Legislature(1995 - 1996)

02/14/1996 05:15 PM MLV

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
 HB 466 - ADAK REUSE AUTHORITY                                               
 Number 1487                                                                   
 REPRESENTATIVE CARL MOSES shared photographs of Adak with the                 
 committee and testified:                                                      
 "HB 466 would establish an Adak Reuse Authority to facilitate the             
 conversion of the Adak Naval Air Facility to civilian use.  Last              
 year, the ANAF was targeted for closure by the federal base closure           
 commission.  The closure deadline is January, 1998, however, it is            
 widely recognized that the Department of Navy will vacate the                 
 facility ahead of schedule.                                                   
 REPRESENTATIVE MOSES proceeded, "Creating a reuse authority is                
 crucial to the conversion process in terms of developing and                  
 implementing a reuse plan.  Since Adak has no local governmental              
 entity, the need for a reuse authority is doubly important.                   
 REPRESENTATIVE MOSES continued, "HB 466 establishes a seven-member            
 authority as an instrumentality of the Community and Regional                 
 Affairs Department.  It calls for membership consisting of the                
 Commissioner of DC&RA, two other department heads selected by the             
 Governor, and four public members, appointed by the Governor.                 
 REPRESENTATIVE MOSES said, "The Adak Reuse Authority would manage             
 a comprehensive redevelopment plan in a manner which would attract            
 business, create jobs and advance the general prosperity and                  
 economic welfare of the region.                                               
 REPRESENTATIVE MOSES concluded, "This authority would have the                
 powers to perform administrative duties, enter into contracts,                
 operate enterprises, receive grants and other funds, disburse funds           
 and issue revenue bonds.  An enterprise development account would             
 be created for the Adak Reuse Authority by virtue of this bill."              
 Number 1601                                                                   
 REPRESENTATIVE MOSES said in line with base closure procedures all            
 over the country, the Department of Defense makes some funding                
 available for the economic development of the areas impacted and              
 works in concert with local government.  The significant difference           
 regarding Adak is that there is no local governing body with which            
 the federal government can work in this regard.                               
 REPRESENTATIVE MOSES said the creation of the Reuse Authority will            
 ensure that the economic potential of Adak will have a fair shot at           
 redevelopment.  He stated that the potential for a model fishing              
 community at Adak is obvious.  Communities and municipalities in              
 the region are supportive.  In addition to federal agencies, which            
 include U. S. Fish and Wildlife, the United States Navy and the               
 United States Coast Guard, all wish to maintain a presence on the             
 REPRESENTATIVE MOSES emphasized that the airfield at Adak is world            
 class, there are two deep water port facilities, and, in all, there           
 are approximately $2.3 billion in fixed and rolling assets                    
 currently on the island.                                                      
 REPRESENTATIVE MOSES said, "Our vision is to responsibly work                 
 towards conversion and economic vitality."  He maintained that Adak           
 represents a model, a showpiece to the nation as to what can be               
 done with the closure of a military base.                                     
 Number 1687                                                                   
 REPRESENTATIVE MULDER recalled that an air force base in Louisiana            
 had done the same thing.  They found in the short term that while             
 it was economically difficult or challenging, in the long term                
 their economy expanded because they used this same approach.  He              
 felt that HB 466 was a good idea and a much better approach than              
 piecemealing it which is often the only alternative.                          
 Number 1736                                                                   
 REPRESENTATIVE MOSES said HB 466 is an even better opportunity.  It           
 will be a big help to the economy of the district and the state.              
 Number 1775                                                                   
 REPRESENTATIVE KOTT asked what the procedures will be when the                
 military vacates Adak to turn that land over.                                 
 REPRESENTATIVE MOSES said that technically it is part of a wildlife           
 refuge, of which 63,000 areas were leased to the Department of                
 Defense for the Adak Naval Facility.  It will take some legislation           
 to convert that to the authority.  It has to be officially taken              
 out of the wildlife refuge.  He said it was his understanding that            
 U. S. Fish and Wildlife is interested in doing this because they do           
 not want to accept the liability that comes with the improved                 
 acreage.  He said that Fish and Wildlife had indicated that they              
 are in favor of keeping the base as it is now.                                
