Legislature(2017 - 2018)HOUSE FINANCE 519
03/28/2017 07:30 AM Senate LEGISLATIVE COUNCIL
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ALASKA STATE LEGISLATURE
LEGISLATIVE COUNCIL
MARCH 28, 2017
7:31 AM
MEMBERS PRESENT
Representative Sam Kito, Chair
Senator Bert Stedman, Vice Chair
Representative Matt Claman
Representative Bryce Edgmon
Representative David Guttenberg
Representative Charisse Millett
Representative Dan Ortiz
Representative Louise Stutes
Representative Harriet Drummond, Majority Alternate
Representative David Eastman, Minority Alternate
Senator Lyman Hoffman
Senator Anna MacKinnon
Senator Kevin Meyer
Senator Peter Micciche
Senator Gary Stevens
MEMBERS ABSENT
Senator Pete Kelly
Senator Cathy Giessel, Alternate
OTHER MEMBERS PRESENT
AGENDA
APPROVAL OF AGENDA
APPROVAL OF MINUTES
RATIFICATION OF CHARITY EVENTS
CONTRACT APPROVALS
OTHER COMMITTEE BUSINESS
SPEAKER REGISTER
Tina Strong, Procurement Officer, Legislative Affairs
Agency
Doug Gardner, Director, Legal and Research Services
Theresa Bannister, Attorney, Legal and Research Services
Pam Varni, Executive Director, Legislative Affairs Agency
Jessica Geary, Finance Manager, Legislative Affairs Agency
7:31:06 AM
I. CHAIR SAM KITO called the Legislative Council meeting to
order at 7:31 a.m. in Room 519 (House Finance) of the State
Capitol. Present at the call were Representatives Claman,
Edgmon, Millett, Ortiz, Stutes, Eastman (alternate), and
Kito; Senators Kelly, MacKinnon, Meyer, Micciche, Stevens,
and Stedman. Representatives Drummond (alternate) and
Guttenberg, and Senator Hoffman joined the meeting after
the roll call. Senator Giessel (alternate) was absent.
II. APPROVAL OF AGENDA
VICE CHAIR STEDMAN moved that Legislative Council approve
the agenda.
The motion was approved without objection.
III. APPROVAL OF MINUTES
7:34:43 AM
VICE CHAIR STEDMAN moved that Legislative Council approve
the following minutes:
• December 20, 2016
• January 20, 2017
• February 9, 2017
• February 15, 2017
The motion was approved without objection.
IV. RATIFICATION OF CHARITABLE EVENTS
7:35:24 AM
VICE CHAIR STEDMAN moved that Legislative Council ratify
the Chair's sanctioning of the following charitable events
per AS 24.60.080(a)(2)(B):
Legislative Skits
Bowl for Kids' Sake
Kenai River Jr. Classic
Kenai River Classic
Kenai River Women's Classic
The motion was approved without objection.
V. CONTRACT APPROVALS
a. Ombudsman Lease Renewal
b. Stoel Rives Contract Amendment
c. Wells Fargo Resolution Recovery Plan Amendment
a. Ombudsman Lease Renewal
TINA STRONG, Procurement Officer for the Legislative
Affairs Agency, stated that the original lease between the
Legislative Affairs Agency and JRW Ventures, Windward Town
and Country Plaza, Inc., for the Ombudsman's Anchorage
office space was for three years beginning May 1, 2013, and
terminated April 30, 2016. There were three renewals of
lease available under the lease agreement: each for a one
year period.
She said we have exercised Renewal No. 1 that expires on
April 30, 2017. The Office of the Ombudsman would like to
proceed with Renewal No. 2 for the period May 1, 2017,
through April 30, 2018.
If Legislative Council approves Renewal No. 2, this will
leave one more renewal of lease available before we have to
go out to bid or do a lease extension.
This lease exceeds $35,000 in one fiscal year; therefore,
Legislative Council's approval is required. Ms. Strong said
she was available to answer any questions.
DISCUSSION FOLLOWED regarding support for consolidation of
legislative agencies in the new Anchorage Legislative
Office Building at 1500 W. Benson Boulevard as a way to
reduce lease costs. The Chair noted that this specific
renewal is for the period of one year only, so there will
be time to work on incorporating legislative offices in the
new building.
7:41:24 AM
VICE CHAIR STEDMAN moved that Legislative Council approve
Lease Renewal No. 2 with JRW Ventures, Windward Town and
Country Plaza, Inc. for the time period May 1, 2017 through
April 30, 2018 in the amount of $40,905.64.
The motion passed without objection.
b. Stoel Rives Contract Amendment
DOUG GARDNER, Legal Services Director, provided Council a
summary of the history of the continuing litigation, both
from a lawsuit and an appeal of a prior Legislative Council
Chair procurement decision, regarding the property at 716
W. Fourth Avenue, as well as his estimate of the funding
necessary to continue the ongoing defense needs.
DISCUSSION FOLLOWED about the difficulty of anticipating
expenses in any litigation, as well as the possibility of
an executive session at an upcoming meeting for a Council
briefing regarding risk analysis of the ongoing litigation.
