Legislature(1995 - 1996)

03/12/1996 01:40 PM FIN

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
txt
  HOUSE BILL NO. 466                                                           
                                                                               
                                                                               
                                1                                              
                                                                               
                                                                               
       "An Act establishing the Adak Reuse Authority."                         
                                                                               
  REPRESENTATIVE  CARL MOSES,  Sponsor  HB  466, testified  in                 
  support of  the legislation.    He provided  members with  a                 
  proposed  Committee  Substitute  for  HB  466,  #9-LS1580\F,                 
  3/11/96 (copy on file).  He noted that Terri Lauterbach in a                 
  memorandum  dated  3/11/96  clarified  the  relationship  of                 
  subsections (a) and (b) in AS 30.17.260 (copy on file).                      
                                                                               
  TIM BENINTENDI,  STAFF, REPRESENTATIVE  CARL MOSES  provided                 
  members with a memorandum dated 3/12/96, summarizing changes                 
  made by the proposed committee substitute (Attachment 1).                    
                                                                               
  Representative Parnell referred to  page 5, lines 18 to  21.                 
  He  noted  that  the Administration  has  the  discretion to                 
  determine whether sufficient money is  available to the Adak                 
  Reuse Authority with respect to each proposed transfer.  Mr.                 
  Benintendi explained that  this provision provides oversight                 
  and addresses concerns regarding the State's liability.  The                 
  language  expands oversight  to the Administration  and ties                 
  the receiving of federal assets  to federal funding to  help                 
  develop the  assets.   He did  not think  that the  language                 
  would impinge  upon the authority of the Legislature to make                 
  similar determinations.   Representative Parnell  summarized                 
  that  the  Office of  Management and  Budget  has to  act in                 
  accordance to  legislative  appropriation  or  authority  to                 
  receive federal appropriations.                                              
                                                                               
  Representative Parnell referred to page  7, lines 14 and 15.                 
  He noted  that the bond limit was  changed from $400 to $100                 
  million dollars.  Mr. Benintendi explained that a total bond                 
  sum of $400  million dollars was deemed to be excessive.  He                 
  stated that $100 million dollars is more realistic.                          
                                                                               
  Representative Parnell  referred to page  11, lines  7 -  9.                 
  Mr. Benintendi  explained that  this provision would  assure                 
  that  any  applicant entering  into  activity with  the Adak                 
  Reuse Authority is not in arrears on any taxes due the state                 
  of Alaska.  Representative Parnell noted that  line 9, "paid                 
  all taxes due" may be changed to "current on all taxes due."                 
  Co-Chair  Hanley noted  that  taxes  can  be  due  while  an                 
  individual is under  appeal or  on a payment  schedule.   He                 
  noted that the  intent is  not to preclude  someone who  has                 
  appealed the process, had  their taxes reduced and are  on a                 
  schedule for  the  remaining amount.    He stated  that  the                 
  amount in default  or in arrears  needs to be  distinguished                 
  from what is due.                                                            
                                                                               
  Representative  Parnell  cited  page  13,  line  17:    "The                 
  municipality may not  levy taxes  to pay the  indebtedness."                 
  Mr. Benintendi stated  that the  language could be  amended.                 
  He  noted that  the intent is  that the  assets of  the Adak                 
                                                                               
                                2                                              
                                                                               
                                                                               
  Reuse Authority cover the debt.                                              
                                                                               
  Representative  Parnell referred to  page 15,  line 21.   He                 
  asked   what    other   obligations    could   be    issued.                 
  Representative  Moses referred  to  obligations under  lease                 
  agreements.                                                                  
                                                                               
  Representative Martin stressed the importance of legislative                 
  oversight.   He  questioned if  arrearage  of taxes  to  the                 
  federal government would  be included under page 11, lines 7                 
  - 9.  Mr. Benintendi stressed that the concern is to protect                 
  the State.   Representative  Martin noted  that the  federal                 
  government takes assets  to cover arrears of  federal taxes.                 
  Representative Moses did not think  arrears of federal taxes                 
  would  be the  Adak Reuse  Authority's  responsibility other                 
  than to discover an applicant's financial capability.                        
                                                                               
