HB 122-RAILROAD CORP. FINANCING  2:21:46 PM CHAIR MCCABE announced that the final order of business would be HOUSE BILL NO. 122, "An Act authorizing the Alaska Railroad Corporation to issue revenue bonds to finance the replacement of the Alaska Railroad Corporation's passenger dock and related terminal facility in Seward, Alaska; and providing for an effective date." 2:22:31 PM REPRESENTATIVE FRANK TOMASZEWSKI, Alaska State Legislature, as prime sponsor, introduced HB 122. He noted that this is a re- introduction of the bill and would answer any questions and take amendments at the will of the committee. 2:22:57 PM ZACH YOUNG, Staff, Representative Frank Tomaszewski, Alaska State Legislature, on behalf Representative Tomaszewski, prime sponsor of HB 122, paraphrased the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: The purpose of HB 122 is to enable the Alaska Railroad Corporation to secure financing for the critical replacement of its passenger dock and associated terminal facility in Seward, Alaska. By issuing revenue bonds, the Alaska Railroad Corporation can address infrastructure needs, enhance transportation services, and contribute to the economic vitality of the region. The existing passenger dock and terminal facility play a crucial role in supporting tourism, commerce, and transportation along the scenic Alaska Railroad route. However, due to wear and aging, these facilities require immediate attention. The proposed financing through revenue bonds will allow for timely upgrades, ensuring safe and efficient operations for passengers, freight, and tourism-related activities. The replacement project aims to enhance the overall experience for travelers, promote economic growth, and maintain the Alaska Railroad's status as a vital transportation link within the state. By investing in modern infrastructure, we can continue to connect communities, foster tourism, and support local businesses. HB 122 represents a collaborative effort to address critical infrastructure needs while maintaining fiscal responsibility. We appreciate your support for this legislation, which will benefit Alaskans and visitors alike. 2:24:20 PM CHAIR MCCABE announced that the committee would take up amendments. REPRESENTATIVE MCKAY moved to adopt Amendment 1 to HB 122, labeled 33-LS0623\A.1, Klein, 2/8/24, which read as follows: Page 1, line 13: Delete "$150,000,000" Insert "$135,000,000" CHAIR MCCABE objected for the purpose of discussion. REPRESENTATIVE MCKAY explained that the change would reduce the maximum principal amount of revenue bonds the ARCC can issue for the replacement of their passenger dock and terminal facility in Seward, Alaska. CHAIR MCCABE removed his objection to the motion to adopt Amendment 1. There being no further objection, Amendment 1 was adopted. 2:26:07 PM The committee took a brief at-ease at 2:26 p.m. 2:26:29 PM CHAIR MCCABE moved to adopt Amendment 2 to HB 122, labeled 33- LS0623\A.2, Klein, 2/21/24, which read as follows: Page 1, line 3, following "Alaska;": Insert "authorizing the Alaska Railroad  Corporation to issue revenue bonds to finance the  completion of the Port MacKenzie Rail Extension in  Point MacKenzie, Alaska;" Page 2, following line 6: Insert a new bill section to read:  "* Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to read: LEGISLATIVE AUTHORIZATION AND APPROVAL. (a) The Alaska Railroad Corporation is authorized to issue revenue bonds under AS 42.40.250 to finance the completion of the Port MacKenzie Rail Extension in Point MacKenzie, Alaska, and associated costs, including, without limitation, reserves for debt service and capitalized interest, if necessary or appropriate, and costs of issuance. The maximum principal amount of bonds that the Alaska Railroad Corporation may issue under this section is $58,000,000. The Alaska Railroad Corporation may issue the bonds in a single issuance or in several issuances, without limitation as to number of issuances or timing, and as the Alaska Railroad Corporation determines best furthers the purpose of financing the extension of the Alaska Railroad Corporation's rail from Point MacKenzie, Alaska, to Houston, Alaska, and associated costs. The bonds shall be repaid from revenue or other funds available to the Alaska Railroad Corporation. The general credit of the Alaska Railroad Corporation and the state may not be pledged for the repayment of the bonds. (b) The authorization under (a) of this section extends to bonds issued to refund the bonds authorized in this Act. The principal amount of the bonds authorized in this Act may be increased in an issue of refunding bonds in an amount equal to the costs of