SENATE BILL NO. 308 "An Act authorizing the Alaska Railroad Corporation to issue revenue bonds to finance rail transportation projects that qualify for federal financial participation; and providing for an effective date." PATRICK GAMBLE, PRESIDENT AND CEO, ALASKA RAILROAD CORPORATION, conveyed information about the bill, which calls for legislative approval for the Railroad to sell bonds not to exceed $165 million for an acceleration of a track refurbishment. He provided background on the Alaska Railroad. In 1996 the Alaska Railroad realized it was entitled to certain federal subsidies for passenger carrying railroads. Some of the money was earmarked for rebuilding the mainline, which had been rebuilt in the 1950's after WW II. Mr. Gamble reported that receiving annual funding from SAFETEA-LU provided an opportunity to accelerate the track refurbishment program by issuing bonds. It also shortened the project by as much as 10 years. This provides for a more reliable, safer railroad. The bond debt service would be repaid by the entitlements coming in each year, and the amount of those entitlements would not equal 50 percent of the total federal capital input. 9:44:32 AM Mr. Gamble reported that the bond debt service would be paid for by asking the legislature for approval to sell the bonds. He reported that $225 million has been put into the line so far. This project will not exceed $165 million in tax-exempt bonds, and will allow for re-financing. The length of the program would be a function of three separate issuances. Mr. Gamble referred to the trend line of derailments in the Alaska Railroad on page 4 of the handout, "Alaska Railroad Corporation - Legislative Request for Bonding Approval" (copy on file.) He reported on train accident rates on page 5. The recent work has made an impact on the downward trend of accident rates. 9:47:51 AM Mr. Gamble referred to page 6, project information: 100 percent CWR from Anchorage to Fairbanks, all concrete ties on curves less than 6 degrees, wooden ties all upgraded to a 35-year cycle, all ballast reset, complimented by ARRC Bridge Program, and complimented by ARRC Collision Avoidance program. The project is worthwhile and affordable. 9:50:43 AM Mr. Gamble addressed why the project is timely on pages 7 and 8. He spoke to the proposed funding on page 9. ARRC Board approval is required for each project and bond sale. Mr. Gamble referred to the debt service graph on page 10. He pointed out the information on joint elimination on page 12. Representative Stoltze asked if any of the money is for realigning curves. Mr. Gamble said it will be used for putting joints in curves, but not straightening them. Representative Stoltze asked about the northern route in his district. He asked about naming mileposts. Mr. Gamble said there are proposals to name more posts after past workers. 9:55:43 AM Representative Holm mentioned that the low sulfur fuels are no longer going to be produced in Flint Hills. Mr. Gamble said this project will not be affected by that loss of revenue, but others would. Representative Holm asked about crushed rock vs. round rock. Mr. Gamble reported that all remaining round rock would be replaced by crushed granite. 9:57:33 AM Representative Stoltze asked about Hatcher Pass Mine rock. Mr. Gamble said he has no awareness of that project. He said his company is always looking for good rock. Representative Stoltze asked for the status of negotiations at the Eklutna Quarry. Mr. Gamble spoke to a new proposal to settle a cultural issue regarding Eklutna. A memo of agreement was adopted and great progress is being made. Co-Chair Meyer stated intent to hold the bill for amendment purposes. SB 308 was heard and HELD in Committee for further consideration.