  Representative Brown  cited page  14, lines  13 -  17.   Mr.                 
  Benintendi explained  that the  objective was  to facilitate                 
  the autonomy of  the Adak  Reuse Authority.   Representative                 
  Brown observed that  page 14, line  21 states:  "To  further                 
  ensure  the  effective  budgetary  decision  making  by  the                 
  legislature, the authority  shall..."    She questioned  who                 
  owns  the assets if  they do not  belong to the  State.  She                 
  pointed out that  the legislation sets  up an entity of  the                 
  State.  A corporation  would be created to run  and generate                 
  economic activity using  assets the State receives  from the                 
  federal government.  She acknowledged  that the assets would                 
  be transferred to a  local municipality after  organization.                 
  She  asserted  that  until  the   transfer  the  assets  and                 
  obligations would be the State's.                                            
                                                                               
  JIM BALDWIN,  ASSISTANT ATTORNEY GENERAL, DEPARTMENT  OF LAW                 
  observed that the language in HB  466 is similar to enabling                 
  language for the  Alaska Industrial  Development and  Export                 
  Authority (AIDEA).  He emphasized that the intent is to make                 
  funds separate from  the state treasury.  They are corporate                 
  receipts.  He noted that language referring to the Executive                 
  Budget Act is similar to language governing AIDEA.  He noted                 
  that under this language  the Legislature and Administration                 
  have only required  that AIDEA  submit its operating  costs.                 
  Loan  programs  and  capital expenditures  are  not  part of                 
  AIDEA's   budget   submission.      The  Alaska   Industrial                 
  Development and  Export Authority's  budget submissions  are                 
  shown  as  corporate  receipts  not  as state  general  fund                 
  receipts.                                                                    
                                                                               
  Mr. Baldwin stressed that public corporations are created to                 
  be separate  entities and  to have  their own  assets.   The                 
  corporation itself may  be an asset of the State,  but it is                 
  created to  have separate assets.   Creditors can  only seek                 
  recovery  against  the corporation's  assets  if there  is a                 
                                                                               
                                3                                              
                                                                               
                                                                               
  default.  He emphasized that the legislation states that the                 
  Adak Reuse Authority  is independent from  the State.  As  a                 
  creature of the  State the  Legislature can specify  varying                 
  ways for handling their finance and accounts.  He noted that                 
  finances  and accounts  are  handled  differently among  the                 
  various public corporations.    There  is no set formula  to                 
  follow.                                                                      
                                                                               
  Representative  Brown  maintained  that AIDEA's  assets  are                 
  considered as state assets.  She noted that they are part of                 
  the budget plan proposed for appropriation.  Co-Chair Hanley                 
  clarified that AIDEA's assets would be  paid to the State in                 
  the form of a dividend.  Mr. Baldwin stressed  that AIDEA is                 
  surrendering its  assets.  He  maintained that if  AIDEA did                 
  not surrender its assets  it would have to be  dissolved for                 
  the State to access them.                                                    
                                                                               
  Co-Chair Hanley  noted that the  Legislature retains control                 
  of   AIDEA's   operating  budget.      Representative  Brown                 
  summarized  that the Adak Reuse Authority's operating budget                 
  would be under the Executive Budget Act.  Mr. Baldwin agreed                 
  that the Adak  Reuse Authority's  operating budget would  be                 
  submitted through the Office of Management and Budget in the                 
  general appropriation bill.                                                  
                                                                               
  Representative  Brown asked  if  conditions  of the  federal                 
  transfer would be  affected by  the language that  expresses                 
  that the land does not belong  to the State.  Representative                 
  Moses  replied  that  this  implies   that  the  Adak  Reuse                 
  Authority is not the direct responsibility of the State.                     
                                                                               