refunding. (c) This section constitutes the approval required by AS 42.40.285 for the issuance of the bonds described in this section. (d) The bonds authorized to be issued under this section are issued by a public corporation and an instrumentality of the state for an essential public and governmental purpose. (e) In this section, "bonds" means bonds, bond anticipation notes, notes, refunding bonds, or other obligations." Renumber the following bill section accordingly. REPRESENTATIVE STUTES objected for the purpose of discussion. CHAIR MCCABE summarized that Amendment 2 would authorize ARRC to complete the Port MacKenzie rail extension. He noted he had done the amendment before on the floor two years in a row. REPRESENTATIVE STUTES asked whether the completion of Port MacKenzie had been anticipated by ARRC. CHAIR MCCABE said there is no current plan, just "circling around" the financing. REPRESENTATIVE STUTES asked whether the bonding would require a public vote. CHAIR MCCABE replied no. 2:28:30 PM REPRESENTATIVE MINA stated that she was curious about ARRC's perspective on Amendment 2. 2:28:50 PM MEGHAN CLEMENS, External Affairs Director, Alaska Railroad Corporation, explained that ARRC is supportive of rail infrastructure and actively pursuing opportunities to the build the Port MacKenzie rail extension. Having the bond authorization would expedite the process; therefore, ARRC had no objection toward Amendment 2 to HB 122. 2:29:37 PM REPRESENTATIVE VANCE questioned why bonding authority was not included for the northern rail extension as well. CHAIR MCCABE indicated that that was considered, but he anticipated it may be easier to "take it in small chunks." 2:30:58 PM REPRESENTATIVE VANCE asked Ms. Clemens if this were to pass what the next step in the bonding authority would be. MS. CLEMENS replied that the next step is to continue trying to identify a commercial customer that would be able to secure the bond debt. 2:32:48 PM REPRESENTATIVE MINA asked whether ARRC would typically have funding secured prior to asking for the bond authority. MS. CLEMENS suggested Mr. O'Leary weigh in on the question. 2:33:30 PM BILL O'LEARY, President & CEO, Alaska Railroad Corporation, joined the discussion on HB 122 and, in response to Representative Mina, stated it has gone both ways over the years but the majority of the time there is a specific revenue source identified prior to coming to the legislature. 2:34:33 PM REPRESENTATIVE STUTES removed her objection. 2:34:36 PM REPRESENTATIVE MINA objected. 2:34:42 PM A roll call vote was taken. Representatives C. Johnson, McKay, Vance, Stutes, and McCabe voted in favor of Amendment 2 to HB 122. Representative Mina voted against it. Therefore, Amendment 2 to HB 122 was adopted by a vote of 5-1. 2:35:39 PM REPRESENTATIVE STUTES moved to adopt Amendment 3 to HB 122, labeled 33-LS0623\A.3, Walsh, 3/4/24, which read: Page 1, line 11, following "issuance.": Insert "The replacement dock and terminal facility  must accommodate Alaska marine highway system  vessels." CHAIR MCCABE objected for the purpose of discussion. 2:35:47 PM REPRESENTATIVE STUTES [moved to adopt] Conceptual Amendment 1 to Amendment 3 to add "with side loading doors" following "highway  system vessels". REPRESENTATIVE C. JOHNSON objected. 2:36:47 PM REPRESENTATIVE STUTES explained Conceptual Amendment 3, as it would be amended by Conceptual Amendment 1. 2:37:37 PM REPRESENTATIVE C. JOHNSON asked, "Why would we limit our options?" 2:38:18 PM REPRESENTATIVE STUTES replied that was a consideration, but there is not a timeline on when rebuilding the cargo dock will begin. She said when the cargo dock is rebuilt, it will accept the front, back, and side loading vessels. She pointed out that allowing these vessels to be used at the same dock as the cruise ships, there is accessibility. 2:38:55 PM CHAIR MCCABE agreed with Representative Stutes and offered his belief that the design change to the dock that would allow a front-loading vessel would be fairly significant at this point. 2:40:19 PM REPRESENTATIVE VANCE asked whether the bonding amount request would change. MS. CLEMENS replied it does not change the scope or "price tag" of the proposed passenger dock. She added that the cargo dock has a construction plan in place and the project is funded, but the timeline has been pushed slightly since federal dollars are involved, she said. 2:41:28 PM REPRESENTATIVE C. JOHNSON removed his objection to Conceptual Amendment 1 to Amendment 3. There being no further objection, Conceptual Amendment 1 to Amendment 3 was adopted. CHAIR MCCABE announced that Amendment 3, [as amended], was adopted. 