Legislature(2003 - 2004)

04/24/2003 09:08 AM House CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
HB 264-STATE CONSTR. PROJECTS; REVIEW/INSPECTION                                                                              
CHAIR MORGAN announced  that the only order of  business would be                                                               
HOUSE BILL  NO. 264, "An  Act relating  to the review  of certain                                                               
state public  construction projects for compliance  with building                                                               
and other  safety codes,  relating to  the inspection  of certain                                                               
state public  construction projects, and exempting  certain state                                                               
public  construction  projects  from obtaining  building  permits                                                               
from   municipalities,    from   municipal    inspection   during                                                               
construction, and  from complying with a  review requirement; and                                                               
providing for an effective date."                                                                                               
Number 0073                                                                                                                     
REPRESENTATIVE NORMAN  ROKEBERG, Alaska State  Legislature, spoke                                                               
as the sponsor  of HB 264.   He began by mentioning  that the Ted                                                               
Stevens   Anchorage   International   Airport  (TSAIA)   is   the                                                               
motivation  for  the  introduction  of HB  264.    Representative                                                               
Rokeberg explained  that the legislature entered  into agreements                                                               
with the  administration to  enter into  agreements with  the air                                                               
carriers for a  large construction project that would  add to and                                                               
rebuild Concourse C  and other amenities.  This  project has been                                                               
delayed due to  seismic designs, plan checking,  and review prior                                                               
to the issuance  of building permits.   These delays precipitated                                                               
a recent  joint meeting  of the  House and  Senate Transportation                                                               
Standing    Committees   during    which   the    Department   of                                                               
Transportation  & Public  Facilities (DOT&PF)  discussed the  $33                                                               
million in  cost overruns resulting  from "this breakdown  in the                                                               
planning process."   The aforementioned is part  of the committee                                                               
packet.   The  committee  packet should  also  contain the  Joint                                                               
Committee  on   Legislative  Budget  and  Audit   review  of  the                                                               
situation, which  suggested the need for  remedial legislation in                                                               
order to ensure that [the  delays and cost overruns] don't happen                                                               
Number 0293                                                                                                                     
REPRESENTATIVE  ROKEBERG  explained  that   HB  264  would  allow                                                               
DOT&PF,   for  projects   over  $1   million  in   valuation,  to                                                               
immediately   have   the   plan   reviewed   by   a   third-party                                                               
organization, such as the International  Code Council (ICC).  The                                                               
issue  is the  relationship between  the state,  DOT&PF, and  the                                                               
municipal  governments   that  have  plan  reviews   or  building                                                               
officials in  the jurisdiction  [of the  project].   He indicated                                                               
that   mainly  the   larger  communities,   such  as   Anchorage,                                                               
Fairbanks, and  Juneau, have plan reviews  by building officials.                                                               
Typically,  the process  is such  that one  would obtain  working                                                               
drawings from  an architect/consulting  engineer and  those plans                                                               
would be  taken to the  building officials for review  on matters                                                               
of zoning and  fire as well as the  various building disciplines.                                                               
Therefore, there will be variations  between the codes of various                                                               
REPRESENTATIVE ROKEBERG  related his understanding that  in order                                                               
to expedite  large projects there  would usually be  an agreement                                                               
between   the  developer,   the  building   officials,  and   the                                                               
municipality  to  send  the  plans  for  review.    However,  the                                                               
aforementioned  didn't occur  with TSAIA.   He  opined that  such                                                               
review could've avoided  the almost two years of  delay and saved                                                               
the  state considerable  money.   However, the  current situation                                                               
means that the department will  have to return to the legislature                                                               
for further bonding authorization.                                                                                              
REPRESENTATIVE  ROKEBERG concluded  by noting  that there  may be                                                               
some technical issues that need to  be worked out.  He noted that                                                               
HB 264  has three  committees of referral  and if  this committee                                                               
decides to move  it to the next committee of  referral, the House                                                               
Labor and  Commerce Standing Committee,  he pledged to  work with                                                               
all  involved parties  over the  interim.   He announced  that he                                                               
didn't intend  for this legislation  to move through  the process                                                               
this session.   His intention, he  said, is to focus  on the plan                                                               
checking,  however the  current  legislation  doesn't quite  meet                                                               
that goal.                                                                                                                      
Number 0812                                                                                                                     
REPRESENTATIVE  CISSNA commented  that this  problem couldn't  be                                                               
unique  to Alaska.   Therefore,  she  inquired as  to what  other                                                               
states do in similar situations.                                                                                                
REPRESENTATIVE  ROKEBERG, speaking  from his  personal background                                                               
in real  estate, related  that this  [third-party plan  check] is                                                               
frequently performed.  In Alaska,  construction is typically done                                                               
in the spring and summer.   Therefore, the departments performing                                                               
