Legislature(1997 - 1998)
02/05/1997 08:05 AM House CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 35 - EXTEND REG. ECONOMIC ASST PROGRAM Number 145 REPRESENTATIVE ALAN AUSTERMAN came forward as sponsor of HB 35 which extends the sunset date of the Alaska Rural Development Organizations (ARDOR) program to July 1, 2000. Representative Austerman read the sponsor statement into the record: "In 1988 the Alaska Regional Development Organizations program was created in statute. Commonly referred to as ARDOR's, they are private, nonprofit corporations formed by local initiative to promote private sector economic development within their designated regions. "The ARDOR program has led to the formation of 11 regional development organizations such as the Southwest Alaska Municipal Conference, the Southeast Conference, the Lower Kuskokwim Economic Development Council and the Anchorage Economic Development Corporation. Nearly two hundred representatives of local political, social and economic interests, who serve on ARDOR boards of directors, are working together to lead their regions to greater economic self-sufficiency. "ARDOR's are achieving significant success in sustainable development through the establishment of production and marketing cooperatives, improved access to capital, development and marketing of tourism destinations, technical assistance and training for local businesses and entrepreneurs, support to value added production and proactive involvement in locally initiated economic development projects. "Sound economic development relies heavily on solid partnerships between the public and private sectors. The ARDOR's were conceived to facilitate this kind of partnering and to bring a regional perspective to the discussion of economic development issues. "The original legislation had a sunset clause that ended the program in 1993, but was extended until the end of fiscal year 1997. I believe it is in the best interest of the State of Alaska to continue the ARDOR program to insure the ongoing economic viability of Alaska's various regions." REPRESENTATIVE AUSTERMAN noted that in 1986, when he was first elected to the Kodiak Island Borough Assembly, they became involved with regional aspects of local government and state government. They formed the Southwest Alaska Municipal Conference. This was done in the hopes of developing an ARDOR type of program which they eventually did. Number 416 BROOKE SELMER, Arctic Development Council, came forward to testify on HB 35. In the last few years his organization has been heavily involved with (indisc.) on the North Slope which has proven to be an educational process. This effort has been very successful. They've established an incubator where businesses are promoted and seven businesses have graduated so far. They have a technical assistance program which investigates the feasibility of proposed businesses and develops marketing plans. They also assist these businesses in securing financing and they've established a revolving loan fund. They also have a project information center for small contractors who can't afford the cost of plans and other materials. MR. SELMER said they have a village out-reach program. Barrow being the largest populated village on the slope probably receives most of the attention, but the infrastructure development is very important for the more small, outlying villages. They visit the villages about once month and they've had some substantial successes there. They are in the process of trying to become a grant funding information source by helping to write grants or assisting in any way which helps clients along. Number 594 PAUL FUHS, Alaska ARDOR Association, came forward to testify on HB 35. He stated again that this is a public and private partnership. The ARDOR program is a good example of how a relationship such as this works effectively. The boards of directors related to this organization are made up of approximately 50 percent municipal government officials and 50 percent private sector people. The private sector participation is very important by keeping the ARDOR's on track with a realistic development program with people who are actually in business. The ARDOR'S assist small businesses with small projects, but also large projects which are regional in nature such as the Iron Carbide Reduction Plant in Kenai, as well as with the Magnuson Act issue, the Community Development Quota Program, and the Foreign Vessel Re-flagging Act which spurred the Americanization of the fishing industry in the 200 mile limit. MR. FUHS stated that the ARDOR funding comes from program receipts through the Alaska Industrial Development & Export Authority (AIDEA) and the ARDOR's serve an important function in terms of outreach for AIDEA allowing people throughout the state to know what programs are available and by making referrals. He added that the ARDOR program will be critical in Welfare Reform implementation in terms of creating jobs, as well as making sure there are coordinated training programs and services available to people in order for them to move from welfare to work. All of the ARDOR programs are involved with this issue on a regional basis. Number 744 JEROME SELBY, Mayor, Kodiak Island Borough, testified by teleconference from Kodiak. The ARDOR's, in his opinion, are probably one of the greatest success stories which the legislature has ever funded in terms of developing the economic base of Alaska. The Southwest Alaska Municipal Conference, which is the ARDOR for Kodiak, Alaska Peninsula and the Aleutian chain, see a lot of development which has resulted from their efforts such as business opportunity tours. These tours allow individuals to see facilities that they might consider expansion of in their own