2:41:50 PM REPRESENTATIVE MCKAY moved to adopt [Conceptual] Amendment 4 to HB 122, labeled 33-LS0623\A.4, Walsh, 3/14/24, which read as follows: Page 1, line 3, following "Alaska;": Insert "authorizing the Alaska Industrial  Development and Export Authority to issue bonds to  finance infrastructure that supports development of  critical mineral and rare earth element projects;" Page 2, following line 6: Insert a new bill section to read:  "* Sec. 2. The uncodified law of the State of Alaska is amended by adding a new section to read: LEGISLATIVE APPROVAL: STATEWIDE CRITICAL MINERAL AND RARE EARTH ELEMENT INFRASTRUCTURE PROJECTS. (a) The Alaska Industrial Development and Export Authority may issue bonds to finance infrastructure and construction costs of infrastructure that support the development of critical mineral and rare earth element projects located in the state. The critical mineral and rare earth element project infrastructure shall be owned and operated by the authority or financed under AS 44.88.172, 44.88.650 - 44.88.690, or 44.88.800 - 44.88.840. The principal amount of the bonds provided by the authority for critical mineral and rare earth element projects may not exceed $300,000,000 and may include the costs of issuing bonds considered reasonable and appropriate by the authority. The bonds shall be repaid from revenues of the authority. (b) The Alaska Industrial Development and Export Authority may issue the bonds under this section in a single issuance or in several issuances, without limitation as to the number of issuances or timing, and as the authority determines best furthers the purpose of financing infrastructure that supports the development of critical mineral and rare earth element projects in the state. (c) The bonds authorized by this section may not be considered in calculating the authority's bonding limitation for a 12-month period under AS 44.88.095(a). (d) This section constitutes legislative approval required by AS 44.88.095(g)." Renumber the following bill section accordingly. 2:41:52 PM REPRESENTATIVE STUTES objected. REPRESENTATIVE MCKAY explained that [Conceptual] Amendment 4 would allow Alaska Industrial Development and Export Authority (AIDEA) to issue bonds in the amount up to $300 million to finance infrastructure and construction costs necessary to develop critical mineral and rare earth projects located in Alaska. The amendment grants the legislative approval necessary for AIDEA to issue bonds and finance economically viable projects. He further related example projects. CHAIR MCCABE noted that the amendment was brought in late; therefore, it is a conceptual amendment by Representative McKay. 2:43:56 PM REPRESENTATIVE STUTES opined that Conceptual Amendment 4 "junks up the bill" and makes the bill less likely to go anywhere. She added her belief that it is not germane to the original bill and maintained her objection. 2:44:27 PM REPRESENTATIVE VANCE understood the bill would go to the House Finance Committee next, and she requested that the amendment sponsor give more details on, once bonded, what kind of process there is with the legislature and public on each of the various projects. REPRESENTATIVE MCKAY referred the inquiry to a member of AIDEA. 2:46:30 PM MARK DAVIS, Special Counsel, AIDEA, joined the discussion on HB 122 and directed his response to Representative Vance. He said this is a preauthorization for bonds that would be issued under AIDEA but not revenue bonds. He said AIDEA issues two types of bonds and has products all over the state that deal with critical minerals. If a project were being developed and needed to go back to the legislature for bonding approval, then it would take time, and sometimes that means the deal does not go forward, he said. He summarized that AIDEA is asking for preauthorization for rare earth metals, but that they are not the debt of the state. 2:47:51 PM REPRESENTATIVE STUTES inquired whether, if the bond authorization is issued, there would be a requirement to come back to the legislature in order to get authorization for that particular project using the funds. MR. DAVIS replied not if it was for the rare earth metals. He added if it were any other kind of bond for a different purpose, then it would not be an authorization. Any bond issuance has to go through all governance, he said, to make sure they track and make sense. 2:49:00 PM CHAIR MCCABE, considering time, announced that HB 386, which had a public testimony component, would be held until the next hearing. He apologized to those listening specifically for HB 386. 