SENATE BILL NO. 261 "An Act relating to the Special Olympics World Winter Games to be held in Anchorage in the year 2001; establishing a reserve fund for the games; providing certain duties and authority for the Alaska Industrial Development and Export Authority regarding financing for those games; and providing for an effective date." Mary Gore, aide to Senator Mike Miller and Area Director for the Juneau Special Olympics, was invited to join the committee. The legislation before the committee was the result of hard work by a variety of different people to guarantee Anchorage would be awarded the Special Olympics World Winter Games in the year 2001. She recited a brief history for the committee. A couple of years ago the executive director of Special Olympics Alaska decided this would be a wonderful thing to do for Alaska and enlisted the aid of U.S. Senator Ted Stevens. Last summer the Anchorage organizing committee was told by Special Olympics International that in order to be awarded the bid the State would need to be the financial guarantor for the games. Special Olympics International would not go in the hole as a result of any location being awarded the bid. She explained that the result of several conversations between Special Olympics International and the Governor's Office was that the money did not need to be appropriated prior to the bid being awarded, however, the State would have to show that it was behind the organizing committee's efforts. Last fall letters were sent from the Governor's office, Speaker Gail Phillips and President Mike Miller stating they were behind the program and they would work toward resolution of the funding once session started. It was determined that the cash did not need to be appropriated and held in an account for the games. However, the State just needed to be on record if private resources could not raise the money. This legislation would morally obligate the State up to four million dollars if the organizing committee did not raise the funds. However, the likelihood of that was minimal. Total budget for the games was eight million dollars; four million in hard cash and four million in contributions. Thus far, she said about one million dollars in cash had been raised and the organizing committee had three years left to raise the remaining three million dollars. Checks and balances would be through AIDEA who would oversee the fundraising of the organizing committee and report to the Legislature every January 2 as to the status of the organizing committee's efforts. In the event the committee was falling behind a gentle push from the Legislature would put them back on track. In the year 2001 the Legislature would need to appropriate and then approve spending of those dollars during a legislative session if for some reason that was required. She said the organizing committee had already started raising money. Full page ads have been running in newspapers around the State and financial help as well as in kind help was going to be needed for hosting the games. Approximately two thousand athletes were expected with each two athletes requiring one chaperone. About seven thousand people would be visiting Anchorage, generating about seventeen million dollars during the ten day period the games will be held. Co-chair Pearce noted for the record that she is on the board of the Alaska Governing Board of the Special Olympics. Senator Phillips asked how many venues would be hosted. Ms. Gore indicated that there would be downhill, cross-country, snowboarding as an exhibition, snowshoeing and iceskating with a total of approximately eight venues. Senator Parnell voiced concern that it was being represented to the Legislature they were taking on the obligation as guarantor, however it was looking like they were a lendor or grant giver as well. He referred to page three, line eleven, section four, paragraph one. He felt the wording was very loose in comparison to what was being represented. Ms. Gore indicated that Keith Laufer from AIDEA was on teleconference and asked that he be allowed to explain since he worked through the legislation for the committee. Senator Torgerson asked Ms. Gore if any building were being built? Ms. Gore said no there were not. Senator Torgerson asked about checks and balances on the operational costs. Ms. Gore said there was an organizing committee overseeing everything to date. Most individuals from the private sector have been working through their own budget and the work being done has been free. She further advised that BP was paying for ads and not out of the eight million dollars budget. Senator Torgerson said his biggest concern was the opportunity to spend and not have any checks and balances. He asked if AIDEA would have a chance to reject the plan if the organization did not stay within the means of the financial plans submitted to them? Keith Laufer, Alaska Industrial and Export Authority testified via teleconference from Anchorage. He said AIDEA supported the bill. It would create a new fund with AIDEA that would not be capitalized initially but could be capitalized in the event that come the year 2001 the games would require an additional amount of money they had not been able to raise. Further, the bill did not anticipate the State would finance any portion, but merely act as a guarantor. He said the reference to section 4, State financial assistance, had to be read in context with the rest of the bill. The assistance would be in the form of the Legislature appropriating up to four million dollars to the Special Olympics fund created in the bill, which would occur in the year 2001. He said there was no other vehicle for State financial assistance in the bill, other than references that the local organizing committee had to do everything to reduce any State participation, including that appropriation. He felt there was nothing to anticipate any financing other than the four million dollar back-up guarantee. With regards to the Authority's role, the bill required the local organization to submit a finance plan to the authority within six months of the bill being passed and then every six months thereafter. The finance plan would have to be approved by the Authority and they could go to the Legislature and suggest they appropriate money later. He explained this was a protection. Senator Parnell said he understood the purpose of the guarantee in the event there would be insufficient funds. He said presumably in 2001 they could come back to the Legislature and ask them