 Number 1842                                                                   
 REPRESENTATIVE MULDER asked Representative Moses to explain the               
 upload or front load costs.                                                   
 REPRESENTATIVE MOSES said normally the Department of Defense                  
 assists in that, but it is not unlimited.  He said this is such a             
 showpiece that he anticipates Alaska's Congressional delegation to            
 be able to get funding either from EDA or direct funds for the                
 transition of the base.                                                       
 REPRESENTATIVE MOSES informed the group that almost overnight,                
 there has been bidding on the fuel concessions which he predicts              
 will develop into an income stream.  He said he was confident that            
 there would be fish processors clamoring for a base of operations.            
 The airfield presents an ideal opportunity for flying fresh fish to           
 the Orient.                                                                   
 Number 1940                                                                   
 REPRESENTATIVE MULDER asked if there is a mechanism in the bill to            
 handle the financial relationship.  If so, how does that interact             
 with the state?                                                               
 LAMAR COTTEN, Deputy Commissioner, Department of Community and                
 Regional Affairs, said that is a good question; part of the problem           
 is that it is still being worked out.  He stated that he and                  
 Representative Moses had found the Department of Defense and the              
 Navy's Office of Economic Adjustment, a bit of a moving target.               
 However, he felt they are sincere in wanting to do the transfer,              
 and they have led us to believe that they are interested in                   
 assisting us financially.  Technically, how that is to be done, we            
 have not worked out those details.  But we are comfortable that               
 they are going to participate during the transition period.  For              
 example, they have a responsibility for cleanup.  There have been             
 92 sites identified as needing hazardous material waste cleanup.              
 Number 2027                                                                   
 REPRESENTATIVE MULDER said that Mr. Cotten was alluding to the                
 point he was trying to make.  At what point does the state want to            
 adopt or assume financial responsibility behind the enterprise or             
 would we be better off abrogating that responsibility to the                  
 Aleutians East Borough?                                                       
 Number 2052                                                                   
 REPRESENTATIVE MOSES informed Representative Mulder that two local            
 municipalities were very interested in the prospect of becoming the           
 local governing body of Adak.  He said that is the idea of the                
 authority that it will eventually transfer into the local                     
 government: the authority cannot obligate the state.                          
 CO-CHAIRMAN IVAN asked Representative Moses to show where that is             
 located in the bill.                                                          
 Number 2143                                                                   
 REPRESENTATIVE DAVIES said his concern is the limitation on powers            
 in the bill.  Does this disappear when this becomes a borough?                
 REPRESENTATIVE MOSES said that was his understanding as well.                 
 Number 2185                                                                   
 REPRESENTATIVE KOTT asked the status of the proposed committee                
 Number 2196                                                                   
 CO-CHAIRMAN IVAN stated that this is a landmark bill to a federal             
 facility.  He asked if the Department of Defense is ready to let              
 this facility out?  Are there planning sessions taking place right            
 now?  He asked for a status report.                                           
 Number 2249                                                                   
 MR. COTTEN clarified that he is the chairman of the Local Reuse               
 Authority/Planning.  What that means is the Department of Defense,            
 the Office of Economic Adjustment, which has responsibility on all            
 these closures, has set up a process where they want to get some              
 kind of collective consensus of the stakeholders, principally,                
 municipal governments, counties, school districts, and other taxing           
 jurisdictions.  That is applicable to the other states.  In this              
 case, it is not very applicable.  We have two communities who are             
 facing military base closures. The state was approached by the Navy           
 and the Office of Economic Adjustment in March of 1995, and told it           
 was on the list and in all likelihood, it will be closed in January           
 MR. COTTEN said in the absence of a local government, they                    
 approached the state with trying to come up with a committee that             
 would represent concerned interests in the Aleutians to develop a             
 reuse plan.  The state, along with the Aleut Corporation, an                  
 Aleutian Pribilof CDQ group representing seven Native fishing                 
 organizations, the City of Atka, the City of Unalaska, the APICDA,            
 the Aleutians East Borough and Reeve Air Aleutians, represent the             
 Local Redevelopment Authority (LRA).  The Office of Economic                  
 Adjustment came to us and said we will give you planning money.               