  LAMAR COTTEN,  DEPUTY COMMISSIONER, DEPARTMENT  OF COMMUNITY                 
  AND REGIONAL AFFAIRS  AND CHAIRMAN,  LOCAL REUSE Adak  Reuse                 
  Authority PLANNING ACTIVITIES gave a brief background on the                 
  closure of Adak.   He observed that the Navy  approached the                 
  state of Alaska indicating that Adak would be on the August,                 
  1995 Base  Realignment and  Closure list  and scheduled  for                 
  closure on January 1,  1998.  The Navy assisted the State in                 
  developing a reuse process.  The  process is broken into two                 
  components,  planning  and  implementation.   He  noted  the                 
  absence of a local entity.                                                   
                                                                               
  Mr. Cotten observed that a Local  Reuse Adak Reuse Authority                 
  Planning Committee was created by the State.   He emphasized                 
  the  Committee's  intent  to  involve  local groups  in  the                 
  planning process.   He noted the  diversity of interests  in                 
  the region.  He observed that  the local school district and                 
  the  U.S.  Department  of  Commerce  provided  funds  for  a                 
  conceptual  reuse plan.   He noted  that a  preliminary plan                 
  will  be  ready  in  May.    He  noted  reuse  potential  in                 
  transportation,  fishing, and storage.   He discussed assets                 
  of the base.  He observed that assets are estimated  at $1.0                 
                                                                               
                                4                                              
                                                                               
                                                                               
  - $3.0 billion dollars.                                                      
                                                                               
  Mr.  Cotten noted that  it is the  intent of the  Adak Reuse                 
  Authority   Planning   Committee  to   finish   the  initial                 
  conceptual plan by May.   A final plan along  with marketing                 
  activities would be completed in the summer.                                 
                                                                               
  Mr. Cotten observed that the base  is located on lands which                 
  will return to  the Department of  Interior.  He noted  that                 
  the Department  of Interior is undergoing  negotiations with                 
  the Aleut Corporation  in regards to  the lands.  The  Aleut                 
  Corporation is interested in obtaining the base  lands.  The                 
  State is  not opposed to  ownership of the base  land by the                 
  Aleut Corporation.   The State's  position is that  the Adak                 
  Reuse Authority should  be self  sustaining.  State  general                 
  fund support should not be needed.  He noted that there is a                 
  provision in  the bill that  says the  Adak Reuse  Authority                 
  must demonstrate the means to operate the base for two years                 
  without  state funds.  To  generate operating funds the Adak                 
  Reuse Authority has to  be in the position to  receive rents                 
  and  other income.   The Navy  estimated base  operation and                 
  maintenance  costs   for  full  capacity  at  $30.0  million                 
  dollars.  The State does not anticipate that the entire base                 
  and  assets will  be  assumed.   The  planning process  will                 
  dictate  which  parts of  the  base  will be  obtained.   He                 
  observed that there are 600 - 700 housing units on the base.                 
  He pointed out  that these housing  units will be of  little                 
  value if they are not maintained.                                            
                                                                               
  Mr.  Cotten  noted  that Senator  Steven's  office  has been                 
  involved in discussions  regarding the base.   He emphasized                 
  the  Senator could  introduce  federal legislation  at  some                 
  future date.                                                                 
                                                                               
  Mr.  Cotten  explained  that  the  State is  concerned  that                 
  somebody  could  get the  key assets  on  the base  with the                 
  expectations that the  State or a municipality would pick up                 
  traditional maintenance and operation activity.                              
                                                                               
