HB 444-ALASKA PUBLIC BUILDING FUND  REPRESENTATIVE JEANNETTE JAMES, sponsor of HB 444, said the Alaska Public Building Fund (PBF) was established a couple of years ago for a trial period. The buildings listed in that legislation were the Alaska Office Building in Juneau, the Robert B. Atwood Building in Anchorage, the Fairbanks Regional Office Building, the Juneau Community Building, the Juneau Public Safety Building and the State Office Building in Juneau. The PBF establishes a methodology for charging rent to the various agencies and/or other outside interests that use space in these buildings including an amount for depreciation. After paying for heat, light and other minor maintenance items, the additional money from the fund could be used to keep up the maintenance. She noted that the State has a deferred maintenance lag, meaning that virtually no major maintenance was being done. She said the fund gives the State a little more money to keep things from running down over a period of time. She noted that this two-year trial period has been successful. HB 444 would allow all of the buildings that have been transferred from the Department of Transportation (DOT) to the Department of Administration (DOA) to be "covered buildings." HB 444 would also keep the PBF as a permanent program. The State would be able to move forward with the fund and allow the same process on other buildings that may be transferred to DOA. SENATOR HALFORD asked if HB 444 only applied to buildings that have come from DOT to DOA. REPRESENTATIVE JAMES said yes. SENATOR HALFORD noted that the fiscal note said HB 444 allows for the expansion of the PBF approach. The way he reads the definition, he is concerned that HB 444 may mandate the PBF approach. He wanted to make sure that the process was permissive. REPRESNTATIVE JAMES said DOA went through another process to reach the decision. RECESS UNTIL 4:55 P.M. CHAIRMAN THERRIAULT called the Senate State Affairs Committee back to order. He asked if Representative James had concluded with her comments. REPRESENTATIVE JAMES said she had. CHAIRMAN THERRIAULT asked if somebody from the State could explain how the PBF worked and how the money came into and went out of the fund. CHRIS PARCE, Director of the Division of General Services, Department of Administration, said one of her duties was to manage the PBF. She said DOA determines the cost of running the buildings including the depreciation of the facilities. Those costs are spread over the total rentable square feet and the rent is collected from the tenants. Those funds are used to pay for utility bills, general janitorial services and other items of that nature. She noted that one of the main goals of the PBF was to be able to collect the depreciation dollars and be able to use them on major maintenance projects. She pointed out that the Alaska Office Building was being roofed at the moment. She said the PBF was working marvelously. CHAIRMAN THERRIAULT asked how much money was earned. MS. PARCE said the eight buildings brought in about $6-7 million. CHAIRMAN THERRIAULT asked if that showed up in the capital budget. MS. PARCE said the money comes into the operating budget. The PBF is a sub-fund of the general fund and is a dedicated fund. DOA pays the bills out of the PBF and takes care of major projects as they can afford to. 5:00 p.m. CHAIRMAN THERRIAULT asked how DOA got authorization for the expenditures. MS. PARCE said the Legislature approved the expenditures through the operating budget in the first two years of the PBF. In the budget that is before the Legislature now, she has requested that the depreciation dollars be called CIP funds so they can be used throughout the construction season. She said major construction projects don't get started until April or May. If she had to th stop these projects on June 30, the money can't be used effectively. The depreciation purposes of the PBF have been moved to be able to roll over the year. SENATOR HALFORD asked how many more buildings or how much more in value HB 444 would add to the PBF. MS. PARCE said HB 444 wouldn't add any more buildings. HB 444 would allow more buildings to be added if they became attractive to the PBF. She noted that one of the main missions of the PBF is to replace general fund dollars with other kinds of revenue streams. In order for a facility to be attractive for PBF uses, it would need to bring in new money for the State. If a building were housed totally by the general fund, it wouldn't be quite as attractive because it wouldn't bring in new money. SENATOR HALFORD said he thought it would lose money. MS. PARCE agreed. SENATOR HALFORD said it would have an operating budget impact if there was the cost of operation that was normally in the operating budget plus the reserve for maintenance. That would cost more than it would otherwise. MS. PARCE said DOA wouldn't just take all of the buildings. SENATOR HALFORD said saving reserves for maintenance might not be a bad idea. MS. PARCE said DOA looked at the makeup in the tenants of each building. REPRESENTATIVE JAMES said originally, Retirement and Benefits had not been paying rent. She said that was collected in a different fund. The State also cannot collect rent from the federal agencies in the facilities unless all of the agencies in the building are charged rent. She said when DOA was making its decisions, those federal agencies needed to be included to make it a benefit financially. She said the kinds of maintenance the PBF was able to achieve wouldn't get done otherwise without a special appropriation. CHAIRMAN THERRIAULT asked if the federal agencies housed in the state buildings had been paying rent. MS. PARCE said they had not. Their costs had been covered through the regular operating budget of DOT. DOT was managing these buildings and would put forth a proposal to pay for the bills of the buildings. She said she supposed DOT could have asked for funds for depreciating items. However, she didn't think that they had done so because there is a great deal of work that never got done. There was no further testimony. SENATOR DAVIS moved HB 444 from committee with attached zero fiscal note and individual recommendations. There being no objection, HB 444 moved from committee with attached fiscal note and individual recommendations.