HOUSE TRANSPORTATION STANDING COMMITTEE April 14, 1994 5:00 p.m. MEMBERS PRESENT Representative Richard Foster, Chairman Representative Gary Davis, Vice-Chair Representative Bill Hudson Representative Eldon Mulder Representative Al Vezey Representative Curt Menard MEMBERS ABSENT Representative Jerry Mackie COMMITTEE CALENDAR Seward Ships Drydock Presentation Issues Relative to Whittier Access Project Presentation *HB 544: "An Act relating to the tax on transfers and consumption of aviation fuel; and providing for an effective date." MOVED FROM COMMITTEE (* First public hearing) WITNESS REGISTER JIM PRUIT P.O. Box 944 Seward, Alaska 99664 224-5640 POSITION STATEMENT: Gave presentation on Seward Ships Drydock (via teleconference) GARY WILLIAMS, Manager City of Whittier P.O. Box 608 Whittier, Alaska 99693 472-2327 POSITION STATEMENT: Gave presentation on City of Whittier BRUCE CAMPBELL, Commissioner Department of Transportation/Public Facilities 3132 Channel Drive Juneau, Alaska 99801 465-6973 POSITION STATEMENT: DOT/PF position of support for HB 544 PREVIOUS ACTION BILL: HB 544 SHORT TITLE: INCREASE AVIATION FUEL TAX SPONSOR(S): TRANSPORTATION JRN-DATE JRN-PG ACTION 04/05/94 3126 (H) READ THE FIRST TIME/REFERRAL(S) 04/05/94 3126 (H) TRA, STATE AFFAIRS, FINANCE 04/12/94 (H) TRA AT 05:00 PM CAPITOL 17 ACTION NARRATIVE TAPE 94-15, SIDE A Number 000 CHAIR FOSTER called the meeting to order at 5:10 p.m., and introduced Jim Pruit, via teleconference, narrated a presentation on the Seward Ships Drydock. Number 012 MR. PRUIT thanked the committee for the opportunity to speak, and clarified that Seward Ships Drydock, Inc., is located in Seward, Alaska, on Resurrection Bay, at the Seward Marine Industrial Park. He added that the facility is a ship-lift, full-service shipyard, currently employing about 53 people, with a year-round average of about 48 to 50 employees. He expressed the hope that an 80-90 employee, (100-120 in summer), year-round work force will be achieved when the facility is operating as a repair facility. Number 044 CHAIR FOSTER thanked Commissioner Bruce Campbell for also sitting in on the presentation, and stated to Mr. Pruit that he hadn't realized the operation was as extensive as described by Mr. Pruit. Number 068 MR. PRUIT stated the facility is a 5,700 ton drydock, with the capability of lifting vessels up to ground level on a prearranged boat-carriage, and transfer them to the uplift. He then indicated that he would narrate the silent video about to be viewed by the committee members and audience (copies of the video may be obtained from Mr. Pruit.) Number 120 MR. PRUIT stated that the Seward Ships Drydock (SSD) is the only yard in Alaska which is approved by the American Bureau of Ships to do shaft repair. He added that the facility is a "classed" drydock, classed by Lloyd's of London, with an annual inspection performed in accordance thereto. Number 140 MR. PRUIT announced that the SSD is in the process of constructing a 300' x 132', 10-story high boat building to go over the 300' rail. Number 163 MR. PRUIT stated the lifting capacity of the facility can be expanded, and the lifting platform itself can be extended, in terms of lifting capacity. He added there is currently enough capacity in the facility to haul the Tustumena, transfer it up to the other rail, have the Bartlett over on one of the side rails, and possibly another ferry on the approach rail. In emergencies, drydocking on the platform itself is possible. Number 210 MR. PRUIT stated that in 1989, Seward Ships' gross payroll was $864,433, and $409,000 went to local vendors. In 1991, $1,133,454 was payroll, and $519,545 went to local vendors; and 1993-94 will see the gross payroll exceed $4 million, and the vendor figure will be close to $730,000. Number 234 MR. PRUIT stated that in its market research, the trade SSD looks at could be broken down into several categories: The Alaska Marine Highway System, with 2 vessels currently available to SSD; forest product industry vessels, with 6 currently available to SSD; fishing vessels, with approximately 190 vessels available to SSD; passenger vessels, with approximately 11 vessels available to SSD, though this figure is probably higher now; miscellaneous government vessels, with seven currently available to SSD; and the military, with eight vessels