Legislature(2009 - 2010)CAPITOL 17

03/11/2010 01:00 PM House TRANSPORTATION

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
-- Meeting Postponed to 1:20 pm Today --
Moved Out of Committee
Moved CSHB 366(TRA) Out of Committee
Heard & Held
+ Bills Previously Heard/Scheduled TELECONFERENCED
        HB 354-AK CAPSTONE AVIONICS REVOLVING LOAN FUND                                                                     
CHAIR P. WILSON announced that  the first order of business would                                                               
be HOUSE BILL NO. 354, "An  Act relating to eligibility for loans                                                               
from the Alaska capstone avionics revolving loan fund."                                                                         
1:33:57 PM                                                                                                                    
MATTHEW JOHNSON,  Staff, Representative Wes Keller,  Alaska State                                                               
Legislature, paraphrased  from the sponsor statement,  which read                                                               
as follows [original punctuation provided]:                                                                                     
     In 2008 the Alaska Legislature commissioned the                                                                            
     Capstone Avionics Loan Program. It was designed to                                                                         
     provide access to a new generation of avionics for                                                                         
     Alaskan aircraft owners and operators. The impetus for                                                                     
     the program was an FAA pilot program that confirmed                                                                        
     the substantial value and effectiveness of the                                                                             
     technology. The results of the pilot program revealed                                                                      
     a 47 percent decrease in accident rates in the trial                                                                       
     area, and the FAA estimates that full implementation                                                                       
     will result in 33 percent fewer fatalities statewide.                                                                      
     HB 354 is being proffered to amend existing statute in                                                                     
     order to carry out the mission and original intent of                                                                      
     the Capstone Avionics Program more effectively.                                                                            
     As initially conceived, the program was intended to                                                                        
     provide loans that would allow in-state operators and                                                                      
     carriers to upgrade their avionics. However, there is                                                                      
     an unforeseen gap in eligibility standards precluding                                                                      
     significant portions of the target market from                                                                             
     participation. Because the threshold for eligibility                                                                       
     is predicated upon ownership of aircraft, an owner or                                                                      
     carrier that chooses to lease its aircraft or fleet is                                                                     
     deemed ineligible to access the program. This bill                                                                         
     seeks to redress this deficiency by allowing for                                                                           
     maximal participation.                                                                                                     
     HB 354 is being offered only as an improvement to the                                                                      
     Capstone Avionics Program because we believe it is in                                                                      
     the interest of public safety, especially as it                                                                            
     pertains to flights in and out of rural                                                                                    
MR. JOHNSON  commented on the  zero fiscal note  attached to                                                                    
the bill.                                                                                                                       
1:37:17 PM                                                                                                                    
CHAIR  P.  WILSON  recalled that  Capstone  Avionics  assist                                                                    
pilots  by providing  the next  generation of  technology to                                                                    
improve flight safety.                                                                                                          
MR.   JOHNSON   offered   that  the   "Automatic   Dependent                                                                    
Surveillance -  Broadcast (ADS-B)" allows  aircraft equipped                                                                    
with  the avionics  to interact  with ground  infrastructure                                                                    
and  satellite  stations  to   provide  pilots  their  exact                                                                    
location, airspeed, rate of  ascent and descent, surrounding                                                                    
terrain,  other aircraft  and real  time  weather, which  is                                                                    
essential data needed for a safe flight.                                                                                        
1:38:53 PM                                                                                                                    
GREG WINEGAR, Director,  Division of Investments, Department                                                                    
of  Commerce,  Community,  & Economic  Development  (DCCED),                                                                    
introduced himself.                                                                                                             
CATHY JEANS, System Branch Manager, Division of Investments,                                                                    
Department of Commerce, Community, & Economic Development                                                                       
(DCCED), introduced herself.                                                                                                    
1:39:29 PM                                                                                                                    
REPRESENTATIVE GRUENBERG  referred to the  sponsor statement                                                                    
and related  his understanding that  owners who  lease their                                                                    
planes  are  excluded  from participating  in  the  Capstone                                                                    
Avionics Program.                                                                                                               
MR. WINEGAR explained that the  lessee cannot obtain a state                                                                    
loan  for  the  Capstone  Avionics equipment.    In  further                                                                    
response to Representative Gruenberg,  he clarified that the                                                                    
state  can  only  make  loans  to  owners  from  the  Alaska                                                                    
Capstone Avionics Revolving Loan Fund.                                                                                          
CHAIR P.  WILSON explained that some  companies buy aircraft                                                                    
for the purpose  of leasing.  The owners are  not willing to                                                                    