  Mr. Cotten referred to page  13, line 11.  He observed  that                 
  the legislation assumes  that assets and liabilities  of the                 
  Adak Reuse Authority would be assumed by a municipality.  He                 
  noted  that  the city  of  Unalaska and  the  Aleutians West                 
  Borough  have expressed interest  in incorporating the base.                 
  He added that base civilians have also expressed interest in                 
  creating a second  class city.   He stressed that the  State                 
  would not support  transference of the Adak  Reuse Authority                 
  to a second class city.                                                      
                                                                               
  Representative Brown asked if the  fiscal note covers public                 
  safety and education services.  Mr. Cotten stated that these                 
  services are not  covered by the  fiscal note.  He  stressed                 
                                                                               
                                5                                              
                                                                               
                                                                               
  that the function of  the assets are to pay  for traditional                 
  operational costs including traditional municipal costs.  He                 
  cited page 5, lines  14 - 21.   This provision would  assure                 
  that funds are available before the  assets are assumed.  He                 
  emphasized  that  the  base  should   be  driven  by  public                 
  contracts with federal agencies and  the private sector.  He                 
  explained that the  federal government  will continue  these                 
  services  in  the  interim.    He  added  that  the  federal                 
  government has  a  major clean-up  responsibility  and  will                 
  maintain a presence until clean-up is completed.                             
                                                                               
  Mr. Cotten  further discussed the Department's  fiscal note.                 
  He observed that  some expenses  in the fiscal  note may  be                 
  covered by revenues from  leasing and renting.  He  asserted                 
  that the fiscal  note reflects  a conservative outlook  that                 
  these operations may  not occur  quickly.   The fiscal  note                 
  provides for an executive  director, staff assistant, travel                 
  and legal costs.                                                             
                                                                               
  Representative Mulder  felt that  the fiscal  note could  be                 
  reduced.  He noted that legal work could be performed by the                 
  Office of the Attorney General.  Mr. Cotten agreed that work                 
  would  be  performed  through  the  Office of  the  Attorney                 
  General.   He did not  know if the  Department of  Law would                 
  have to be reimbursed.  Representative Moses emphasized that                 
  federal transition money should be available.                                
                                                                               
  (Tape Change, HFC 96-72, Side 2)                                             
                                                                               
  ELARY GROMOFF, JR., ALEUT CORPORATION provided  members with                 
  a  letter  from the  Corporation  to Co-Chair  Hanley, dated                 
  3/11/96  regarding  proposed  changes  to  the   legislation                 
  (Attachment  2).    He emphasized  the  Aleut  Corporation's                 
  willingness to work with  the state of Alaska  regarding the                 
  reuse of  Adak.  He  noted that Adak is  a traditional Aleut                 
  land.  He  observed that the Aleut Corporation  is currently                 
  negotiating  with the federal  government on land transfers.                 
  He  maintained  that  the Department  of  Interior  wants to                 
  transfer  the lands to  the Aleut Corporation.   He stressed                 
  the need for equal representation.   He noted that the local                 
  Aleut community  is composed  of  Village Corporations,  the                 
  regional corporation and tribal governments.  He referred to                 
  a memorandum provided to members from the Aleut Corporation,                 
  dated   3/12/96   regarding   the   Corporation's   concerns                 
  (Attachment 3).                                                              
                                                                               
  CHRIS   GATES,   ATTORNEY,   ALEUT  CORPORATION   emphasized                 
  cooperation.  He requested that a majority of the Adak Reuse                 
  Authority's Board members come from the region.  He observed                 
  that the legislation  states that  the Adak Reuse  Authority                 
  "shall" be integrated into the  municipality within one year                 
  after incorporation.   He expressed concern that  assets not                 
                                                                               
                                6                                              
                                                                               
                                                                               
  be stripped by a municipality that  may not be interested in                 
  seeing Adak effectively developed.  He asked that provisions                 
  be included that would  prevent stripping assets for 4  to 5                 
  years.   He  emphasized that Adak  needs to  be aggressively                 
  marketed in  order to create 500 full-time year around jobs.                 
  He  maintained that  these jobs  must exist  to justify  the                 
  starting  infrastructure.    He  stressed   that  the  Aleut                 
  Corporation is  prepared  to  immediately  begin  aggressive                 
  marketing.                                                                   
                                                                               