currently available to SSD. Mr. Pruit added that these numbers will have changed over the last four years, with SSD's market share increasing considerably, especially with the proposed construction. Number 255 MR. PRUIT commented on having the drydock roofed. He stated this was a necessity because of the need to do the sandblasting and painting under cover. He added that another advantage to being roofed is that deckside work can be done more easily. Number 268 CHAIR FOSTER commented to Mr. Pruit that although he had been with the House Transportation Committee for six years, this was the first he had heard of SSD, and thanked Mr. Pruit for bringing it to the committee's attention. He added that he would like to perhaps visit SSD with the committee. Number 288 REPRESENTATIVE HUDSON thanked Mr. Pruit for his presentation, and asked if there is a proposal, or if SSD was looking for money, or what. MR. PRUIT responded that SSD probably was the best kept secret in Alaska, and he felt the Transportation Committee and legislators should know about a facility such as this one, that was built with state money. SSD put over $2 million of private money in it and is getting ready to build a $2.2 million building, with Key Bank as the financing partner. Construction is slated to begin as soon as the frost is out and the first components will arrive sometime at the end of June. Number 320 MR. PRUIT stated that SSD had been concerned that there might be a policy of state vessels going to the state facility, but he had met with the different departments and had been told that the Bartlett and Tustumena would certainly be viable candidates for SSD haul and repair. He concluded that all SSD wants is to be treated equally in having the opportunity to haul and repair state-owned vessels. Number 333 CHAIR FOSTER thanked Mr. Pruit. Number 335 GARY WILLIAMS identified himself as City Manager of the city of Whittier and thanked the committee for providing seed money last session, which will be protected until Intermodal Surface Transportation Efficiency Act (ISTEA) money comes in FY 96. Number 365 MR. WILLIAMS stated it is projected that with road access, Whittier could get as many as 900,000 visitors; currently, there are about 200,000 visitors yearly. He noted that currently, the town of Whittier is cut off from the waterfront, which is its economic lifeline. Number 383 MR. WILLIAMS stated that the city of Whittier and others had gotten together and hired International Resort Advisors (IRA), which has created resorts around the world. IRA was asked to answer two questions for city of Whittier, etc.: How to respond to the level of impact projected, and who benefits (how does Whittier benefit), and by how much? He suggested that he would show that the investment of an initial $15 million by the state of Alaska, to seek the construction of the road and attract more money from the Federal Highway Administration to construct the road, will accrue to the state of Alaska many times more than that in local economy. Number 400 MR. WILLIAMS stated there are 211 acres available for development in the core area of Whittier. Over half of this acreage is held by the Alaska railroad, 70 percent of which is in the waterfront area. He suggested a joint development by the Alaska railroad and the city of Whittier, for mutual economic benefit. Number 434 MR. WILLIAMS stated that it would be fundamental for the Alaska Marine Highway to move their ferry boat from where it currently is located, out of the core area, to allow development to occur. This would provide double the staging area and provide additional ferry terminal waiting space, thus allowing large numbers of people to move in a small area without undue conflict. Number 460 MR. WILLIAMS mentioned, as one of the most fundamental developments portended by the increased access, the build out of the railroad dock and the marginal wharf. He called this a "premier multi-modal transportation center." Number 506 MR. WILLIAMS discussed the overall vision for Whittier: To hold people on the ground as long as possible, and allow them to spend money and create economy. He commented on how quickly the cruise ship industry moves people in and through its Alaskan ports, and that strategies to hold these passengers a little longer and create economy must be developed. Number 