HJR 27-RELOCATE COASTAL VILLAGES REGION FUND    3:19:01 PM CHAIR OLSON announced the consideration of HJR 27. 3:19:14 PM REPRESENTATIVE PAUL SEATON, sponsor of HJR 27, said this resolution supports "Alaskanizing" the fishing fleet, including the large vessels that operate in the Bering Sea and within one of the six Community Development Quota (CDQ) groups. These CDQ groups were established to give communities along the Bering Sea access to the fisheries resource. The Coastal Villages Region Fund (CVRF) is the largest CDQ group with a 341 foot Bering Sea Pollack trawler, four 100 plus foot crab boats, seven 100 plus foot ground fish vessels as well as smaller tenders and other vessels. The homeport for this fleet has been Seattle, but CVRF made a decision to find a homeport in Alaska. The City of Seward has what the fleet needs including an ice-free port, upland space for development, the Alaska Vocational Technical Center (AVTEC) training facility, and a large vessel lift facility. HJR 27 supports the return of this private industry to Alaska and hopefully it will bring economic development to from Seward to Anchorage. REPRESENTATIVE SEATON noted that the packets contain numerous expressions of support for the resolution and bringing private industry jobs to Alaska. 3:22:19 PM CHAIR OLSON asked why the CVRF initially made the decision to homeport in Seattle. REPRESENTATIVE SEATON replied Seattle had long all the necessary facilities in one place, including road and rail access and sufficient dock space. In anticipation of becoming the homeport for the CVRF fleet, Seward did a preliminary analysis to make sure it had sufficient dock space. In addition, the capital budget allocates $400,000 to do a more detailed economic study. CHAIR OLSON asked if he had an idea of what it might cost the community of Seward to be able to handle these large vessels. REPRESENTATIVE SEATON replied the detailed facility design will give the economic analysis. CHAIR OLSON asked who will maintain this large facility. REPRESENTATIVE SEATON replied it will probably be the City of Seward. 3:25:15 PM CHAIR OLSON asked if the City of Seward would look to the state for operating capital if it had trouble maintaining the facility. REPRESENTATIVE SEATON said he hopes the facility will be built to a standard such that major maintenance wouldn't be necessary for 15-20 years. CHAIR OLSON asked what adverse effects the large vessels and increased traffic will have on the smaller vessels. REPRESENTATIVE SEATON replied that shouldn't be a problem; the large vessels will be located on the east side of the bay across from Seward. At this point there is no intention to place these large vessels inside the municipal boat harbor. He added that he doesn't foresee a traffic problem. CHAIR OLSON asked if he'd sought comment from the local CDQ group. REPRESENTATIVE SEATON answered yes. He offered to provide a copy of the video presentation CVRF made. This will be a great economic development for not just Seward but also the Kenai Peninsula to Anchorage. CHAIR OLSON asked when the actual move will take place. REPRESENTATIVE SEATON replied 2014 is the timeline. 3:27:38 PM SENATOR WAGONER asked how much of its own money the CDQ will invest and if that would be enough to ensure that CVRF will stay in Seward. REPRENTATIVE SEATON replied that's a question for the CDQ but there has been talk about contractual obligations to use the facilities over time. 3:28:43 PM PHILLIP OATES, Manager, City of Seward, informed the committee that the CDQ groups were formed as a result of the Magnuson- Stevens Act. The vision in the '70s was first to Americanize the foreign-dominated fishing fleets. Second, it was to give some of the fishing quota to the communities that surround the prime fishing areas of the Bering Sea. Third, it was to allow those communities and development groups to reinvest their earnings into the fishing industry through training and education. Finally, the vision was to "Alaskanize" the fishing fleets. That is the current focus. Responding to the question about why the CVRF vessels have been homeported in Seattle, he explained that the location of the homeport is an owner's decision and the CDQ groups initially didn't own their vessels. The Coastal Villages Region Fund is the most successful of the six CDQ groups in terms of vessel ownership and as owner they made the decision to leave Seattle and homeport in Alaska. Mr. Oates opined that this is probably happening sooner than those initial visionaries thought it would. Responding to the question about cost, Mr. Oates said the