2:49:45 PM REPRESENTATIVE STUTES offered her understanding that if AIDEA has a project and needs bonding, it must explain the reason behind it to the legislature. MR. DAVIS confirmed that is correct and added that if the general obligation (GO) bonds are less than $25 million, then AIDEA can issue them by themselves and issue revenue bonds as well. 2:50:51 PM REPRESENTATIVE MINA asked Mr. Davis whether AIDEA has pursued this language in a separate bill or a committee bill throughout this legislature. MR. DAVIS stated he did not think the matter had been presented until very recently. REPRESENTATIVE MINA asked whether there was a timeline or urgency for the passage of HB 122 and what would happen if the bill did not pass. MS. CLEMENS confirmed that there is an urgency to pass HB 122 and how it relates to the construction timeline of the Seward passenger dock. REPRESENTATIVE MINA asked Mr. Davis whether there was an urgency for the proposed amendment and what the result may be if the amendment does not go through. MR. DAVIS offered his belief there was not urgency in the sense of ARRC. 2:53:07 PM REPRESENTATIVE VANCE asked Mr. Davis whether there is a revenue that would be gained by the state through the projects once they start to get implemented. MR. DAVIS answered yes. 2:53:43 PM REPRESENTATIVE STUTES, adding to Representative Vance's question, inquired how there could be revenue for the state when there are no projects lined up. MR. DAVIS clarified that bonds are one of the last things done on a project that is financed. REPRESENTATIVE STUTES stated her belief that currently there are no projects lined up that would be utilizing the bonding dollars. MR. DAVIS replied they are in discussions with companies that would like to have the bonding authority, and he said he believed they would come to fruition. He added they are not the same as ARRC type projects with already laid out, detailed plans. REPRESENTATIVE STUTES reiterated that currently no projects are lined up that would utilize these dollars. MR. DAVIS confirmed there are currently discussions with companies with the goal being to start projects within a reasonable period of time. 2:55:29 PM REPRESENTATIVE C. JOHNSON pointed out that recently, AIDEA was designated as a state energy finance institution through the U.S. Department of Energy and asked whether that made funds available through the department to help with the projects and, if so, how the bond would play into that interaction. MR. DAVIS confirmed the designation was correct and mentioned Title 17 [Clean Energy Funding], further explaining there are guarantees of loans and credit to projects that would be used with the bonding authorized by the amendment. REPRESENTATIVE C. JOHNSON asked whether the dollars are substantial or a match. MR. DAVIS stated the dollars could be substantial depending on the projects. 2:57:23 PM JEFF SAN JUAN, Program Manager, AIDEA, added to Mr. Davis' comments that AIDEA had the ability to draw investment from other parts of private entities, and he referenced understanding the mineral potential in Alaska and how the state could capitalize on outside investment. 2:58:54 PM REPRESENTATIVE MINA commented that she did not disagree with the amendment but needed time to think about what it does. She restated her opposition. 2:59:49 PM CHAIR MCCABE welcomed any further discussion. 3:00:20 PM REPRESENTATIVE STUTES maintained her objection. 3:00:20 PM A roll call vote was taken. Representatives Sumner, C. Johnson, McKay, Vance, and McCabe voted in favor of Conceptual Amendment 4 to HB 122. Representatives Mina and Stutes voted against it. Therefore, Conceptual Amendment 4 was adopted by a vote of 5-2. 3:00:59 PM The committee took an at-ease from 3:00 p.m. to 3:03 p.m. 3:03:04 PM CHAIR MCCABE announced the committee would dispense with Amendment 5 and asked for the will of the committee in moving the underlying bill. 3:03:32 PM REPRESENTATIVE MINA indicated that she would object to a motion to move the bill out of committee. 3:04:01 PM CHAIR MCCABE opened public testimony on HB 122, as amended. After ascertaining no one wished to testify, he closed public testimony. 3:04:33 PM REPRESENTATIVE VANCE moved to report HB 122, as amended, out of committee with individual recommendations and the accompanying fiscal notes. 3:04:50 PM REPRESENTATIVE MINA objected. 3:04:58 PM A roll call vote was taken. Representatives C. Johnson, McKay, Vance, Stutes, and McCabe voted in favor of the motion to report HB 122, as amended, out of committee with individual recommendations and the accompanying fiscal notes. Representative Mina voted against it. Therefore, CSHB 122(TRA) was reported out of the House Transportation Standing Committee by a vote of 5-1.