GENERAL SUBJECT(S): Overview, Department of Transportation and Public Facilities, Statewide Transportation Improvement; Overview, Alaska Housing Finance Corporation The following overview was taken in log note format. Tapes and handouts will be on file with the Senate Finance Committee through the 21st Legislative Session, contact 465-2618. After the 21st Legislative session they will be available through the Legislative Library at 465-3808. Time Meeting Convened: 9:10 A.M. Tape(s): SFC-99 #13, Sides A and B PRESENT: Senator Parnell Senator Adams X Senator Torgerson X Senator P. Kelly X Senator Donley Senator Green Senator Leman X Senator Phillips X Senator Wilken ALSO PRESENT: JOSEPH PERKINS, Commissioner, Department of Transportation and Public Facilities; KURT PARKAN, Deputy Commissioner, Department of Transportation and Public Facilities; DENNIS POSHARD, Legislative Liaison, Office of the Commissioner, Department of Transportation and Public Facilities; NANCY SLAGLE, Director, Division of Administrative Services, Department of Transportation and Public Facilities; DAN FAUSKE, Executive Director, Alaska Housing Finance Corporation; JOHN BITNEY, Alaska Housing Finance Corporation; DAVID TEAL, Director, Division of Legislative Finance; FRED FISHER, Fiscal Analyst, Division of Legislative Finance; GINGER BLAISDELL, Fiscal Analyst, Division of Legislative Finance, and aides to committee members and other legislative members. LOG SPEAKER DISCUSSION 000 CO-CHAIR TORGERSON Convened the meeting. Noted absent members. Asked Commissioner Perkins to continue departmental overview. 017 COMMISSIONER PERKINS Was invited to join the committee. Explains gravel surface and how much they lose during use. Once it is gone it is impossible to retain. It does not cost much to patch and repair asphalt. Most people prefer paved roads. Each fiscal year in three regions they will pave a certain amount of roads. 1999: 65 miles of road to be paved. Majority of state-owned roads will be paved in four years with hard surface. In response to Senator Torgerson, Commissioner Perkins said these roads were the most beneficial in reducing maintenance costs. Commissioner Perkins said they would like to have these roads transferred to local governments however there is not much incentive to do such. 117 SENATOR PHILLIPS Asked about the roads and who maintains them. COMMISSIONER PERKINS Explained the primary driving factor for maintaining roads. A few roads have been switched to local governments in Kenai and Mat-Su. Local governments in general are not welcoming this program because they pick up a maintenance cost they don't have. Winter maintenance in particular scares the local governments. 140 SENATOR PHILLIPS Asked further clarification of the roads and how the agreements with local governments worked. He was concerned about this. COMMISSIONER PERKINS This was also a concern of his. There are local governments that will not be taking over their roads. He wants to take maintenance off the gravel roads and put it on paved roads. He would also like to see the roads turned over to local governments in order to minimize departmental costs. 168 SENATOR PHILLIPS Thinks this system should be put into effect on all roads in Alaska. There should be an incentive provided the local governments. COMMISSIONER PERKINS Said there had been incentive for the past three years. However, the world of reality was that no one wanted to take them over. He was still providing maintenance for these roads. The Commissioner said he did not feel most roads would ever be taken over. 196 SENATOR DONLEY Was there such a program last year? COMMISSIONER PERKINS This program comes from the CTP program. SENATOR DONLEY AMATS comes out of CTP? COMMISSIONER PERKINS Yes, it does. SENATOR DONLEY Anchorage roads are far behind the rest of the State. He felt that Anchorage has been subsidizing the rest of the State roads. COMMISSIONER PERKINS 38.8 percent of the total transportation program goes to Anchorage. This did not include any of the surrounding areas. (The Commissioner passed out a chart for the members to refer to.) SENATOR DONLEY Have been very few road projects over the past few years. DOT postponed several projects. The Anchorage caucus was interested in the AMATS program. They would like to see some sensitivity to their needs in Anchorage. COMMISSIONER PERKINS Concurred with Senator Donley. He explained the program had been broken down to see where monies were needed most. Anchorage urban projects take six to seven years to complete. Presently they were looking at a 3-lane highway. Studies before a project takes place are very important. He specifically referred to the Anchorage intersections. This was an ongoing project. However, they cannot spend this kind of money now without the proper study and design. In about three years there will be projects seen in urban Anchorage. SENATOR DONLEY Asked for increase from $20 million to $30 million. This was badly needed monies. He felt jobs done by DOT were not done properly nor completed. Proper planning should have been done. The municipality is also to blame as they come under AMATS. There may be some middle ground. COMMISSIONER PERKINS Anchorage will also receive $5 million in TRAAK funds. AMATS (Anchorage Metropolitan Area Transportation Study), CMAQ (Congestion Management Air Quality) and TRAAK (Trails for Access for Alaskans). JOHN HORN Invited to join the committee. He explained what CMAQ monies could be used for. Promotion of the