7:48:09 AM
VICE CHAIR STEDMAN moved that Legislative Council approve
an amendment to the Stoel Rives Contract in the amount of
$150,000.
The motion passed without objection.
c. Wells Fargo Resolution Recovery Plan Approval
THERESA BANNISTER, Division of Legal and Research Services,
stated that Wells Fargo, a lessee of the Alaska Legislative
Office Building at 1500 W. Benson Boulevard, sent the
Legislative Affairs Agency a proposed change to the lease
to accommodate their need to comply with federal
requirements by the FDIC that large bank holding companies
and certain other financial institutions establish a
resolution plan on how affairs will be handled if they
should ever go into financial distress, such as bankruptcy.
In order to comply with a plan, Wells Fargo drafted and
sent a proposed amendment to the lease.
Ms. Bannister said that Legal Services tightened up the
language of Wells Fargo's proposal in the amendment
currently before Council; addressing the overly broad
language as well as reclaiming a few rights as the lessor,
while accommodating the needs of Wells Fargo to meet the
FDIC requirements. Wells Fargo accepted the amendment as
drafted by Legal Services. In short, Ms. Bannister said
that if Wells Fargo goes into financial distress, the
Legislature cannot automatically hold them in default; as
long as they make the lease payments and comply with the
rest of the lease terms, they can stay in the building.
Ms. Bannister said the amendment before Council
accomplishes what Wells Fargo needs to do while ensuring
our rights as the Lessor were also protected.
DISCUSSION FOLLOWED regarding specifics of language in the
lease; which party is responsible for addressing property
vandalism; whether the State is protected in the case of
Wells Fargo financial distress; that Legislative Council
does not have to take any action on this amendment and
there would be no consequence to the State; a concern over
the term "a reasonable amount of time" for ensuring lease
payments are made; State liability should Wells Fargo go
into financial distress.
MS. BANNISTER stressed that Legislative Council does not
have to take any action on the request for the amendment by
Wells Fargo.
DISCUSSION FOLLOWED regarding the suggestion that this
amendment could be a negotiating tool to change other
aspects of the existing lease; FDIC requirements and the
Dodd-Frank Act; a comment that the State will have bigger
problems than lease payments if Wells Fargo goes broke; a
repetition that the State is under no legal obligation to
do anything with this amendment; a concern that the Lessor
does not have any control over any potential successor; a
request for a white paper from Legal Services regarding the
lease in general and this amendment in particular;
confirmation that should Wells Fargo go into bankruptcy or
receivership, the Lessor has very little power at that
point, regardless of whether Council approves this
amendment.
CHAIR KITO, in response to a request by Senator Meyer,
tabled the item to allow time for Legal Services to prepare
additional information for Council's consideration. He then
asked Ms. Varni to address the issue Senator Stevens
brought up of graffiti on the "Benson Building" and whether
the Lessor or Lessee is responsible for dealing with it.
PAM VARNI, Executive Director of the Legislative Affairs
Agency, told members that she was made aware of graffiti
spray painted on the building, the sidewalk, and some Wells
Fargo signage at 1500 W. Benson Boulevard: "Oil Kills", "We
Kill", and "Divest". A police report was filed and the
property manager quickly addressed the graffiti, removing
the paint where they could and covering up in areas where
it was difficult to remove paint due to texture and
temperature. She has been in touch with Jeff Radar, Vice
President of Corporate Properties for Wells Fargo out of
San Francisco, and one of the principals for the lease with
Wells Fargo. She would get back to Council with the exact
cost of remedying the removal of the graffiti. In response
to a question by Senator Stevens, Ms. Varni confirmed that
the graffiti was directed at Wells Fargo and not the
Legislature. In response to a question by Chair Kito, Ms.
Varni said that the removal of the graffiti is being
addressed by LAA, but that she would be having a
conversation with Wells Fargo to look at them contributing
to the cost of that remediation. In response to a question
from Senator MacKinnon, Ms. Varni noted that there are
currently neither exterior nor interior cameras at this
building, although there is armed security; and that she
would check to see if another building in the area had
exterior cameras that might have recorded the culprits.
Council took no action with regard to this item.
VI. OTHER COMMITTEE BUSINESS
a. Late Per Diem Request from Representative LeDoux
b. Moving and Travel Subcommittee
a. Per Diem Request from Representative LeDoux
8:16:44 AM
VICE CHAIR STEDMAN moved that that Legislative Council
approve the Late Per Diem Claim for Rep. LeDoux in the
amount of $771.70.
The motion was approved without objection.
b. Moving and Travel Subcommittee
Jessica Geary, Finance Manager and Chair of the Moving and
Travel Subcommittee, stated that before members is a memo
highlighting the proposed recommended changes to the Moving
and Travel Policy, which she proceeded to summarize. She
said the first change was to clarify the appeal process; if
any member disagrees with a decision made denying certain
expenses turned into the Accounting Office, that member can
go to the Legislative Council Chair to request a review of
the full Council. With regard to the limit on weight for
shipping personal household goods and effects, which has
been a maximum of 10,000 pounds, she noted that during her
tenure in the Accounting Office, she has never seen any
shipment near that limit; the average weight shipped is
approximately 3,000 pounds. The proposed change is to
reduce the limit to a maximum of 3,000 pounds of allowable
household goods.