to cover the amount. His concern was there was no specific time limit and felt they could come back next year and ask for the money if their fund- raising was not on track for 2001. He did not want the Legislature to get in the business of being a lender. Mr. Laufer in response to Senator Parnell referred to page three, lines seven through nine of the bill. He said AIDEA would have to determine there was insufficient monies from all other sources in an amount to not exceed four million dollars. He said after determining there was no other funds available then they would turn to the appropriation. Senator Donley agreed with Senator Parnell and said the witness was just talking around the issue. The language made it sound as if it was an invitation to come back and ask for direct State funding. He suggested it be rewritten to state that "if, after due diligence there has been a failure to raise the adequate amount of money and AIDEA certifies that due diligence has been done". Co-chair Pearce asked if the language was prescribed by the contract signed by the International Organization? Mr. Laufer indicated no. He said they tried to pull language out of AIDEA statutes that required finance reviews for what would otherwise be development projects. Those were combined with moral obligation language that would be used to support bond issuances, where the Legislature agreed to use moral obligation but did not wish to actually advance any funds. He felt that if the committee believed other more specific language was appropriate it could be accomplished. Senator Torgerson also voiced concerns on approving the operating costs of the operating committee. He wanted to know if there was anything other than the six months review by AIDEA. Mr. Laufer said their being required to make sure they could approve the plan every six months, which would include sticking with the plan, would insure the plan being accomplished with no deficit whatsoever. However, everyone knew that sometimes as one moved forward plans could be changed. Senator Torgerson asked if there would be any chance their agreement with the National Committee would change where it would affect dollar amounts? Mr. Laufer said his understanding was that the bill would provide the entire guarantee the International Committee was looking for. Nothing else would be required. Ms. Gore concurred. She said the total budget was eight million dollars. She further advised that in the first seven months that have passed they had already raised one million dollars of the four million dollars they were asking the Legislature to guarantee. They still had three years to raise the other three million dollars. She did not feel there would be a problem. Co-chair Pearce said she sensed some unease with section 4 and asked that Ms. Gore work with Mr. Laufer from AIDEA to come up with language that would make the committee feel more comfortable. She said this could be made available in the form of a proposed Finance CS. Senator Phillips referred to page two, lines six through nine regarding the number of venues. He said he was still interested in how many venues would be sponsored in comparison to the Arctic Winter Games or the Winter Olympics. Co-chair Pearce clarified that the Special Olympics would be the largest games to be held in the year 2001. She said the Arctic Winter Games were not going to be held until 2002. Senator Parnell in concurrence with Senator Donley felt the language on page three, lines thirteen and fourteen, essentially said "if the local organization desires State financial assistance they would prepare a finance plan and submit that plan to the Authority for approval no later than ninety days after the effective date of this Act." He said it sounded like they would submit the finance plan to AIDEA within ninety days that indicated they were already desiring State assistance. Ms. Gore said that referred to the plan they were required to submit every six months so that AIDEA can oversee what was being done. Senator Parnell reiterated that it read "State financial assistance". He felt everyone agreed they wanted to be a guarantor. Ms. Gore said it was for State financial assistance in the year 2001 if they did not meet their requirements. She said perhaps the wording could be changed. Mr. Laufer explained the requirement for the financial plan within ninety days and every six months thereafter. If the organization failed to comply they would no longer be eligible for financial assistance. Senator Phillips asked if it was required in other jurisdictions to have financial moral obligations, how was it done, and where. Ms. Gore indicated that it was required in other jurisdictions and believed it was the State of South Carolina who did the same backing, even though they had more flexibility through a division that was very similar to AIDEA. They were able to do an actual bond for the Olympics. Toronto, two years ago, was also under the same requirement. Senator Torgerson asked if the fund would be able to use the amount generated off the investment as part of the fund? Mr. Laufer said they had not provided for that because they had not anticipated any funds ever being appropriated into the reserve fund until the year 2001. They would only expect to ask for that appropriation if the money were to be expended in short order. Senator Torgerson said the committee just heard there was one million dollars already collected. Was that not in the fund? Mr. Laufer said the fund would only be used for the State's contribution when and if it was required. Meanwhile, the local organizing committee had their own non-profit corporation holding the funds they had raised. Senator Donley asked if this appeared in a temporary section of the statutes? Mr. Laufer said that was his understanding. Senator Parnell asked how long an act stayed in temporary statutes and was a sunset needed? Mr. Laufer said his understanding was that once they were passed the time the fund no longer has any input it did not matter if it was in the temporary statutes. However, they should confer with the Attorney General's office. Co-chair Pearce said she would hold SB 261 in committee until next Tuesday, 24 March along with SB 25. (The committee took a short at ease at 9:20 a.m. and reconvened at 9:30 a.m.) Co-chair Pearce said the remainder of the meeting was a continuation of the results based budgeting work session for Department of Natural Resources, Forestry Program. She asked Senator Parnell to continue the meeting as chair.