public transportation system. Flow of public traffic, intersection improvements are also included. COMMISSIONER PERKINS City of Fairbanks also receives funds under CMAQ. They do not receive as much as Anchorage, however. SENATOR DONLEY Asked about the scoring system. He felt the scoring system for urban areas did not have any waiting period. This made the system biased against Anchorage, and possibly Juneau. There was a brief reference to SB 263. Senator Torgerson was sponsor of the bill that was passed last year. One-fifth volume ranking against use. COMMISSIONER PERKINS This was the whole scoring system. There will be a separate meeting sometime next week in order to explain the criteria used in this system. He would prefer to defer any further questions regarding this matter to that meeting. CO-CHAIR TORGERSON The Commissioner can answer the question at this time. However, he explained to the committee that the Commissioner would be back next week to explain the ranking system and other criteria. COMMISSIONER PERKINS 12 to 14 factors were used in the scoring system. The main question was where does one put the points. Questions have been put out for public comments many times. DOT has not done this in the dark. The department is still welcoming comments, however, realizes there will be no perfect system. He thinks the meeting for Thursday is good. Those on "help" side will be happy, those on the "hurt" side will be unhappy. SENATOR DONLEY Asked that there be a clear explanation regarding the fact that Anchorage is so desperately behind. He is concerned with the ranking system being in violation of statute. There are Supreme Court decisions to back this up. By law it should be under regulations and not the whim of the department. Should not be based on an internal decision. COMMISSIONER PERKINS Concurred with Senator Donley. SENATOR P. KELLY Also agreed with Senator Donley. Does not want to see this become a popularity contest with public input. If everything were based on population Anchorage would become Rome and the others would be left out. SENATOR PHILLIPS Does not think Anchorage will become Rome as those in Anchorage can't even agree amongst themselves. SENATOR TORGERSON No one really understands the ranking system. The frustration of the public was because something that makes it through the Legislature, the Governor signs the bill and then the department decides not to do the project. This did not make any sense. There needs to be some serious changes in the ranking system. Will request Legislative Legal and Legislative Finance to be present for the Thursday meeting. 475 COMMISSIONER PERKINS Continued his presentation with the Alaska Marine Highway System. The Malaspina was a success in its first year as a day boat. They operated 71 days with 541 passengers. Cabins were put out to bid. He said this should work out. SENATOR PHILLIPS In reference to the success story of the Malaspina he Will ask in reference to the road and how it will affect the rest of the State at the next meeting. COMMISSIONER PERKINS Came in $100,000 under the cost. This was a good test. Day boats do work and supported a lot of conclusions in the Southeast day boat plan. Attendance at the Haines Fair was up because many could catch the ferry up and back the same day. Delivery of the Kennicott proved to be a success. Unfortunately it received much publicity as to many little things wrong with the ferry. However, he felt this happened because there was nothing else to write about. They should compare the running record of the Kennicott with the running of the Columbia when it first came on line. He did not feel bad about water on the deck of the Kennicott because the new Disney boat also had water on the deck. Took a trip himself on the Kennicott even though they did run into some rough water. Feels the Kennicott can be used on Gulf trips. The Kennicott has proved to be a vessel that can be used in Alaska. Some challenges he foresees with an increase in federal mandates for training in these mandates and compliance. New Coast Guard regulations were costing lots of money to provide training. He hoped to use Federal monies. Another challenge would be the implementation of the Southeast Regional plan. It would significantly alter the way transportation is provided. They will be making use of more day vessels and smaller vessels between communities. At the next meeting he will explain where the funds are being used for this implementation. He noted the work with the Legislature last year was paying off. Will also look at the Southwest Marine system, specifically the Yukon-Kuskokwim area and what transportation can do. It is about 40% complete at this time. He will provide data sheets. Another plan is the Northwest plan. It will be the most critical of plans. They will look at resources and figure out between water, land and air as to what can be done. They want to use the funding in the demonstration program to do this. He next went to aviation. This program is presently in the same fix as the Marine Highway was last year. This is extremely contentious. They will run out of money in March unless another extension is passed. He does not know what Congressional plans are. He thinks they will pass another extension come March but it is not for sure. Explained how aviation projects are chosen. FAA makes the decision not the department. They can only nominate programs. This is a federally operated system. There is a separate group in the department to evaluate