 MR. COTTEN said to make a long story short, they did not show up              
 with the money.  So, the local school district, which has no                  
 students but has staff, gave the LRA $100,000.  He said the LRA had           
 gone ahead with a request for proposal and are now negotiating for            
 a contract with Tryck Nyman Hayes, Inc. to complete a reuse plan,             
 including marketing of the base, to be conceptually finished by               
 Number 2360                                                                   
 MR. COTTEN said the importance of May is that along with the                  
 planning process of what the reuse possibilities are, there is                
 another group called the Restoration Advisory Board (RAB), which              
 the Department of Environmental Conservation plays a prominent role           
 in, who is identifying a series of polluted sites.  We want to do             
 those cleanup activities that are necessary to allow reuse                    
 Number 2399                                                                   
 MR. COTTEN said again, the Authority is a reflex of the fact that             
 there is not another entity to take over the base, such as a county           
 or borough, but as Representative Moses mentioned, there is                   
 interest by the City of Unalaska and the Aleutians East Borough to            
 take over the base.  At this point, the department and the state              
 are not taking a position on that as much as trying to get some               
 kind of authority that can assume the assets of this base when the            
 closure occurs.  He reemphasized that the department does support             
 the bill.                                                                     
 Number 2430                                                                   
 REPRESENTATIVE DAVIES asked for clarification of who is receiving             
 the $100,000.                                                                 
 MR. COTTEN said the Local Redevelopment Authority and the                     
 Department of Community and Regional Affairs, which is the acting             
 agent along with committee members from the AIDEA and the private             
 sector, put out an RFP and interviewed the teams and the LRA will             
 be administratively holding the contract for the DC&RA.                       
 REPRESENTATIVE DAVIES asked who constitutes the LRA.                          
 MR. COTTEN replied that the LRA is not legally established as much            
 as it was established by the state as a way to bring consensus and            
 stakeholders into the process.  The Office of Economic Adjustment             
 has recognized the state as the lead entity for the creation of the           
 LRA.  He said the chief function of the LRA, to date, has been                
 planning.  There have been a series of meetings to educate                    
 ourselves.....(end tape).                                                   
 TAPE 96-2, SIDE B                                                             
 Number 000                                                                    
 MR. COTTEN reiterated that the Local Redevelopment Authority (LRA)            
 is a planning commission established by the state with an effort to           
 bring in private and other, principally, Aleutian interests to                
 assist and develop a plan for reuse.  He believe that comports with           
 the federal regulations from the Office of Economic Adjustment of             
 trying to get some kind of consensus on reuse.                                
 MR. COTTEN said some of these groups eventually have established              
 themselves in law for the purpose of keeping the process open,                
 inclusive as opposed to exclusive.  He said the meetings are fairly           
 informal and tried to have everybody at the table.  There are a               
 series of issues about who owns the land.  It is not owned by the             
 Natives as a withdrawal.  So, we have some technical issues to deal           
 with. There are issues such as housing.  There are about 500 units            
 of housing and some of them are starting to be mothballed.                    
 REPRESENTATIVE MOSES interjected that there are actually 1,000                
 MR. COTTEN continued that there are subcommittee groups as well               
 working on different topics.                                                  
 Number 051                                                                    
 REPRESENTATIVE DAVIES asked if the Navy still controls the housing            
 at this point.                                                                
 MR. COTTEN said the Navy still runs the base.  There are 600 people           
 REPRESENTATIVE MOSES said the Navy will be continuing their plan of           
 moving out.  If there is lead paint or mercury switches, they have            
 to remove it.  They have to remove the refrigerators.  This process           
 is proceeding.  It is in the book.                                            
 Number 099                                                                    
 REPRESENTATIVE MOSES responded to Co-Chairman Ivan's earlier                  
 clarification that the authority cannot obligate the state.  He               
 referred to page 8, beginning on line 29.  "The authority may not             
 pledge the faith or credit of the state or of a political                     
 subdivision of the state, except the authority, to the payment of             
 a bond, and the issuance of a bond by the authority does not                  
 directly, indirectly, or contingently obligate the state or a                 
 political subdivision of the state to apply money from, levy, or              
 pledge any form of taxation to the payment of the bond."                      