communities. There has also been quite a lot of activity in this region with the tourism industry, such as new charter operations, new lodges, etc. MAYOR SELBY stated that the Southwest Conference gets information out to people so that there is a constant flow of good, solid information about business opportunities, as well as information about how to run their businesses effectively in order to stay operational. He added that good solid small businesses have resulted from the ARDOR programs which allows the economy to grow quietly and gradually, rather than under a boom scenario. Number 915 WAYNE STEVENS, Executive Director, Kodiak Chamber of Commerce testified by teleconference from Kodiak on HB 35. He also serves as a board member on the Southwest Alaska Municipal Conference. He very briefly expressed his support of HB 35. The ARDOR program has been very successful in their region. It is a collaboration of government, business and non-profits. The chamber has supported the ARDOR program since its inception and he encouraged the committee's continued support with the passage of HB 35. Number 970 JAMES ELSON, Chairman, Kenai Peninsula Borough Economic Development District, testified by teleconference from Kenai on HB 35. He has been a resident of Kenai since 1967 and since, then he's been involved in economic development. From 1973 to 1976, he served as mayor of Kenai which was before Prudhoe Bay and before money. He understands the struggles that the small communities have had to go through. The Kenai Peninsula Borough Economic Development District was the first economic development organization to become certified as an ARDOR. Initially they were organized into three committees, industrial, business assistance and tourism. ARDOR allowed their Kenai organization to have a professional staff. MR. ELSON stated that through their tourism committee, they were able to put together an organization which has spun off and is a corporation itself called the Tourism and Marketing Council. He used this as a successful illustration of how different sectors of industry can come together in an effective manner. MR. ELSON stated that prior to the ARDOR program, tourism was very fractured. The whole peninsula was brought together in a successful program with now close to 600 members in their organization. Also, because of the professional staff, they've developed a partnership with the Small Business Development Center and the First National Bank of Anchorage in order to host a region wide small business assistance program. As a result of this first effort, they networked with 255 clients. Presently, they assist 21 of these clients with projects that range from small businesses to value added, to natural resources, to technical assistance in the oil industry to brand new products, as well as with assistance in the tourism trade. Number 1180 MR. ELSON noted that they host educational seminars throughout the year within the borough. Their efforts are truly regional and this would not be possible without the assistance of the ARDOR program. They've been involved with numerous successful projects over the years including a study on the gas reserves in Cook Inlet which was introduced to the Koreans. Unfortunately, this effort didn't develop into anything, but as a result of this study, Stewart Drilling made the first successful find in the inlet in 20 some years. He also made mention of the Carbide project which Mr. Fuhs had outlined. MR. ELSON stressed the importance of the involvement of the Economic Development district and the professional staff coming together to work on these projects. Because of staff, they are able to access state agencies and also key people in the native corporations, as well as other citizen groups. The ARDOR program allows the state to contract without going through a competitive bid process. This has been very beneficial for their shellfish industry and he outlined other fish related projects they've been involved with. He felt as though the contractual services within ARDOR will be very important as government continues to downsize in the future. ARDOR will be very effective with the Welfare to Work program in providing necessary training. Number 1456 ALICE RUBY, President, Southwest Alaska Municipal Conference testified by teleconference from Dillingham on HB 35. The ARDOR program has allowed them to make significant achievements and economic development in their region. ARDOR allows them to facilitate networking which is very important. They also provide education through workshops and technical assistance to their communities, as well as cooperating on specific economic development projects especially with the idea of bringing together community, government, private industry, and non-profit organizations. She gave an example of one of these successes in the Dillingham area called the Day and Dillingham Project where the municipal conference is working with the City of Dillingham to try and develop some tools to bring visitors into the community. Number 1583 JAMES WINCHESTER, Executive Director, Prince William Sound Economic Development Council testified from Valdez on HB 35. This organization is the ARDOR for Prince William Sound and they represent the communities of Valdez, Cordova, Whittier, Tatitlik and Chenega Bay. This ARDOR was formed in 1990. Mr. Winchester helped write some of the grants at that time and served as the first board president. He felt then that if this ARDOR at the very least, served as a forum for communication for the communities of Prince William Sound, then, it would be a success. It does this very well, along with a number of other important things. MR. WINCHESTER stated that what they are about in Prince William Sound are jobs, jobs, and jobs for