530 MR. WILLIAMS stated the build out cost would be about $1.2 million. He added that the cruise ship industry has said "when" there is a road to Whittier, they will be back. In addition, Princess Tours is apparently preparing two world- class size cruise ships for Whittier. Number 537 MR. WILLIAMS discussed the various possible financing schemes, and described the project as an amenity which also provides an opportunity for the community to recreate. The city of Whittier would no longer be a split town with no sociological center or economic base. He cited the road as a key element. Mr. Williams stated that the vision also includes the Buckner Building eventually being something. He concluded that in the end, a $30 million annual economy would be created. Number 555 REPRESENTATIVE MENARD asked Mr. Williams if the railroad and road traffic would be at the same level. MR. WILLIAMS responded they would be on the same level, and there would be crossings. Number 561 REPRESENTATIVE MENARD asked if there has been any thought toward making one or the other elevated. MR. WILLIAMS responded there is a lot to work out, and that perhaps trains will run in the evenings, but at present, they anticipate them being on the same level, with crossings. He elaborated that it would cost too much to elevate either one. Number 574 REPRESENTATIVE MENARD asked what the current population of Whittier is. MR. WILLIAMS cited the population as 280. Number 576 REPRESENTATIVE HUDSON stated that the key to the entire issue turns around whether or not a road can be built into Whittier, and what it will cost. He commented that even though the project may only take $15 million of state monies, the project would also take federal highway monies which would also be in demand in other parts of the state. He added that the initial report he received was not too positive in terms of guiding vehicular traffic through the tunnels, and that the practicality of the concept must be considered. Number 585 MR. WILLIAMS responded that the environmental impact statement and other documents go into great detail on how requirements would be met in the project. He stated the cost for road option #3, the simplest of the options, would be $49 million, with $38 million in ISTEA money. TAPE 94-15, SIDE TWO Number 000 CHAIR FOSTER thanked Mr. Williams for his presentation and asked if there were further questions from the committee. There were none, so Chair Foster noted the presence of Commissioner Bruce Campbell here to testify on HB 544, and thanked him for waiting through the two prior presentations. Number 009 BRUCE CAMPBELL, COMMISSIONER, DEPARTMENT OF TRANSPORTATION AND PUBLIC FACILITIES (DOT/PF), stated that HB 544 is the result of a court challenge to the method which certain landing fees were adopted. The plaintiffs prevailed, which left DOT with the choice of either readopting landing fees in a manner which met the Administrative Procedures Act, or having an off-setting fuel tax which would provide the same revenue the landing fees would. He added that the air carriers preferred the latter option and the Finance Committees approved, so DOT/PF decided to pursue it. Number 065 CHAIR FOSTER commended Commissioner Campbell for his accurate recitation of the facts and sequence of events surrounding the issue, adding that he gets frequent calls from members of the Air Carriers Association, of which he was once a member. Number 081 REPRESENTATIVE HUDSON asked Commissioner Campbell about the wording "motorfuel consumed by user," and asked what that meant. Number 090 COMMISSIONER CAMPBELL explained that the section in question is in the bill because the air carriers wanted an escape. He added that if the commissioner reinstated landing fees, the section in question would immediately trigger the mechanisms for doing away with the tax. Number 103 REPRESENTATIVE HUDSON asked if this bill impacts any other fuels. Number 105 COMMISSIONER CAMPBELL responded in the negative. Number 110 REPRESENTATIVE HUDSON motioned to move HB 544, with accompanying fiscal notes and individual recommendations, out of the House Transportation Committee. Number 119 CHAIR FOSTER asked if there were any objections. There were none, and so HB 544 was declared to be moved out of committee. The meeting was adjourned at 6:01 p.m. for floor session.