aviation projects. There is detailed Tape: SFC - 99 #13, Side B 9:40 AM COMMISSIONER PERKINS Continued explaining the aviation program. Not a lot of State money is used in this program. FAA requires legislative authority before they request discretionary funding. They will not accept a project that the Legislature has not approved. He referred to runway lengths. They are sticking with 3,000 feet and are trying to get lighting for all runways in the State. There is a lot of critical work that has to be done on our airports. He referred to the International Airport. The work is on schedule. Anchorage International Airport is a very viable project. He will be happy to provide further data on the airport and how everything stands to date. Fairbanks has also done quite well. There is excellent management there. Some VIP projects are going in. He commented on the deferred maintenance bill passed by the Legislature for harbors. Those involved were Seward, Kodiak and Homer. Seward had some controversial problem with users. There were two public meetings held. The transfer from the State to the city will be made soon. In Kodiak the city counsel will vote Feb 11 on taking their harbor over. Homer is currently under the municipal staff review. There are no problems but the transfer is just taking a little longer. Would like to see the Juneau harbors transferred along with many others in the State. Feels these transfers are good. SENATOR PHILLIPS Are local governments cooperative in these transfers? COMMISSIONER PERKINS He said they were getting good reactions from the municipalities. However, they want the harbors fixed up before transfers are made. Most communities want their own harbors. SENATOR DONLEY Asked about the harbor budget? COMMISSIONER PERKINS Are not in the budget for this year. Explained normal harbor maintenance. It is a line item in the capital budget. Will only cover emergency repairs. Does not cover updating required by municipalities to take them over. SENATOR DONLEY Re: Corp of Engineers COMMISSIONER PERKINS He explained how much money the Corps would be bringing. Will explain this matter later. Would like to continue in presentation on the Railroad. Alaska Railroad is owned by the State but not subsidized by the State. Have about 600 employees. Railroad is in excellent situation to keep growing. Have reinvested their profit back into the railroad. Should remain profitable in the foreseeable future. This is a passenger railroad. Has eligibility in TEA-21. Have succeeded in getting funds from the Federal government. Tie replacement was done because the Federal government did not do it before they turned the system over to the State. They will add new locomotives and replace ties this year. Denali Park is going to get full service depot. Taxi and rail service in Fairbanks. Most curves to be removed out near the military reserves. Make possible the commuter service between Wasilla and Anchorage. Monies received from the military. Haul cruise ship passengers up to Anchorage to be covered by a Federal grant. All airports want rail service. This is a good project. Explains a lot of work to be done in Whittier. This is a real good program and notes the Railroad will provide necessary information in their presentation before the committee. Legislative issues: International Airport Requested a bonding number.reduced by $25 million because they wanted to get this money from FAA. They did get this money, however it is over ten years. They need the monies this year and next year. They are going to request a $25 million bond from the Legislature to be paid back from these funds. Gas tax, 9% increase request. They will use as much flexibility as possible. Wants to talk about design. Not a legislative bill but important in how their budget is constructed. Feels there are middle ground for discussion. Will discuss sunset policies. Wants to get old projects off the books from the past ten years. Refers to Alaska transportation programs from 1999 and 2000. These projects will benefit Alaskans for years to come, even though this presents such a large challenge. They will make a major economic impact on the State beginning this summer. SENATOR PHILLIPS How much federal dollars for capital improvements for the railroad as appropriated. COMMISSIONER PERKINS Would prefer the question be posed before the Railroad, however it was a sizeable amount. CO-CHAIR TORGERSON Governor Sheffield will be here in February for the Railroad presentation. SENATOR DONLEY Asked about the Anchorage airport project with the Railroad terminal. Where is the money from? And who asked for it? He said the Anchorage caucus does not want it held against them. They feel there are more important traffic problems to be solved that they have right now. COMMISSIONER PERKINS This is not coming out of highway monies. SENATOR DONLEY How is the money coming to the project? COMMISSIONER PERKINS Coming directly from FRA to the Railroad. They are only making sure the project fits into their plans. This project will help DOT on their airport project because it will give them one more tunnel. SENATOR DONLEY Will this show up in the STIP? COMMISSIONER PERKINS No, it will not. CO-CHAIR TORGERSON Thanks commissioner Perkins 10:20 a.m. Co-chair Torgerson recessed for approximately three minutes. Tape number 1, Side B at log number 357. CO-CHAIR TORGERSON Reconvened the meeting. DAN FAUSKE Invited to join the committee. Explains AHFC projects for the next year. Budget request