  In response  to a  question by  Representative Kohring,  Mr.                 
  Gromoff noted that the Navy estimates  the value of the base                 
  at $2.8 billion dollars.                                                     
                                                                               
  Mr. Gates summarized discussions with the U.S. Department of                 
  Fish  and  Wildlife.   He noted  that the  Aleut Corporation                 
  would  allow the  U.S.  Department of  Fish and  Wildlife to                 
  retain  65,000 to 75,000 acres that were identified for land                 
  selection by  the Corporation  in exchange  for base  lands.                 
  Mr. Gromoff  noted that  the   U.S. Department  of Fish  and                 
  Wildlife  consider the base  lands to  be compromised.   Co-                 
  Chair Hanley clarified that the lands will be exchanged acre                 
  for acre.  Mr.  Gates pointed out that the Aleut  people are                 
  exchanging all  of their  legitimate ANSCA  entitlement land                 
  "to  place  all of  their eggs  in  the Adak  basket."    He                 
  reiterated  the  need for  a  team approach  and substantial                 
  involvement of the Aleut people.                                             
                                                                               
  Representative Brown  asked if  the Aleut Corporation  would                 
  want to own the  land if representation remains the  same as                 
  is currently in the  legislation.   Mr. Gromoff  stated that                 
  the Aleut Corporation would still pursue land ownership.  He                 
  stated that the Aleut Corporation would look at first rights                 
  on  some  Navy  facilities.    He asserted  that  the  Aleut                 
  Corporation will be the land owners.                                         
                                                                               
  Representative Brown referred  to page 13, Succession.   Mr.                 
  Gates requested that "shall" be changed to "may" on page 13,                 
  line 13.   Representative  Brown questioned  if "within  one                 
  year"  could  be deleted.   Mr.  Gates  did not  support the                 
  deletion of "within one year."                                               
                                                                               
  Mr. Gates asked for  a prohibition on stripping  assets from                 
  the Island for  at least  5 years without  a super  majority                 
  vote.   He stressed that operations and maintenance costs at                 
  the base would be a minimum of $10.0 million dollars a year.                 
  He  stated  that   assets  should  remain  in   place  while                 
  aggressive  marketing occurs to assure full-time year around                 
  jobs.                                                                        
                                                                               
  Representative  Mulder   maintained  that  the   Adak  Reuse                 
  Authority is going  to pursue those  avenues which it  finds                 
                                                                               
                                7                                              
                                                                               
                                                                               
  financially  feasible  and economically  advantages  for the                 
  promotion of Adak.  He argued that they would  not strip the                 
  assets for a one time cash out.                                              
                                                                               
  Representative Mulder  stressed that  representation is  the                 
  most important  issue.   He asked  if the  Aleut Corporation                 
  would accept 3 members on the  Board.  Mr. Gromoff responded                 
  that the Corporation  is seeking people representation.   He                 
  suggested  that the Adak Reuse Authority be composed of nine                 
  members with  two appointed  by the  Governor.  He  stressed                 
  that  he  would  at  least  like   to  see  an  equal  vote.                 
  Representative Mulder  noted that the legislation  calls for                 
  seven members on the Adak Reuse Authority.  He stressed that                 
  there needs to be state involvement.   He estimated that the                 
  legislature would take a dim view of assisting a semi-tribal                 
  organization that was  created through ANILCA.   He stressed                 
  that three members on the Adak Reuse Authority would provide                 
  for fair and adequate representation.  He noted that company                 
  towns have a history of failure.                                             
                                                                               