purchase the  Capstone Avionics  equipment, but  the lessees                                                                    
want the  safety equipment installed  in the planes.   Thus,                                                                    
the lessees  desire to participate in  the Capstone Avionics                                                                    
Loan Program.                                                                                                                   
1:40:50 PM                                                                                                                    
REPRESENTATIVE  GRUENBERG asked  whether  any law  currently                                                                    
would prevent  an owner who  leases a plane  from qualifying                                                                    
for the loan.                                                                                                                   
MR. WINEGAR  clarified that the Division  of Investments can                                                                    
make a loan  to an owner, but HB 354  would allow lessees to                                                                    
also qualify  for the Capstone  Avionics loans.   In further                                                                    
response to Representative Gruenberg,  he agreed that owners                                                                    
are not willing to take  out loans for the Capstone Avionics                                                                    
equipment for planes the owners lease out.                                                                                      
1:41:55 PM                                                                                                                    
REPRESENTATIVE  GRUENBERG   asked  whether  the   loans  are                                                                    
collateralized by the planes.                                                                                                   
MR. WINEGAR  agreed that the  Capstone Avionics  loans would                                                                    
require collateral,  but the division might  also need other                                                                    
REPRESENTATIVE GRUENBERG  expressed his  concern that  if an                                                                    
owner refused to  take out a loan he/she may  also not allow                                                                    
the plane to be used as collateral.                                                                                             
MR. WINEGAR  agreed.   He explained  that unless  the lessee                                                                    
has  some way  to collateralize  the Capstone  Avionics loan                                                                    
the  division would  not make  the  loan.   This bill  would                                                                    
provide   the    legal   authority   to   make    loans   to                                                                    
lessee/operators.    He  provided  a  scenario  in  which  a                                                                    
commercial  carrier  owned  a hangar  free  and  clear,  but                                                                    
leased a plane from a company  in Sweden.  The company would                                                                    
offer the  deed of trust on  the hangar to secure  the loan.                                                                    
In   further  response   to  Representative   Gruenberg,  he                                                                    
answered that  he doubted  that a  long-term lease  would be                                                                    
1:43:15 PM                                                                                                                    
REPRESENTATIVE GRUENBERG  asked whether  the lessee/operator                                                                    
would have the ability to collateralize.                                                                                        
MR. WINEGAR  stated he was  unsure.  He explained  that some                                                                    
people expressed interest  to do so and  in those instances,                                                                    
the   potential  lessees/operators   have  the   ability  to                                                                    
collateralize.  He was unsure  whether all operators who may                                                                    
be   interested  in   the  Capstone   Avionics  loans   have                                                                    
sufficient collateral to qualify for the loans.                                                                                 
1:43:57 PM                                                                                                                    
REPRESENTATIVE  GRUENBERG  asked   for  the  typical  amount                                                                    
needed for Capstone Avionics loans.                                                                                             
MR.  WINEGAR answered  that  the  average Capstone  Avionics                                                                    
loan  would be  $87 thousand  for commercial  aircraft.   He                                                                    
stated  that  general  aviation loans  are  less  expensive,                                                                    
typically ranging from $12,000-$18,000.                                                                                         
1:44:34 PM                                                                                                                    
REPRESENTATIVE  PETERSEN  asked  whether the  loans  ranging                                                                    
from $12,000 to $100,000 are to retrofit existing aircraft.                                                                     
MR. WINEGAR  agreed that  the typical loan  would be  to add                                                                    
Capstone Avionics to existing aircraft.                                                                                         
REPRESENTATIVE PETERSEN  asked whether new  aircraft already                                                                    
are equipped with Capstone Avionics technology.                                                                                 
MR.  WINEGAR  answered  probably  not.   He  said  that  the                                                                    
Capstone  Avionics technology  is relatively  new technology                                                                    
currently  being  tested in  Alaska.    The technology  will                                                                    
subsequently  be used  in  the Lower  48  since the  Federal                                                                    
Aviation  Administration  (FAA)  is  currently  implementing                                                                    
Capstone     Avionics     infrastructure    at     airports.                                                                    
Additionally, the  FAA is  currently working  on regulations                                                                    
that will  likely allow for  additional manufacturers.   The                                                                    
proposed  regulations are  anticipated  to  be finalized  in                                                                    
April 2010.   Thus, as  new manufacturers enter  the market,                                                                    
the price  of the  Capstone Avionics technology  should also                                                                    
go down.                                                                                                                        
1:46:10 PM                                                                                                                    
REPRESENTATIVE  PETERSEN inquired  as to  whether Alaska  is                                                                    
testing this equipment since it  is a rugged environment and                                                                    