reflects AHFC policies. Have established specific criteria. AHFC plays major role in State housing. (Brief tape malfunction log number 387 to 364 countdown on side B.) All communities around the State reported healthy recovery. Personally proud of accomplishments over the last four years. Offers lowest interest rates to Alaska homebuyers. Streamlined paperwork process for loan applications. Provide workshops for purchasers and also for builders. Explains urban and rural loans. Staff processed re-finance loans. Increase activity in multi-family loans. This is a more popular program AHFC is offering around the State. Amendment to front section may be requested for increase of loans. Commercial paper program returned to domestic from foreign. HUD recognizes them of leading in the U.S. AHFC received upgrade on bond rating. They had been penalized for years. Commends Legislature and Governor for making this possible. Working very hard to maintain good record. $36 million requested for FY 2000 and explains the breakdown. Three positions for mortgage department to keep up with loan program. One position for Gateway in Anchorage to help provide training to be funded by Federal HUD dollars. CO-CHAIR TORGERSON Asks cash flow and assets be explained. MR. FAUSKE Many funds restricted because they are operating cash. They do not have taxing authority. Must have adequate fund balances that allow them to move in and out of the market. They do have cash on hand which allowed them to go into the market on their most recent bond. Do well on their loan activity. CO-CHAIR TORGERSON Needs more data on this but will not take up committee time. MR. FAUSKE Will provide the co-chair with requested information. SENATOR PHILLIPS Re: slowdown in request for loans. Feels this is barometer of the economy. However recognizes this is January. MR. FAUSKE Have been following oil prices carefully and latest situation of British Petroleum layoff of approximately 600 employees. Will furnish information to Senator Phillips office as soon as possible. SENATOR PHILLIPS Refers to sister working in credit office and feels this could be a critical situation. AHFC will be first indicator of this situation. SENATOR DONLEY Subsidy or discount less than the going rate for certain communities in the State and not others. List of communities that this applies to. Is cut-off at 1,400? JOHN BITNEY It is 1,600 and no accessible by rail or road. SENATOR DONLEY Poor folks in Anchorage, Fairbanks or Juneau may not be able to qualify? This is inequitable. Should be based on need and not where one lives. Requests spreadsheet reflecting this information. MR. FAUSKE AHFC builds up arbitrage and explains how it must be used. If exceeds the rate must be reimbursed to the Federal government. Actual cost on favorable side for AHFC however if they do not use the monies they leave the State. Can provide information as to how loan works. SENATOR DONLEY May want to apply left over arbitrage to another program. MR. FAUSKE Have provided extra funds in Anchorage and Fairbanks; also the North Slope. SENATOR DONLEY What would it cost to expand some of the other programs into other areas? He cited AS 18.56.420(a). MR. FAUSKE Have not done much taxable work, however there is a great need. Great deal of discussion to expand savings benefits to all programs in the State and he supports this concept. He is looking into federal reins attached to some loan programs. Will report as they are trying to fast track this also. They are currently at about 30% of the market. Want to be able to compete more to keep dollars in Alaska. He explained They were the tax-exempt side. Have been analyzing this for some time. 070 SENATOR WILKEN Asks explanation of homeownership. Asks for data to be provided. MR. FAUSKE Uses data from Department of Labor and will supply information to the committee. JOHN BITNEY Invited to join the committee. All programs operated at the level they were approved. Homeless, weatherization funds being requested at same level as always. Public housing and renovation have different projects. Showing more than the total of last year. This may be because they were not funded in prior years. In response to Senator Torgerson, only new program energy efficiency program. Trying to come up with new standards as mandated by law. MR. FAUSKE Would like to see more testing done in Alaska. Fairbanks represents the best area to test according to scientists. Tape: SFC - 99 #14, Side A 9:40 AM MR. BITNEY Continues comments to committee. Re: low-income senior housing facility in Fairbanks and the Riverbend school in Juneau. MR. FAUSKE Closing comments. Contacted by Union Labor Life Insurance. Wanted to know if they are interested in purchasing the building they are in. Has notified Legislature this offer was made to them. Would provide a savings for them. Presently in lease situation. However, situation must be analyzed. Vacancy rate for commercial is only at 2% in Anchorage. If AHFC does not own it some other Alaska firm should. SENATOR DONLEY Real tough time with the capital budget this year. Asks impact of spreading out some of the phasing on projects. Would there be any options? MR. FAUSKE Will provide breakdown. SENATOR DONLEY Perhaps this could be done over several years rather than all at once. SENATOR TORGERSON Thanked AHFC for their presentation. Next meeting for Monday regarding Y2K at 9:00 a.m. Adjourned meeting at approximately 10:51 a.m. SENATE FINANCE COMMITTEE LOG NOTES 01/29/99 SFC-99 12 01/29/99