  Mr.  Gromoff  emphasized  that  the  Aleut  Corporation  has                 
  cooperated with the  State.   He stressed the  Corporation's                 
  willingness and ability  to market and  invest in Adak.   He                 
  disagreed that Adak would be similar  to a one company town.                 
  He stressed that the  Aleut Corporation can meet  the Navy's                 
  closure schedule.   He expressed  support for four  regional                 
  members  on   the  Adak   Reuse  Authority's   Board.     He                 
  acknowledged that a  municipality will be needed  to provide                 
  public support.   He stressed that  Adak should be an  Aleut                 
  community.  He pointed to  the high unemployment rate  among                 
  the Aleut people.  He maintained that Adak is an opportunity                 
  to create jobs and opportunities for the Aleut people.                       
                                                                               
  Representative Mulder  asked why  the  Adak Reuse  Authority                 
  would not  meet the Navy's  schedule.  Mr.  Gates questioned                 
  what would happen if the  congressional delegation is unable                 
  to obtain two years worth of funding.                                        
                                                                               
  Mr. Gromoff restated that the Aleut Corporation  is ready to                 
  back  the  plan  with  aggressive  marketing  and  financial                 
  support.    He  stressed that  there  are  no  guarantees of                 
  federal support.  He observed that the Corporation through a                 
  subsidiary offered  to operate  and maintain the  facilities                 
  and contract to the Navy.                                                    
                                                                               
  Mr. Gates added that the legislation requires regulations to                 
  be reviewed by  the Office of  the Lieutenant Governor.   He                 
  restated the  request  to  provide  representation  for  the                 
  region.   He stressed that the people  of the region are the                 
  ones that  will suffer from failure or benefit from success.                 
                                                                               
                                                                               
                                8                                              
                                                                               
                                                                               
  Representative Brown  noted that  the legislation calls  for                 
  three state commissioners to  be members of the Board.   She                 
  questioned if members of the public would have more time and                 
  interest.     Representative  Mulder   suggested  that   the                 
  commissioners be allowed to appoint designees.                               
                                                                               
  Mr. Cotten spoke  in support of  retaining the provision  to                 
  designate three commissioners.  He pointed out that  page 2,                 
  line  1 - 5  allows the commissioners  to appoint designees.                 
  He suggested that in addition to the Department of Community                 
  and Regional  Affairs, the Department  of Transportation and                 
  Public  Facilities,  Department  of  Commerce  and  Economic                 
  Development or Department of Natural  Resources could have a                 
  vested interest in the Adak Reuse Authority.                                 
                                                                               
  Mr. Cotten clarified that  there is no agreement  in regards                 
  to land ownership by  the Aleut Corporation.  He  added that                 
  the legislation creates  an Adak  Reuse Authority that  will                 
  have title  to the  property.   He restated  that the  Local                 
  Reuse Adak Reuse  Authority Planning  Committee will have  a                 
  preliminary plan in  May.   He pointed out  that their  plan                 
  calls for extensive marketing activities.                                    
                                                                               
  Co-Chair Hanley asked if the  sponsor would support language                 
  preventing removal of  assets for  the first 3  to 5  years.                 
  Representative Moses stated  that he  could not imagine  the                 
  Adak  Reuse Authority removing assets.  He spoke against the                 
  proposal to add  language prohibiting removal of assets.  He                 
  maintained that the language would  be too restrictive.  Mr.                 
  Cotten pointed  out that it may be  wise to move some assets                 
  off the Island.  He noted that there will be surplus housing                 
  on the Island.   He stressed the  need for housing  in other                 
  areas of the  region.   Co-Chair Hanley summarized  concerns                 
  that a municipality  could absorb  the Adak Reuse  Authority                 
  only to utilize the assets.                                                  
                                                                               
  Mr. Gates noted  that discussions  have taken place  between                 
  the federal government  and the  Aleut Corporation that  Mr.                 
  Cotten was not privy to.  He maintained that there are draft                 
  agreements for the land transfer.  He asserted that the land                 
  issue is well down the road.  He maintained that this is the                 
  appropriate time  to anticipate  and address  problems.   He                 
  expressed   hope   that   the  Adak   Reuse   Authority  and                 
  municipality will act in good faith, but emphasized the need                 
  for assurances.                                                              
                                                                               
