SB 338 An Act relating to the issuance of revenue bonds for acquisition and construction of the Alaska Discovery Center for the Ship Creek Project in Anchorage; relating to a study of the feasibility and financial viability of the Alaska Discovery Center; relating to construction of the Alaska 1 Discovery Center; and providing for an effective date. CS SB 338 (FIN) was reported out of Committee with "no recommendations" and with a zero fiscal note by the Department of Revenue dated 3/02/94. SENATE BILL 338 "An Act relating to the issuance of revenue bonds for acquisition and construction of the Alaska Discovery Center for the Ship Creek Project in Anchorage; relating to a study of the feasibility and financial viability of the Alaska Discovery Center; relating to construction of the Alaska Discovery Center; and providing for an effective date." JOSHUA FINK, STAFF, SENATOR TIM KELLY, explained that the Alaska Railroad Corporation (ARRC) has a unique and rare federal authorization to issue non-recourse revenue bonds for private as well as public interests. SB 338 would authorize ARRC to sell $55 million dollars in non-recourse revenue bonds to be loaned to a public or private entity for the acquisition, design and construction of the Northern Discovery Center at Ship Creek Landings if the following conditions were met: 1. The potential developer pays for a feasibility and financial viability study to be performed by a person/business selected by the ARRC. 2. The ARRC board of directors reviews the feasibility study and determines the project is viable. Mr. Fink added that the payment of the bonds and interest would be made solely with assets and revenues received from the owner/operators of the facility, and that ARRC was prohibited from using any other financing or financial vehicle to repay the bonds. He concluded that prior to the start of construction, the developer must post a payment and completion bond in favor of ARRC. Representative Brown asked if the study was necessary before the bonds could be issued. Mr. Fink explained that in Section #1, Line #11, the inclusion of "if" would establish the condition: "They are allowed to issue the bonds if the Board of Directors determines after completion of the study conducted in Section #7". Representative Brown questioned why authorization was being granted for $55 million dollars when only $40 million was 2 needed. Mr. Fink replied that the language would clarify that "Not more than $55 million dollars" would be required. He stressed that $55 million would be the ceiling. MARK LOPATIN, LOPATIN & COMPANY, WEST BLOOMFIELD, MICHIGAN, echoed that $55 million would be the project ceiling. Representative Martin asked the bonding value of the Alaska Railroad. MARK HICKEY, ALASKA RAILROAD CORPORATION, ANCHORAGE, commented that provisions made in the 1988 State law would require a five year amendment, although, currently there is no specific mandate. The legislative intent would be to dispose of the railroad. Mr. Hickey said federal requirement provides that if the railroad is sold, arrangements for right-of-way would be made. He indicated that these provisions are not relevant to the bond issue before the Committee. Representative Brown asked the agreement terms between the government of St. Petersburg and the Northern Crossroads Discovery Center and if there was expectation for State support for the project. She stated there would be a public subsidy involved in the facility's construction. Mr. LoPatin briefed the Committee that there was no need for a government subsidy for the development or construction of Discovery Center. Following construction, it will become a private venture between the Discovery Center and the Museum of St. Petersburg. Representative Brown questioned if the Discovery Center would be compensating St. Petersburg for the loan of materials. Mr. LoPatin understood that the length of the agreement would be thirty five years and that the terms would be provided by a letter of intent between the two interests. Discovery Center will pay the Russian Museums for contributing materials and displaying them. He added that the specifics have not yet been agreed upon. Co-Chair MacLean pointed out that the project was similar to a previously vetoed project - the Alaska Heritage Park. Mr. Fink advised that the projects were substantially different. Representative Martin questioned the collateral used. Mr. LoPatin explained that the collateral used would not be an obligation to the Alaska Railroad. Representative Hanley clarified that if the bonds were not backed, no one in the bond market would purchase them. Representative Brown warned that a comprehensive traffic 3 analysis should be under-taken in order to address the effect on port and railroad traffic. Mr. LoPatin reminded Committee members that $5.5 million dollars match would be provided through development of the World Trade Center. The cost of the World Trade Center and Hotel is expected to be $80 million dollars. The plans continue to move forward in anticipation of including the Discovery Center. Representative Hanley MOVED to report CS SB 338 (FIN) out of Committee with individual recommendations and with the accompanying zero fiscal note. There being NO OBJECTIONS, it was so ordered. CS SB 338 (FIN) was reported out of Committee with "no recommendations" and with a fiscal note by the Department of Revenue dated 3/02/94.