In response to a question from Vice Chair Stedman, Ms.
Geary said that even with new members shipping items for
the first time and establishing a household in Juneau, the
highest weight allotment was 2,900 pounds, and that was a
pretty large amount of furniture. In looking back over a
few sessions, the weight amounts ranged from 200 pounds to
1,500 pounds of household goods. The highest she had ever
processed was 4,400 pounds, which included some very heavy
items; she didn't think it was necessary to allow more than
3,000 pounds. She noted again that there was an exception
process if a Legislator needed to bring more than the
allowable weight.
REPRESENTATIVE EASTMAN asked why we would want Legislators
to have to go through an exception process simply for
having a large families.
MS. GEARY said there is enough flexibility to handle things
on a case-by-case basis, but that she honestly feels that,
after looking over past bills, 3,000 pounds was a
reasonable limit, and that it would be difficult to ship
in-excess of 3,000 pounds. In response to a question by
Senator Stevens, Ms. Geary explained that the exception
process is such that a Legislator contacts the Agency to
explain their specific situation, and the Chair of
Legislative Council or designee has authority to approve
that request with a simple signature.
CHAIR KITO clarified that if an exception is denied by the
Executive Director, as well as the Legislative Council
Chair, the Legislator could appeal to the full Legislative
Council for final consideration. While not explicitly
written in the policy, that is the intent of the exception
process.
SENATOR MICCICHE, noting his household is a "family of six
including a dog and a cat", said that limiting shipments to
3,000 pounds was reasonable, and with the ability to appeal
in certain circumstances, also appropriate. He said the
policy discouraged excessive garage sale purchasing on this
end that was probably not needed and not part of the
legislative process. He had a question regarding the office
move change in policy and agreed to wait until Ms. Geary
reached that part of her presentation before addressing it.
MS. GEARY continued her presentation. She highlighted that
interim storage was available to members and clarified that
the intent of interim storage is to reduce the cost of
shipping those stored items back to district each
adjournment. She stated that another change is to eliminate
in-district storage during session, which is allowed under
the current policy; to her knowledge there hasn't been a
situation where that was necessary, so the provision will
be deleted. Another clarification in language and intent
was to bold the word "only" and change "home" to "primary
residence" in the section defining the conditions under
which a moving company can pick up a Legislator's household
goods. In response to a question by Vice Chair Stedman, she
said that there are a few Legislators who may have
developed a relationship with a particular moving company
and who have requested multiple stops, for which the Agency
was unaware but was then billed in addition to the normal
shipping rate; this change in policy prevents that from
happening. In response to a follow-up question by
Representative Guttenberg, Ms. Geary said that she did not
feel it appropriate to comment whether there had been abuse
in the past, but rather highlighted that the potential for
abuse was there and the recommended change was to address
that possibility and tighten up the language.
CHAIR KITO interrupted to say that the IT Subcommittee item
would be postponed until Council's next meeting, noting
that the room was needed for a House Finance meeting.
MS. GEARY continued her testimony, and moved to the
consolidated office move portion of the policy. She said
the section was confusing and was redefined to clarify the
language. In discussions with both IT and Supply, both
sections tasked with organizing and operating the
consolidated office move, it was determined that 20 was a
reasonable number of office boxes for the annual office
move between district and session offices. This number was
determined by averaging the number of boxes shipped in the
last few consolidated moves, which fell between 15 and 20
boxes per office. In response to a question by Senator
Meyer, Ms. Geary confirmed that the Print Shop can scan
office files, making electronic copies available and
limiting the need to ship as many hard copy files.
Lastly, Ms. Geary stated that language was added to clarify
intent with regard to what items are not allowed to be
included in a household good shipment expense. For
instance, extra car parts are only allowable if a
Legislator has a vehicle in Juneau, and snow mobiles are no
longer accepted as a Legislator's "vehicle". The section on
prohibited materials was expanded for clarity, specifically
adding the language that articles must be necessary in
order to conduct legislative business, as well as a
statement specifically addressing the exclusion of items
purchased after adjournment and/or items that are not used
in the capital city during a legislative session.
SENATOR STEVENS thanked Ms. Geary for putting together the
proposal; he said that the idea behind the proposal was
cost reduction and while we might not know exactly how much
money was saved through these changes, adopting this
proposal will have a substantial impact on the bottom line.
SENATOR MICCICHE said he that wanted the public to
understand the difference between household goods and
office items; with the latter being essential to the
operation of a legislative office, and why it's important
to have flexibility with what's allowable. He commented
that when the Cross Gulf ferry isn't available for
transportation to and/or from Juneau, it was more
challenging for larger families to move their household
goods as the car carrier did not allow for shipping items
inside a Legislator's personal vehicle; and he wanted LAA
to be aware of that issue.
8:34:24 AM
VICE CHAIR STEDMAN moved that Legislative Council approve
the recommended changes to the Legislative Council Moving
and Travel Policy.
The motion passed without objection.
There being no further business before the committee,
Legislative Council adjourned at 8:34 a.m.
8:34:53 AM