 Number 120                                                                    
 MR. COTTEN said what needs to be done is to ensure that the                   
 military properly mothballs the place or the authority negotiates             
 with the military to ensure that there is enough money that they,             
 not only mothball it, but maybe maintain it longer.                           
 Number 190                                                                    
 MR. COTTEN said both Representative Moses and the state have worked           
 cooperatively with the Congressional delegation to ensure that an             
 opportunity is not lost here, and the reuse possibilities of                  
 fisheries, fuel, transportation, mainly flying fresh product out of           
 that area to the Orient, do not get overlooked.                               
 MR. COTTEN said one of our comments to the Navy is that we do think           
 they are going a little too fast, but we do not feel that this bill           
 corners us into making a bad decision to take over a time bomb.               
 That is why we are trying to work with the federal government,                
 particularly through the Department of Environmental Conservation,            
 to ensure that the area is cleaned up.                                        
 Number 212                                                                    
 REPRESENTATIVE MOSES commented if the airport were to shut down, it           
 could affect all the twin jets that are flying overseas through               
 Anchorage and Fairbanks.  Adak is used as an alternate airport.               
 Number 242                                                                    
 REPRESENTATIVE MULDER pointed out that he does not see how to                 
 indemnify the state from incurring the costs that might be                    
 associated after the military pulls out of Adak.  He felt another             
 issue is a banking account.  He said there is a zero fiscal note.             
 How do you set up a structure or how do you make this thing flow in           
 relation to accounting, short of using the state's general fund?              
 Number 313                                                                    
 MR. COTTEN said we feel it is essential to get the bill moving and            
 move ahead with the authority.  It strengthens our hand in dealing            
 with the military that we are serious about some type of entity               
 taking over some or all responsibility of the base.  He suggested             
 that this is a window of opportunity that the state probably does             
 not want to pass on.  It is also a unique part of the state where             
 there is no city or borough of government to take a leadership                
 Number 370                                                                    
 REPRESENTATIVE MOSES said this is a separate entity, separate from            
 the state, and you can only obligate this authority to the extent             
 of the properties it has under its jurisdiction.  It does not have            
 anything to do with the general fund.  It creates its own banking             
 or money systems.  It can bond.  He said, "other than walking away            
 from it, I do not see where the state has the obligation."                    
 Number 490                                                                    
 MR. COTTEN commented that Under Secretary of the Navy, Bill                   
 Cassidy, had stated that nine years ago the Navy budget was $112              
 billion and today it is $68 billion.  He was trying to communicate            
 to us to get our act together if we wanted to pick up on this                 
 opportunity.  He said the Navy is willing to negotiate a lot of               
 personal property assets to go with the fixed assets such as                  
 graders, barges, tugs.  Mr. Cassidy suggested that if you show us             
 a reuse plan that requires a fire truck then we will throw in the             
 fire truck.                                                                   
 Number 550                                                                    
 CO-CHAIRMAN IVAN referred to a memorandum from Speaker of the                 
 House, Gail Phillips, informing the House Special Committee on                
 Military & Veterans Affairs of her intent to send several committee           
 members to Anchorage on February 16, to participate in the Adak               
 Summit, to be held at the Hotel Captain Cook.                                 
 Number 590                                                                    
 REPRESENTATIVE MOSES exclaimed that he had hoped to have HB 466               
 through the legislature by the end of February, but would                     
 appreciate its passage to the House Finance Committee because of              
 the summit with Senator Ted Stevens and the Deputy Secretary of the           
 Navy on Friday, February 16, to give them some indication that this           
 is moving.                                                                    
 Number 608                                                                    
 REPRESENTATIVE DAVIES said his problems with HB 466 are                       
 predominantly financial in nature.  He said he is still trying to             
 figure it out, but that he is willing to pass the bill out of                 
 committee with the proviso that there are financial issues that the           
 House Finance Committee needs to look at.                                     
