HB 255-PORT OF SOUTHCENTRAL AK; PORT AUTHORITY  1:05:30 PM CHAIR MCCABE announced that the first order of business would be HOUSE BILL NO. 255, "An Act relating to the Port of Southcentral Alaska; establishing the Port of Southcentral Alaska Authority to manage and operate the Port of Southcentral Alaska; and providing for an effective date." 1:06:06 PM REPRESENTATIVE STUTES questioned how there could be a committee substitute when there has not been a committee meeting on the bill. CHAIR MCCABE replied there were two small grammatical changes, and it would be the will of the committee whether to adopt the committee substitute. 1:06:43 PM REPRESENTATIVE VANCE moved to adopt the proposed committee substitute (CS) for HB 255, Version 33-LS0995\S, Walsh, 1/30/24, as the work draft. 1:07:05 PM JULIE MORRIS, Staff, Representative Kevin McCabe, Alaska State Legislature, provided the summary of changes on the CS to HB 255, [included in the committee packet], on behalf of Representative McCabe, prime sponsor, which read as follows [original punctuation provided]: Changes from Ver. B to Ver. S include: Page 1 line 9 - "rail" has been added to the sentence. Page 4 lines 21-22: Section 30.19.160. Quorum and voting. (a) - Four members of the board is amended to five members. Page 4, line 23: Section 30.19.160. Quorum and voting. (b) - Four affirmative votes are required for board action is amended to five affirmative votes. 1:07:44 PM REPRESENTATIVE STUTES asked for clarity regarding the quorum change. CHAIR MCCABE confirmed it was five. 1:08:02 PM CHAIR MCCABE removed his objection to the adoption of the committee substitute. There being no further objection, Version S was before the committee. [Chair McCabe passed the gavel to Vice Chair Vance]. 1:08:31 PM The committee took a brief at-ease at 1:08 p.m. 1:08:55 PM CHAIR MCCABE, as prime sponsor, presented HB 255 and read from the sponsor statement [included in the committee packet], which read as follows [original punctuation provided]: House Bill 255 creates the Port of Southcentral Alaska Port Authority, providing the necessary powers, structure, and oversight to ensure the effective and responsible administration of vital port facilities in our state. The legislation begins by establishing legislative findings and intent, recognizing that creating an authority is in the best interests of the state. The Port of Southcentral Alaska Authority is entrusted with the powers, duties, and functions needed to operate the ports in Anchorage and the Matanuska Susitna Borough. The authority will comprehensively oversee its seaport, rail, industrial, and other properties, assuming exclusive responsibility for managing both the financial and legal obligations related to the ports. This includes handling applications for a diverse array of funding opportunities, notably federal grants, to ensure efficient and effective operations across its various sectors. House Bill 255 is a comprehensive and forward-thinking measure designed to enhance the Port of Southcentral Alaska's functionality, ensuring it operates efficiently, transparently, and in the best interests of the state. I urge my fellow legislators to support this crucial legislation for the benefit of our communities and the economic well-being of Alaska. CHAIR MCCABE added that the sectional analysis for HB 255 is long, as it is a big bill, and asked if his staff should present it. 1:13:31 PM VICE CHAIR VANCE asked for the will of the committee. REPRESENTATIVE MCKAY moved to dispense with the reading of the sectional analysis. VICE CHAIR VANCE invited questions from committee members. 1:14:01 PM REPRESENTATIVE SUMNER asked Chair McCabe if he envisioned the bill facilitating funding for the regional port as well as the port of Anchorage for revitalization. CHAIR MCCABE affirmed that is the idea. He added that "we are stronger together" and both ports bring different synergies to the mix. 1:15:26 PM REPRESENTATIVE MCKAY asked Chair McCabe if he foresaw a Knik Arm bridge being under an organization's authority. CHAIR MCCABE replied that would be "beyond his wildest dreams," and something that should be worked towards. He related that, for example, bridges in New York are under the New York Port Authority, and if there was a port authority, it would be a bigger mechanism and bigger group of people working together to leverage funds. REPRESENTATIVE MCKAY speculated that the authority created by the bill could possibly facilitate the acceleration of the Knik Arm Bridge in the future. CHAIR MCCABE said absolutely. 