building  checks  can't  manage  the volume  created  during  the                                                               
concentrated flurry  of building.   The [third-party  plan check]                                                               
has been  used in the past  in order to avoid  the bottleneck and                                                               
ensure  that projects  proceed in  a timely  manner.   In further                                                               
response  to   Representative  Cissna,   Representative  Rokeberg                                                               
pointed  out  that the  audit  done  by  the Joint  Committee  on                                                               
Legislative  Budget and  Audit specifies:   "Local  regulation of                                                               
state construction is  not a universal practice  in other states.                                                               
Our survey  of the practices  of 24 other states  determined that                                                               
state construction  is not subject  to local building  permits in                                                               
18 of  those 24 states."   Whether the  state is even  subject to                                                               
local building review is one of the issues, he said.                                                                            
Number 1047                                                                                                                     
REPRESENTATIVE  CISSNA   highlighted  the  importance   of  local                                                               
knowledge  in these  situations.   She  recalled  that after  the                                                               
tidal wave in  Kodiak, experts from "Urban Renewal"  came in from                                                               
Washington, D.C., and  planned the community below  the high tide                                                               
line.   Therefore, she  asked if the  local [officials]  could be                                                               
part of the team.                                                                                                               
REPRESENTATIVE  ROKEBERG agreed  with  Representative Cissna  and                                                               
related that  the intention of  HB 264 isn't to  circumvent local                                                               
control, particularly with regard  to land use planning elements.                                                               
This  legislation focuses  on the  architectural and  engineering                                                               
drawings  for plan  review.   Whether the  standards adopted  are                                                               
national  or regional  building codes,  professionals from  other                                                               
jurisdictions  can  know the  code  as  well  as the  local  plan                                                               
checkers.  He  noted that the legislation needs to  be tweaked so                                                               
that local  input is included.   In fact,  Alaska has a  law that                                                               
requires local plan checking in order to obtain a local permit.                                                                 
Number 1179                                                                                                                     
REPRESENTATIVE  SAMUELS informed  the committee  that before  the                                                               
TSAIA  project  started,  the  rental  fees of  one  of  the  air                                                               
carriers  increased by  about two-fold.   Therefore,  for a  very                                                               
small  company the  excess fees  amounted to  about $200,000  and                                                               
those excess fees aren't going  to generate any extra passengers,                                                               
and therefore  the fares  will be raised.   Furthermore,  all the                                                               
employees of this small air carrier are impacted.                                                                               
REPRESENTATIVE  KOOKESH  asked  if   the  rental  fees  to  which                                                               
Representative  Samuels spoke  would've been  raised anyway,  had                                                               
the project been completed on time.                                                                                             
REPRESENTATIVE SAMUELS said that all  of the delays have resulted                                                               
in what  will amount to an  extra $50 million in  fees.  Although                                                               
the  rental  fees  would  have   increased,  they  wouldn't  have                                                               
Number 1351                                                                                                                     
REPRESENTATIVE  KOOKESH  turned  to  the  zero  fiscal  note  and                                                               
inquired as to who will pay  for the review performed by national                                                               
REPRESENTATIVE  ROKEBERG   explained  that  currently   the  plan                                                               
checking  is  carried out  by  the  municipal government.    "The                                                               
developer  of the  state is  paying  for it  now," he  specified.                                                               
With  regard to  who will  receive the  cost of  the plan  check,                                                               
Representative Rokeberg  related that  there would be  an offset.                                                               
The  presumption   is  that  if   the  fee  isn't  paid   to  the                                                               
municipality, it would be paid  to the third party, and therefore                                                               
it would be a wash.                                                                                                             
REPRESENTATIVE KOOKESH said that he didn't agree.                                                                               
REPRESENTATIVE  ROKEBERG acknowledged  that  he  didn't have  the                                                               
empirical evidence to support the presumption.                                                                                  
CHAIR MORGAN inquired as to how  much more bonding is going to be                                                               
requested and who will pay for it.                                                                                              
REPRESENTATIVE  ROKEBERG informed  the committee  that DOT&PF  is                                                               
coming to the  legislature to request that the dollar  cap on the                                                               
level of bonding be raised.  He  recalled that it is in the $120-                                                               
$180  million  range.   He  explained  that  the payment  of  the                                                               
aforementioned would  come from the  revenues of the  airport, to                                                               
which  Representative Samuels  was  referring.   He  acknowledged                                                               
that there  is a connection  between the operating costs  and the                                                               
fare structure and ultimate cost to the public.                                                                                 
CHAIR MORGAN highlighted that Anchorage  is the hub of the state,                                                               
although it's  becoming more difficult  to get to  Alaska because                                                               
the air carriers face [increased fees].   However, in the end the                                                               
consumer will be the one that pays for the additional bonding.                                                                  
REPRESENTATIVE ROKEBERG remarked that the  intent of HB 264 is to                                                               
