CS FOR SENATE BILL NO. 215(STA) "An Act relating to a lease-purchase agreement for, the construction and equipping of, and the financing of a seafood and food safety laboratory facility to be operated by the Department of Environmental Conservation, including the issuance of certificates of participation, and the use of certain investment income for certain construction and equipping costs; and providing for an effective date." This was the first hearing for this bill in the Senate Finance Committee. Co-Chair Wilken stated that this bill, sponsored by the Senate Rules Committee at the request of the Governor "authorizes the sale of $14,145,000 in certificates of participation for the financing of construction of a new seafood and food safety lab for the Department of Environmental Conservation." ERNESTA BALLARD, Commissioner, Department of Environmental Conservation, read testimony into the record as follows. Thank you for the opportunity to testify today. SB 215 provides the funding mechanism for a new Seafood and Food Safety Laboratory. This expense has been included in the capital budget. As Commissioner of the department responsible for protecting the environment and human health, I can testify to the importance of this lab. In our seafood and food safety lab we analyze raw, finished and value-added food products for bacteria, chemicals, and toxic contaminants. We maintain capabilities and FDA certifications that private labs cannot. We operate on schedules that are not available from private labs and can assume the greater liability needed to perform analysis for paralytic shellfish poisoning. We cooperate with emerging industry, such as the growing dive fisheries to be sure time-critical water and raw product analysis is available and market commitments are met. We are qualified to train and certify private labs so that they can operate in established and high-demand testing markets. DEC has leased a facility in Palmer for 34 years. This facility will not be available after 2006. It is overcrowded and not fully compliant with safety codes and laboratory design standards. It was originally placed in Palmer when the principal lab business was agriculture and dairy. The emerging value added seafood industries in coastal Alaska have added significant and time-sensitive testing demands for our service. Our proposed new lab will be in Anchorage where valuable hours can be saved between sample collection and testing for raw and live seafood products. Our laboratory functions are essential to protect the health of all Alaskans. The Governor, past legislatures, and the Commissioners of Revenue, Department of Transportation and Public Facilities and DEC have reviewed the design specifications, equipment requirements and expense of this lab. We considered alternative locations and financing mechanisms for a modern facility sized and equipped for long term service to the state. Specifically, we carefully considered the possibility of locating in remodeled space at the ASI facility in Anchorage. Our requirements would occupy approximately 5% of that space. The process of acquiring a new seafood and food safety lab began seven years ago with a feasibility study. We received an appropriation of $150,000, to obtain an independent evaluation of both build and lease options. This analysis showed that the most economical choice is a state owned laboratory financed with lease/purchase bonds known as Certificates of Participation. The legislature agreed and in 2001 appropriated $1,300,000 to design this facility. This is a conservative and cost conscious proposal. The building contains only laboratory and lab support space: meeting and classroom facilities will be available in the adjacent public health lab. The building materials were selected for low and simple maintenance. The design and materials are similar to the public health lab that was built several years ago on schedule and within budget. We are reviewing the fees the laboratory charges for services and are comparing them to other states' fees. It is clear we can, and should charge more. We will begin drafting the necessary regulations this summer. Senator Taylor spoke to earlier concerns he had about the need for a similar laboratory located in Southeastern Alaska, specifically to support the dive fisheries and seafood and mariculture industries. He supported this proposal and applauded the efforts of the commissioner. Senator Taylor offered a motion to report the bill from Committee with individual recommendations and accompanying fiscal notes. Co-Chair Wilken objected for the purpose of a question. Co-Chair Wilken asked the location of the proposed laboratory. Commissioner Ballard replied it would be located next to the recently constructed public health laboratory, which has adequate meeting, training and other common spaces. She stated the proposed facility would occupy the "minimal footprint" necessary to perform laboratory functions, as other functions could be conducted in the public health laboratory facility. TOM BOUTIN, Deputy Commissioner, Department of Revenue, testified that the State has utilized this lease financing mechanism many times in the past and is a "well understood credit". Co-Chair Wilken removed his objection and SB 215 (STA) MOVED from Committee with zero fiscal note #2 from the Department of Environmental Conservation and fiscal note #3 for $200,000 from the Department of Revenue.