SB 247 "An Act relating to state leases and to state lease-purchase and lease-financing agreements, and repealing a legislative authorization previously given for acquisition of a facility through a lease-purchase agreement; and providing for an effective date." HCS CSSB 247 (FIN) was reported out of Committee with a "do pass" recommendation and with two zero fiscal notes by the Department of Administration and the Legislative Affairs Agency. SENATE BILL NO. 247 "An Act relating to state leases and to state lease-purchase and lease-financing agreements, and repealing a legislative authorization previously given for acquisition of a facility through a lease-purchase agreement; and providing for an effective date." ARTHUR H. SNOWDEN, II, ADMINISTRATIVE DIRECTOR, ALASKA COURT SYSTEM provided members with information regarding state acquisition of the Anchorage Times Building (copy on file). He noted that an appraiser estimated that the state could save $3.7 to $4.0 million dollars by the purchase. In order to complete the purchase the effective date on the bill as it relates to the Alaska Court System would have to be moved. He noted that the members have received a committee substitute, work draft, 8-LS1447\I, dated 4/19/94 (copy on file). He stated that the committee substitute would change the effective date to allow sufficient time to complete the purchase. He assured members that no other purchases are anticipated. RANDY WELKER, LEGISLATIVE AUDITOR, LEGISLATIVE AUDIT DIVISION testified that the Legislative Budget and Audit Committee has been concerned about several lease purchases that have occurred in the recent past. He explained that the legislation would require that all branches of government obtain prior, specific, legislative approval, by law, to proceed with lease purchases. He observed that the legislation lowers the threshold whereby agencies must give notice to the legislature to enter or renew leases. Representative Martin expressed concern with the extension of legislative authority. Mr. Welker stressed that the language clarifies rather than expands authority. He noted that lease purchase statutes require that the Legislative Budget and Audit Committee, Legislative Council and the judicial branch give notice to the full legislature that they intend to enter into a lease purchase. The statute would be amended to add the requirment of legislative approval. He acknowledged that the legislation further limits the authority of the Legislative Council. Co-Chair Larson MOVED to ADOPT work draft, 8-LS1447\I, dated 4/19/94. There being NO OBJECTION, it was so ordered. Co-Chair MacLean MOVED to ADOPT AMENDMENT 1 (copy on file). She explained that the amendment would add a repealer. The repealer was included in other versions of the bill. It would repeal authorization for a Fairbanks court house given in 1986. She stressed that it is the only outdated lease purchase authorization. Mr. Snowden spoke against Amendment 1. He stressed that the legislature would have to approve funding for design and engineering before a lease purchase could take place. He added that the need for a Fairbanks court house exists. He reiterated that the Alaska Court System would seek approval for design and engineering before a lease purchase would take place in Fairbanks. Representative Hanley noted that some lease purchases were completed through certificates of participation between two agencies. Mr. Snowden emphasized that before he could enter into a certificate of participation the building price would have to ascertained. He stressed that before the building price was ascertained he would need to seek funding from the legislature for design and engineering. A roll call vote was taken on the motion to adopt AMENDMENT 1. IN FAVOR: Martin, Parnell, Hanley, MacLean, Larson OPPOSED: Navarre, Therriault, Brown, Grussendorf Representatives Foster and Hoffman were not present for the vote. The MOTION PASSED (5-4). Co-Chair Larson provided members with AMENDMENT 2 (copy on file). He explained that the amendment would add the following language: "The Board of Regents may, when leases are to be paid for with federal grant funds, recovery of indirect costs of university activities, or other university receipts as defined by AS 14.40.491, and grant or other commitment is firm for two years or less, enter into a lease with an initial term equal to the term of the firm commitment, and with optional renewal periods for up to five years." Mr. Welker clarified that all receipts of the University other than general fund money is included under AS 14.40.491. ALISON ELGEE, DIRECTOR OF BUDGET, UNIVERSITY OF ALASKA explained that all non-federal contract work is accounted for under university receipts. She explained that the University of Alaska frequently receives federal or other contracts with a one year firm commitment that could potentially be extended for several years. As written, SB 247 presently limits the University to a one year lease, with a one year renewal option. The amendment would allow up to five one year renewal options. She emphasized that if the market declines the University would rebid the lease. In response to a question by Representative Hanley, Ms. Elgee clarified that student fees are a separate category not included in university receipts under AS 14. There being NO OBJECTION, AMENDMENT 2 was ADOPTED. Representative Navarre noted that the only change in HCS CSSB 247 (FIN) is section 12. Mr. Welker noted that he had no objection to section 12, which extends the effective date for the Anchorage court house lease purchase. In response to a question by Representative Martin, Mr. Welker reiterated that any lease that exceeds $500.0 thousand dollars or is 2.5 percent over the term must be approved by the legislature. Only new leases would be effected. Co-Chair MacLean MOVED to report HCS CSSB 247 (FIN) out of Committee with individual recommendations and with the accompanying fiscal notes. HCS CSSB 247 (FIN) was reported out of Committee with a "do pass" recommendation and with two zero fiscal notes by the Department of Administration and the Legislative Affairs Agency.