1:16:58 PM REPRESENTATIVE MINA questioned why the focus is on these two specific ports. CHAIR MCCABE replied that there was a discussion years ago about combining the entire state into one port authority, and he stated that his idea to start with two ports would be a venue for other cities to apply to be part of the port authority. He said it would be a small step forward. REPRESENTATIVE MINA referred to the short title of the bill and asked whether it would require a legislative change if another town from a different region wanted to be part of the authority. CHAIR MCCABE said possibly. REPRESENTATIVE MINA brought up the current modernization plan and offered her understanding the next phase of construction would begin this summer. She asked how this may impact current plans. CHAIR MCCABE said his vision is that there would be no impact, and contracts would still be enforced. REPRESENTATIVE MINA asked for an idea of what a timeline may look like for implementation if the bill passed. CHAIR MCCABE responded that depends on [the legislature], the city, the borough, and negotiations. He added that it may take years. 1:21:47 PM REPRESENTATIVE STUTES asked about conversations with the municipality or user groups. CHAIR MCCABE affirmed he had talked to boroughs and port managers, but not the Municipality of Anchorage, which he said had been resistant in the past. REPRESENTATIVE STUTES asked about the resistance in Anchorage. CHAIR MCCABE replied it may have to do with politics and money, and the port needs money. He stated that the "pieces could line up nicely" if everyone could get on the same page. In response to a follow-up question, he replied that last year there were discussions with the pilots but no real discussion with user groups. REPRESENTATIVE STUTES asked whether the pilots were supportive. CHAIR MCCABE replied absolutely. 1:26:02 PM REPRESENTATIVE MINA brought up ownership and whether it is being transferred to the state under an authority and how a domain might factor in, as well as the impact on local governments. MS. MORRIS replied that details would have to be worked out and there would be a transition period. She further explained that the port itself would be tax exempt except for a couple items, and once the bill is dissected, there is transition built into the bill. 1:27:40 PM REPRESENTATIVE STUTES asked whether the port is currently tax exempt. MS. MORRIS offered her belief it was. REPRESENTATIVE STUTES stated that she would like to know if that is the case. CHAIR MCCABE said that the vision is to make Port Mackenzie tax exempt, but they are not currently. REPRESENTATIVE STUTES referenced push back from the municipalities regarding their revenues. CHAIR MCCABE agreed that is a good point and a detail that must be worked out. 1:30:16 PM REPRESENTATIVE SUMNER asked about property taxes charged by the port. CHAIR MCCABE said that would be the recommendation, that similar to the railroad, there would be a certain amount of lease money returned to the property owner, which is the city. 1:31:32 PM REPRESENTATIVE STUTES questioned who owns the 9,000 acres and whether it included private ownership. CHAIR MCCABE said that of the 9,000 acres that the borough owns in Port McKenzie, there is a small piece owned by the University of Alaska (UA). 1:32:23 PM REPRESENTATIVE MINA questioned whether local governments would remove their ability to use their local bonding power if ownership would be transferred from local to state government. CHAIR MCCABE replied no. He gave an example of the Alaska Railroad having the authority to use bonds. REPRESENTATIVE MINA reflected on an earlier discussion regarding pricing, and referred to the fiscal note and whether additional financial support would be needed. She expressed her curiosity towards the purchasing price for the port in Anchorage. CHAIR MCCABE said the financial details were not expected to be questioned in depth since this is just a bill introduction. He said there would be a need to value both ports and to move forward for the purpose of docking different vessels. 1:36:35 PM REPRESENTATIVE STUTES asked if a cargo ship was the largest ship in the world. CHAIR MCCABE confirmed it was. VICE CHAIR VANCE asked Chair McCabe to speak to why it would be an added value to allow for the flexibility he was seeking. CHAIR MCCABE explained that the idea is similar to the Alaska Railroad and the benefit to the state would come in resource development jobs. 1:38:55 PM VICE CHAIR VANCE asked for clarification whether the idea of the port authority was to enable a centralized command to do what the individual municipalities cannot do on their own. CHAIR MCCABE replied absolutely. 1:39:42 PM REPRESENTATIVE SUMNER expressed that he is not sure that the state taking municipal property would be "a taking" but if it is, perhaps a consideration could be the money required for the revitalization of the Port of Anchorage and everyone can win. 1:40:09 PM REPRESENTATIVE STUTES asked Chair McCabe whether he worked with the Alaska Railroad on any of this. CHAIR MCCABE replied the railroad is a separate discussion right now. 1:41:16 PM VICE CHAIR VANCE commented that she liked the idea of a port authority that would strengthen the state's capacity for resiliency. She said it would be an ongoing conversation. [HB 255 was held over.]