City of Seward has paid for the initial engineering concept and economic analysis and has received input from the U.S. Army Corps of Engineers. The project appears to be economic. The $400,000 capital appropriation is to complete both the engineering concept and economic analysis before committing more money to the project. At this point the rough estimate of the cost is approximately $34 million. That builds on the existing $70 million infrastructure on the east side of Resurrection Bay. He noted that there are two additional phases to the project if the remaining five CDQ groups move to Alaska. The City of Seward would maintain the infrastructure, just as it does now for the existing industrial area. Revenue is currently generated from land leases and the lease with Seward Ship's Drydock & Ship's Chandlery. The Coastal Villages Region Fund would have skin in the game through binding contracts sufficient to secure the bonding for the project. Funding for the project could be a combination of state GEO bonding, revenue bonding through contracts with CVRF and others, or public/private financing. The Coastal Villages Region Fund can't build the infrastructure itself because the Magnuson-Stevens Act mandates it spend earnings in the Bering Sea area or the vessels that fish in those areas. CVRF can be a tenant. 3:32:58 PM SENATOR MENARD joined the committee. MR. OATES said CVRF found that only Seward met all its needs. The initiative to move came from the president of the board of the Coastal Villages Region Fund and the board produced a DVD that does a good job of articulating their reasons for moving. He noted that every year CVRF spends approximately $2 million to fly crewmembers to and from Seattle, about $20 million in moorage and maintenance in Seattle, and $2 million to fill the fleet's fuel tanks just one time so there are business and economic reasons for the move. He agreed with Representative Seaton that the fleet wouldn't interfere with smaller vessel traffic in Seward because the facility is on the other side of Resurrection Bay. The timeline is December 2014. 3:35:16 PM CHAIR OLSON asked if the City of Seward had considered bonding for the capital project. MR. OATES replied revenue bonding would be one approach for funding the project. SENATOR WAGONER asked if there is any opportunity for funding through the U.S. Army Corps of Engineers ("Corps"). MR. OATES replied the initial phase can be done at the state level, but the Corps might need to be involved in the permitting and funding stream in phases 2 and 3. The initial phase is economic and will be sufficient to establish both land and water infrastructure. Finally, he said, many of the Coastal Villages Region Fund crew members already come to Seward for the AVTEC training and are familiar with the area. 3:37:57 PM SENATOR WAGONER asked if the Seward shipyard was currently under lease. MR. OATES replied it's under lease to the private company Seward Ship's Drydock & Ship's Chandlery. That ship repair facility does major work on Coast Guard and other vessels, which provides another reason for coastal villages to come to this area. SENATOR WAGONER asked if the entire acreage was leased or if there was a place for other vendors to locate. MR. OATES replied there's plenty of expansion room for all user groups; some of the available land is municipal and some is in private ownership. SENATOR KOOKESH reminded the committee that this is only a resolution. 3:40:04 PM NEIL RODRIGUEZ, Coastal Villages Region Fund (CVRF) said CVRF already uses the Seward facility as a dry dock for some of its vessels, but they aren't there on a full-time basis. One thing to take into consideration, he said, is that CVRF has been growing at a rapid rate and it has partnerships in other CDQ groups. MR. RODRIGUES noted that a number of regional residents do maintenance on CVRF boats and it's an overwhelming trip for Western Alaska residents to travel to and from Seattle. Sending these workers to Seward would help the city and keep the work in Alaska. CHAIR OLSON asked Representative Seaton if he would like to make any closing comments. REPRESENTATIVE SEATON said the City of Seward bonded to build the Spring Creek Prison, which is another indication that the business community will find the municipality approachable when a long-term project makes sense. 3:43:36 PM SENATOR KOOKESH moved to report HJR 27 from the committee with individual recommendations and attached fiscal note(s). CHAIR OLSON announced that without objection, HJR 27 moved from the Senate Community and Regional Affairs Standing Committee.