  In response  to a  question by  Representative Parnell,  Mr.                 
  Gates  noted  that the  majority  of  the value  is  in real                 
  property.    Representative Parnell  asked if  real property                 
  should be  restricted.  Mr. Gates asked how generators would                 
  be defined.  Co-Chair Hanley  pointed out that housing would                 
  be real property.                                                            
                                                                               
                                9                                              
                                                                               
                                                                               
  Mr.  Gromoff  noted  that  under  the base  closure  surplus                 
  property will be available for other federal agencies unless                 
  it is identified  in a Reuse  Plan.  The  Navy will have  to                 
  remove equipment that is not identified.  He maintained that                 
  the  Navy  wants  to find  a  way  to keep  as  much  of the                 
  equipment in the  community as possible  due to the cost  of                 
  removal.   He observed that  it would  cost $100.0  thousand                 
  dollars to move each house.                                                  
                                                                               
  KENNETH VASSAR, MUNICIPAL BOND COUNSEL, ANCHORAGE  testified                 
  via the  teleconference network.   He  summarized points  of                 
  concern.    He referred  to page  3,  lines 15  and 16.   He                 
  stressed  that   bond   counsel   generally   desires   more                 
  flexibility,  especially  in   the  case  of  a   brand  new                 
  authority.  He suggested  that subsection (2) be  amended to                 
  read, "to  enter into agreement"  for the  operation of  the                 
  facilities.                                                                  
                                                                               
  Mr. Vassar cited  AS 30.17.110 on page 3.  He noted that the                 
  Adak  Reuse  Authority  might  finance  projects  for  other                 
  entities.    He suggested  that  this be  referenced  in the                 
  legislation.                                                                 
                                                                               
  (Tape Change, HFC 96-73, Side 1)                                             
                                                                               
  Mr. Vassar  addressed page 4, lines 25 -  27.  He noted that                 
  other   authorities   have    the   ability   to    expedite                 
  administrative procedure actions under which regulations may                 
  be in effect immediately  instead of 30 days.   He suggested                 
  that  this ability  would  be  helpful  for the  Adak  Reuse                 
  Authority.                                                                   
                                                                               
  Mr.  Vassar referred to page 5, line 7  - 13.  He noted that                 
  this section prohibits the Adak Reuse Authority from certain                 
  actions.   He  questioned why  the  Adak Reuse  Authority is                 
  prohibited from the  use of state grants,  appropriations or                 
  other  transfers.  He noted that it  is a restriction on the                 
  potential bonding authority of the Adak Reuse Authority.  He                 
  added that (2) in the same section limits the ability of the                 
  Adak Reuse Authority to  finance based upon its asset  base.                 
  The Adak Reuse Authority would be dependent on a facility by                 
  facility revenue bonding  approach.  He  noted that this  is                 
  not consistent with other provisions of the legislation.  He                 
  pointed out  that the  purposes section  refers to  creating                 
  jobs and advancing general prosperity.  He stressed that (2)                 
  is in conflict  with this  purpose.  It  would preclude  the                 
  Adak  Reuse  Authority  from  using  other  facilities  that                 
  generate more than enough revenue to subsidize others in the                 
  early years.                                                                 
                                                                               
  Mr. Vassar observed that AS 30.17.210  allows the Adak Reuse                 
                                                                               
                               10                                              
                                                                               
                                                                               
  Authority to  issue bonds  payable from designated  projects                 
  whether or  not they are  financed in whole or  in part with                 
  the proceeds of the  bonds.  He stressed that  this language                 
  contemplates  allowing  the  revenue  from  one  facility to                 
  support another facility.  He suggested  that (2) on page 5,                 
  lines 11 - 13 be deleted.                                                    
                                                                               
