.
2:57:06 PM
ADJOURNMENT
The meeting was adjourned at 2:57 PM.
| Document Name | Date/Time | Subjects |
|---|---|---|
| 2011 02 23 Communities Served by the Port of Anchorage.pdf |
SFIN 2/23/2011 9:00:00 AM |
Ports and Harbors Presentation |
| 2011 02 23 Port Of Anchorage Funding_Expenditures.pdf |
SFIN 2/23/2011 9:00:00 AM |
Ports and Harbors Presentation |
| 2011 02 23 Port of Skagway Presentation.pdf |
SFIN 2/23/2011 9:00:00 AM |
Ports and Harbors Presentation |
| 2011 02 23 Port Of Anchorage Cost Comparison.pdf |
SFIN 2/23/2011 9:00:00 AM |
Ports and Harbors Presentation |
| 2011 02 23 Port of Skagway Presentation.pptx |
SFIN 2/23/2011 9:00:00 AM |
Ports and Harbors Presentation |
| 2011 02 23 SFIN Port MacKenzie Rail Ext Presentation.pdf |
SFIN 2/23/2011 9:00:00 AM |
Ports and Harbors Presentation |
| 2011 02 23 Port Of Anchorage Cargo Distribution Study Final.pdf |
SFIN 2/23/2011 9:00:00 AM |
Ports and Harbors Presentation |
| 2011 02 23 SFIN Port of Anchorage Presentation.pdf |
SFIN 2/23/2011 9:00:00 AM |
Ports and Harbors Presentation |
| 2011 02 23 Skagway's Yukon Port Projects.pdf |
SFIN 2/23/2011 9:00:00 AM |
Ports and Harbors Presentation |
| 2011 02 23 Natural Resource Development and The Port MacKenzie Rail Extension.pdf |
SFIN 2/23/2011 9:00:00 AM |
Ports and Harbors Presentation |
| 2011 02 23 Benefit-Cost Assessment of the Port MacKenzie Rail Extension - Final ReportPMK_RailExtension.pdf |
SFIN 2/23/2011 9:00:00 AM |
Ports and Harbors Presentations |