avoid  the mistakes  of  the  past and  lower  the  costs to  the                                                               
Number 1566                                                                                                                     
TIM  ROGERS,  Legislative  Program Coordinator,  Municipality  of                                                               
Anchorage   (MOA),  said   that  MOA   shares  the   frustrations                                                               
associated with  the cost overruns  and the time  delays involved                                                               
with the  TSAIA expansion.   He offered that if  the municipality                                                               
can do  anything to streamline the  process, it wants to  be able                                                               
to do so.   However, he said  he wasn't sure that HB  264, in its                                                               
current state, would've solved the  problems that occurred in the                                                               
MR.  ROGERS turned  attention to  a letter  from Craig  Campbell,                                                               
then  Executive Director,  Office of  Planning, Development,  and                                                               
Public  Works, MOA,  dated June  6, 2002.   This  letter presents                                                               
MOA's side of some of the issues  cited in the audit.  Mr. Rogers                                                               
related that  the municipality contends  that the delays  are due                                                               
to engineering  defects caused by  the consultant engineer.   The                                                               
municipality did hire  an engineering firm to  review the project                                                               
and act  as MOA's  agent.   As the  letter specifies,  there were                                                               
considerable   delays  in   making  changes   suggested  by   the                                                               
consulting engineering  firm.   However, Mr.  Rogers acknowledged                                                               
that the  municipality isn't entirely  blameless --  there's room                                                               
for improvement.   Mr. Rogers  said that [MOA] has  realized that                                                               
the   permitting  process   for  large   projects  is   extremely                                                               
cumbersome and,  in a  lot of  cases, for good  reason.   Work to                                                               
streamline  the permitting  process began  in 1994.   Mr.  Rogers                                                               
said that [MOA] is more than  willing to work with the sponsor in                                                               
order to  develop ways in which  to streamline the process.   Mr.                                                               
Rogers  reiterated  that he  wasn't  sure  that  HB 264,  in  its                                                               
current state, would accomplish what everyone is after.                                                                         
REPRESENTATIVE KOOKESH returned  to the issue of  the zero fiscal                                                               
note and  inquired as  to who  would pay for  the third  party or                                                               
local engineers to oversee these projects.                                                                                      
Number 1794                                                                                                                     
NANCY  SLAGLE, Director,  Administrative Services,  Department of                                                               
Transportation  &  Public Facilities,  noted  that  she isn't  an                                                               
expert  on  the matter  of  building  permits.   In  response  to                                                               
Representative Kookesh,  Ms. Slagle  said that  the cost  for the                                                               
third party or local engineer to  oversee a project would be part                                                               
of  the cost  of the  project.   For instance,  in the  past when                                                               
permitting fees were paid to  the local municipality/city, it was                                                               
part of  the construction  cost as  would be  the case  with this                                                               
requirement.   There  would be  a slight  offset.   She said  she                                                               
didn't  believe  this  legislation  would  create  a  major  cost                                                               
savings  or cost  to  the  project.   From  that perspective,  it                                                               
should zero out.                                                                                                                
Number 1838                                                                                                                     
REPRESENTATIVE CISSNA related her  assumption that it's difficult                                                               
to guesstimate  the impact of  this legislation,  especially when                                                               
the sponsor has expressed the need to fine-tune the legislation.                                                                
MS.  SLAGLE  acknowledged that  many  things  can happen  in  the                                                               
building of  a facility and  those things could  cause additional                                                               
cost  overruns.   In  the  case of  TSAIA,  the  delays kept  the                                                               
contractor  idle  for  a  couple  of  years,  which  was  costly.                                                               
Furthermore, the  amount of administrative overhead  necessary to                                                               
respond to  the concerns  by the  municipality was  a cost.   Ms.                                                               
Slagle agreed  with Representative Cissna that  it's difficult to                                                               
estimate   the  cost   of  this   legislation.     However,  this                                                               
legislation may  provide the state  with a bit more  control over                                                               
its resources than otherwise.                                                                                                   
REPRESENTATIVE  KOOKESH  indicated  that   he  hasn't  seen  many                                                               
projects being  done in Anchorage  for less than $1  million; the                                                               
cap seems a little low, which is  of concern.  Very little can be                                                               
built for less than $1 million and have local involvement.                                                                      
MS. SLAGLE related her understanding  that in the last five years                                                               
there have  only been one or  two projects that would  fall under                                                               
this $1 million cap.                                                                                                            
Number 2014                                                                                                                     
SAM  KITO,  III,  Transportation  Development  Manager,  Planning                                                               
Division, Department of Community  Development, City & Borough of                                                               
Juneau,  mentioned that  the committee  should  receive a  letter                                                               
from the City & Borough of  Juneau, which does have concerns with                                                               
regard to HB  264.  For Juneau and many  communities in the Lower                                                               
48 and Alaska  with building officials, there are a  lot of local                                                               