if it works  well in Alaska the prediction  is that Capstone                                                                    
Avionics will work anywhere.                                                                                                    
MR.  WINEGAR  agreed.   He  related  that  testing  Capstone                                                                    
Avionics technology  was initiated  about six years  ago and                                                                    
was  found to  be  "the  way to  go."    Thus, the  Capstone                                                                    
Avionics  technology  will  be  implemented  throughout  the                                                                    
country, he stated.                                                                                                             
1:46:46 PM                                                                                                                    
CHAIR  P. WILSON  asked  whether the  FAA  will provide  any                                                                    
MR.  WINEGAR  answered yes.    He  stated  that the  FAA  is                                                                    
providing  a   "huge  amount  of   money"  for   the  ground                                                                    
infrastructure.   He characterized the FAA's  involvement as                                                                    
a very large  capital investment.  The FAA  has been working                                                                    
on portions  of the state.   He said the  federal government                                                                    
has signaled that  it would like Alaska to also  invest.  He                                                                    
related  that it  does  not make  a lot  of  sense to  equip                                                                    
airports  if  the  aircraft cannot  take  advantage  of  the                                                                    
Capstone  Avionics technology.   He  offered that  Southeast                                                                    
Alaska   and  the   Anchorage-Fairbanks  corridor   are  now                                                                    
completed and the FAA has a  plan in place for the remainder                                                                    
of the state.                                                                                                                   
1:48:23 PM                                                                                                                    
MR. WINEGAR,  in response to Representative  Munoz, reported                                                                    
that  the  Alaska  Capstone  Avionics  Revolving  Loan  Fund                                                                    
started  out at  $4.8 million  and current  fund balance  is                                                                    
$4.3 million.  In  further response to Representative Munoz,                                                                    
he  related that  the $4.3  million  balance represents  the                                                                    
state funds  in the Alaska Capstone  Avionics Revolving Loan                                                                    
Fund.   The funding for  airport infrastructure will  be all                                                                    
FAA funds.  He recalled  that the federal contribution would                                                                    
be in the $50 to $100 million range to cover Alaska.                                                                            
1:49:26 PM                                                                                                                    
REPRESENTATIVE JOHNSON  asked whether the  Capstone Avionics                                                                    
loan would  cover the installation of  the Capstone Avionics                                                                    
technology in aircraft.                                                                                                         
MR.  WINEGAR   answered  yes.    He   noted  that  certified                                                                    
installers  must  install  the Capstone  Avionics,  but  the                                                                    
costs of installation can be part of the loan.                                                                                  
REPRESENTATIVE  JOHNSON related  his understanding  that the                                                                    
installation   could   not    be   collateralized   so   the                                                                    
lessee/operator must provide additional collateral.                                                                             
MR. WINEGAR agreed.                                                                                                             
1:50:07 PM                                                                                                                    
REPRESENTATIVE GRUENBERG referred to  page 1, lines 8-10, of                                                                    
HB 354.   He opined  the definition for applicant  is vastly                                                                    
superior  to the  general definition  contained in  Title 1.                                                                    
He  offered, for  the benefit  of members  serving on  other                                                                    
committees, that  he thought this definition  should be used                                                                    
as the model for other statutory definitions for a person.                                                                      
1:51:23 PM                                                                                                                    
CHAIR P.  WILSON reported  that no  public member  wishes to                                                                    
testify during public testimony.                                                                                                
REPRESENTATIVE JOHNSON  remarked he  has been  familiar with                                                                    
the  Capstone  Avionics program  since  its  inception.   He                                                                    
offered his belief  that Alaska is in the  forefront on this                                                                    
issue.    He  professed  that  he  is  proud  the  state  is                                                                    
encouraging  Capstone  Avionics installations  in  aircraft.                                                                    
He  predicted that  the sooner  airplanes are  equipped with                                                                    
Capstone  Avionics, the  sooner  lives will  be  saved.   He                                                                    
said,  "I  wholeheartedly  encourage  the  passage  of  this                                                                    
REPRESENTATIVE  JOHNSON  moved  to  report  HB  354  out  of                                                                    
committee   with   individual    recommendations   and   the                                                                    
accompanying  fiscal notes.   There  being no  objection, HB
354  was reported  from  the  House Transportation  Standing                                                                    
1:52:46 PM                                                                                                                    
The committee took an at-ease from 1:52 p.m. to 1:53 p.m.                                                                       
1:53:28 PM                                                                                                                    

Document Name Date/Time Subjects
HB267 sponsor stmt TRA.pdf HTRA 3/11/2010 1:00:00 PM
HTRA 3/16/2010 1:00:00 PM
HB 267
hb 267 backup TRA.pdf HTRA 3/11/2010 1:00:00 PM
HTRA 3/16/2010 1:00:00 PM
HB 267
HB366 Backup TRA.pdf HTRA 3/11/2010 1:00:00 PM
HB 366
HB366 Sectional TRA.pdf HTRA 3/11/2010 1:00:00 PM
HB 366
HB366 Sponsor strmt TRA.pdf HTRA 3/11/2010 1:00:00 PM
HB 366
HB354 Sponsor Statement.pdf HTRA 3/11/2010 1:00:00 PM
HB 354
HB354 Sponsor Statement TRA.pdf HTRA 3/11/2010 1:00:00 PM
HB 354
HB354 Sponsor Statement TRA.pdf HTRA 3/11/2010 1:00:00 PM
HB 354