Legislature(1995 - 1996)
02/14/1996 05:15 PM MLV
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 island. 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 substitute. 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 1998. 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 May. 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 activities. 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 units. 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 there. 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 role. 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 comments. 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.