requirements  for projects.   This  legislation  would force  the                                                               
creation of a  new industry of people who  would understand, from                                                               
a building  official perspective,  how to review  a set  of plans                                                               
for code  review compliance with  national and local codes.   Mr.                                                               
Kito   related  his   understanding  that   [the  city]   greatly                                                               
subsidizes the building  permits that come into the  office - the                                                               
fees collected don't reimburse the  cost of the staff required to                                                               
do  the review.    Therefore, one  paying for  those  hours on  a                                                               
project would result in extra cost  to the project.  With respect                                                               
to  the  planning  commission  review  of  a  project,  there  is                                                               
concern.   Although  the legislation  includes  an exemption  for                                                               
highway  and road  projects, no  zoning and  planning review  for                                                               
buildings would occur.   However, the city  has many requirements                                                               
for density  and parking that  are addressed in the  planning and                                                               
zoning review, which  is an area in which the  city would like to                                                               
be involved.                                                                                                                    
Number 2127                                                                                                                     
REPRESENTATIVE  ROKEBERG  addressed  Mr.  Kito's  last  point  by                                                               
saying that  it wasn't his intent  to take a municipality  out of                                                               
the loop  with regard to the  planning and zoning aspects  of the                                                               
building permitting process.   He assured everyone  that he would                                                               
work on  that to ensure  that municipalities will be  included in                                                               
that process.   With regard  to the  creation of a  new industry,                                                               
Representative Rokeberg disagreed because  there are already many                                                               
organizations that perform this [third-party review].                                                                           
CHAIR MORGAN,  upon determining  that there was  no one  else who                                                               
wished to testify, closed the public testimony.                                                                                 
Number 2218                                                                                                                     
REPRESENTATIVE   ANDERSON   indicated   his  belief   that   this                                                               
legislation  falls  under the  purview  of  the House  Labor  and                                                               
Commerce  Standing  Committee, which  is  the  next committee  of                                                               
REPRESENTATIVE KOOKESH  commented that  this committee  should do                                                               
its job and do as much  as possible before moving the legislation                                                               
to its  next committee of referral.   He announced that  he would                                                               
object  on  the basis  that  he  wanted  to  be involved  in  the                                                               
REPRESENTATIVE  ANDERSON   remarked  that  this   legislation  is                                                               
important.   He [as  the chair  of the  House Labor  and Commerce                                                               
Standing   Committee]   offered   his   commitment   to   include                                                               
Representative Kookesh  during the  committee's discussion  of HB
REPRESENTATIVE KOOKESH reiterated his  belief that this committee                                                               
should do its job.                                                                                                              
Number 2302                                                                                                                     
REPRESENTATIVE  CISSNA stated  her agreement  with Representative                                                               
Kookesh.   She  assumed that  HB 264  was referred  to the  House                                                               
Community and  Regional Affairs Standing Committee  because state                                                               
projects are built throughout the  state in communities that vary                                                               
in regard to  the local community's involvement.  She  asked if a                                                               
subcommittee  of   the  House  Community  and   Regional  Affairs                                                               
Standing  Committee could  be  created in  order  to address  the                                                               
issues under this committee's purview.                                                                                          
REPRESENTATIVE WOLF  said that he  has no problem passing  HB 264                                                               
from committee.  However, he noted  concern with regard to the $1                                                               
million  cap,  which  he  indicated   was  low.    As  a  retired                                                               
contractor, Representative  Wolf said that  he has all  too often                                                               
seen  that city  officials lack  the time  to perform  the proper                                                               
third-party  review  and plan  check.    He mentioned  that  [the                                                               
third-party review and plan check] will save the state money.                                                                   
CHAIR MORGAN  remarked that HB  264 is  a good bill,  although he                                                               
said  he has  the same  concerns as  Representatives Kookesh  and                                                               
Wolf.   Chair  Morgan  said  that he  did  believe the  sponsor's                                                               
commitment  to   work  with  those  interested   in  the  matter.                                                               
Therefore, he noted that he doesn't  have a problem moving HB 264                                                               
to the House Labor and Commerce Standing Committee.                                                                             
Number 2480                                                                                                                     
REPRESENTATIVE ANDERSON moved  to report HB 246  out of committee                                                               
with  individual  recommendations  and  the  accompanying  fiscal                                                               
REPRESENTATIVE KOOKESH objected.                                                                                                
A  roll  call  vote  was  taken.    Representatives  Wolf,  Kott,                                                               
Anderson,  and Morgan  voted in  favor of  reporting HB  246 from                                                               
committee.   Representatives  Cissna  and  Kookesh voted  against                                                               
reporting it from committee.   Therefore, HB 246 was reported out                                                               
of the  House Community and  Regional Affairs  Standing Committee                                                               
by a vote of 4-2.                                                                                                               

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