  Mr. Vassar  cited page  5, line  24.   He noted  that it  is                 
  presumed  that the Adak Reuse Authority has the authority to                 
  issue  bonds.  He suggested  that the Adak Reuse Authority's                 
  ability to issue bonds be clarified in the powers section.                   
                                                                               
  Mr. Vassar  noted that there is no  moral obligation created                 
  in  the  bonding  power.    He  noted that  the  Adak  Reuse                 
  Authority  will be  new.  He  added that if  the decision is                 
  made not to include moral obligation power then page 7, line                 
  11 - 13, could affect the State's ability to issue bonds.                    
                                                                               
  Mr.  Vassar  observed that  page  9,  lines 25  -  27 raises                 
  questions  regarding  the type  of  financing that  the Adak                 
  Reuse Authority  might undertake.   He  noted that  projects                 
  financed under this  chapter are  included in the  exemption                 
  from taxation.  He stated that  if only Adak Reuse Authority                 
  projects are financed under this chapter this language would                 
  make sense.  He stressed that if the Adak Reuse Authority is                 
  a  conduit  or  revenue  lender  for private  entities  then                 
  private  entities would benefit through Adak Reuse Authority                 
  bond packages while being exempted from property taxes.  Mr.                 
  Vassar noted that reference is  made under section 30.17.280                 
  to conduit type financing by the Adak Reuse Authority.                       
                                                                               
  Mr. Vassar referred to page 13,  lines 11 - 17.  He  pointed                 
  out that  the Adak  Reuse Authority  would be  attempting to                 
  enter into the bond market to  sell debt, pledging their own                 
  general obligation  indebtedness.    He  explained that  the                 
  Adak Reuse  Authority can  sell bonds based  on their  asset                 
  base.   The assets are pledged to secure bonds.  He observed                 
  that a bond buyer would need to know that a municipality may                 
  be formed and  when it  is formed the  Adak Reuse  Authority                 
  would  be  integrated into  the  municipality.   The general                 
  obligation debt of the Adak Reuse Authority would not become                 
  the general obligation  of the  municipality.  He  concluded                 
  that  general  obligation  bond   financing  would  not   be                 
  realistic under  this scenario.   The  Adak Reuse  Authority                 
  would be limited to revenue supported financing.                             
                                                                               
  Mr.  Vassar questioned  the severity  of page  13, line  17:                 
  "The   municipality   may  not   levy   taxes  to   pay  the                 
  indebtedness."    He suggested  that  the language  could be                 
  changed to:  "The  municipality may not be required  to levy                 
  taxes."                                                                      
                                                                               
                                                                               
                               11                                              
                                                                               
                                                                               
  Mr. Gates expressed  concern that there is no restriction on                 
  the use of development fund  account monies outside of Adak.                 
  He maintained that  development funds  should be focused  on                 
  trying to create jobs and economic activity on Adak.                         
                                                                               
  Mr. Vassar pointed  out that section 30.17.100,  Purpose and                 
  General  Powers  specifically  states  that the  Adak  Reuse                 
  Authority is to "develop and implement a comprehensive reuse                 
  and redevelopment plan for the  territory encompassed by the                 
  Adak  Naval Air Facility..."   He noted that "In furtherance                 
  of its corporate  purposes...,"   section  30.17.110, Powers                 
  of the Adak Reuse Authority, relates  back to the Adak Naval                 
  Air Facility.  He added that the specific items mentioned in                 
  section 30.17.100, Purpose  and General Powers also  specify                 
  the Adak  Naval Air  Facility.   He stressed  that the  Adak                 
  Reuse  Authority  would not  be  able to  finance  a project                 
  outside of the Adak Naval Air Facility.                                      
                                                                               
  HB 466 was HELD in Committee for further discussion.                         

Document Name Date/Time Subjects