 REPRESENTATIVE DAVIES referred to page 2, the public members of the           
 authority are entitled to $100 compensation for each day spent on             
 official business.  On page 3, the authority may employ                       
 professional advisors, legal counsel, etc.  He said he is having              
 trouble understanding where the money is coming from and how we get           
 there from here.                                                              
 Number 693                                                                    
 REPRESENTATIVE DAVIES said there is a limitation in the back that             
 limits the use of rents and royalties to develop anything else out            
 there.  He felt that the House Finance Committee should look at               
 that as well.                                                                 
 Number 734                                                                    
 REPRESENTATIVE KOTT agreed that there are some financial                      
 implications that need to be addressed.  He mentioned page 3, line            
 5 (d), the authority shall keep minutes of each meeting and send a            
 certified copy to the governor and to the Legislative Budget and              
 Audit Committee.                                                              
 Number 758                                                                    
 REPRESENTATIVE FOSTER moved that HB 466 move from the House Special           
 Committee on Military and Veterans Affairs with individual                    
 recommendations and attached fiscal note.                                     
 Number 771                                                                    
 REPRESENTATIVE KOTT objected for the purposes of asking a question.           
 He asked Mr. Cotten, is there any indication as to where the                  
 federal delegation is leaning, as far as the reuse?                           
 Number 796                                                                    
 MR. COTTEN replied that Local Redevelopment Authority had done a              
 good job of staying in contact with Senator Stevens office,                   
 recognizing his interest in it and his responsibility in the area             
 of military and veterans affairs.                                             
 MR. COTTEN said the military itself has an interest, after the base           
 closes, of still using the base.  He reemphasized that the anchor             
 out there is the airport, the waterfront and the fuel.                        
 Number 863                                                                    
 REPRESENTATIVE KOTT asked if the LRA had looked over the comments             
 submitted by the Aleut Corporation.                                           
 MR. COTTEN responded that the Aleut Corporation's position is that            
 they should have control of the process as a corporation.  He said            
 we have indicated that we want everyone at the table and they are             
 at the table along with other entities that are controlled or                 
 dominated by Aleut Corporation shareholders, such as the Aleutians            
 East Borough, the City of Atka, APICDA, and in some ways, the City            
 of Unalaska.  The residents of the region are represented on all              
 the different boards at every step of the process.  He said he felt           
 it unfortunate that they are suggesting to the contrary.                      
 MR. COTTEN said the Aleut Corporation is a private corporation and            
 has an interest in possibly obtaining the entire base.  The federal           
 government has indicated time and again that they have no interest            
 as a process of deciding reuse to simply turn it over to a                    
 corporation.  The idea is to keep the public involved and to have             
 an open process where all the stakeholders are at the table and               
 then decide where the asset goes.                                             
 Number 963                                                                    
 REPRESENTATIVE MOSES said he is a stockholder of the Aleut                    
 Corporation, but he represents the entire district, not just the              
 Aleuts.  His position is that the worst thing the state can do is             
 to have Adak turned over to any one entity whether it be a large              
 fish company or a Native corporation.                                         
 REPRESENTATIVE MOSES felt confident that Alaska's Congressional               
 delegation can get $50-$100 million for the transition.  He said a            
 lot of that will be available from the Navy, but aside from that,             
 it is easily justified because Adak becomes a contributor to the              
 economy of the district, the state and the nation.  He said if the            
 Navy ever wanted Adak back, in the event of a national emergency,             
 it will still be there.                                                       
 REPRESENTATIVE KOTT asked if the Department of Military and                   
 Veterans Affairs had an opinion on HB 466.                                    
 MS. CARROLL said she was there to listen and did not have any                 
 REPRESENTATIVE KOTT withdrew his objection.                                   
 Number 1188                                                                   
 CO-CHAIRMAN IVAN stated that the motion to move HB 466 from the               
 House Special Committee on Military and Veterans Affairs was still            
 on the table.  There being no objection, it was so ordered.                   

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