local people. This program has proved very efficient at putting together programs that provide employment. They offer the following services: small business development through workshops; counseling services for people in the start up phases including business plans, advice on loans, grants, etc.; economic development plans for communities which include putting together strategic plans for their own economic development; and infrastructure development for economic activity. Over the last two years, they've undertaken a dozen infrastructure projects with a price tag of more than $100,000. They've had $3 million in projects just this year. Number 1712 LAMAR COTTON, Deputy Commissioner, Department of Community & Regional Affairs, testified by teleconference from Anchorage on HB 35. He stated that he didn't know if he could add more to what's been said already. The ARDOR programs are locally driven as opposed to state directed. The examples highlighted are proven examples of a continued partnership between the public and private sectors, both locally and regionally. The department supports this ARDOR program. Number 1767 MARY STADUM, Executive Director, Southwest Alaska Municipal Conference, testified by teleconference from Anchorage on HB 35. Their organization is the ARDOR for southwest Alaska and they were formed in 1986, prior to the creation of ARDOR. They are also a federal economic development district. They are structured on a membership basis. They represent the four boroughs in the region, all large and small communities, including villages, native organizations, non-profit entities and businesses. They have over 130 members who are concerned about the seafood industry, tourism, transportation, small business development, education, communication and infrastructure development in southwest. MS. STADUM noted that some of the services that they provide include preparing annually, an overall economic development plan with regional economic development data for southwest Alaska. They provide education and training for over 200 participants at their twice yearly conferences, one in southwest Alaska and one in Anchorage. They provide marketing assistance for southwest Alaska tourism businesses and make referrals for over 2,000 tourism enquiries each year. MS. STADUM stated that on an annual basis they provide a consolidated southwest needs list to the Alaska Department of Fish & Game and they work closely with the department throughout the year to prioritize the organization's needs for fish and game management. They also work closely with the Alaska Marine Highway System on the scheduling and availability of ferry service in their region which is critical to intra-regional commerce. They intend to be involved for the next eighteen months in the southwest regional transportation plan effort headed by the Department of Transportation. MS. STADUM added that their members have supported the ARDOR program through two resolutions in the last six months. They feel very strongly that economic development and the development of self-sufficiency for communities and regions throughout the state are key to the future. ARDOR programs provide vehicles to bring communities together in order to work together. Number 1931 DOUG SMITH, Executive Director, Mat-su Resource Conservation and Development, testified by teleconference from Anchorage on HB 35. He explained that their organization is a marriage of the United States Department of Agriculture Resource Conservation and Development (USDARC&D) to the regional ARDOR. They've been in full time operation for three years in the Mat-su. They have 20 board members and they represent agriculture, utilities, cities, chambers of commerce and the local soil & water conservation district. They bring a common sense approach to economic development in the Mat- su. Currently, they face a number of challenges. Forty percent of those people employed in the Mat-su work outside of the borough. Their unemployment rate is double that of Anchorage while wages are twenty percent less. As welfare rolls are cut, they are going to be terribly affected, yet in spite of this, the opposition to development in their area is often very organized and articulate. Every time there is a major proposal such as the development of iron ore reduction, for instance, at Fort MacKenzie they find tremendous opposition. They are the response to this and they bring a common sense approach. They are a low cost, high benefit operation. MR. SMITH stated that the major economic development projects that face the Mat-su Borough are the development of a ski facility at Hatcher Pass. They are very much involved with developing this project. They represent the Mat-su Borough Port Commission. They recently met with a number of Japanese firms after sending out 3,000 prospectus to various concerns in the United States, Japan, Korea and Taiwan. They are trying to find a major client that would justify the construction of a port facility and he listed various other projects they take an active part in. Number 2076 REPRESENTATIVE REGGIE JOULE noted that someone mentioned earlier that AIDEA provides receipts for the ARDORS. He wondered what statewide development projects generate enough money to make these kinds of dollars available. Number 2099 MR. FUHS offered that these are program receipts from AIDEA which are earnings from their capital base, initial asset base and their earnings from investments they make in the stock market, treasury bills, etc. These are surplus funds within AIDEA and he added that this figure was $650,000 last year. This year the Administration has proposed $620,000. He referred to the last page of the annual report with an outline of funding that has come into the ARDORS from other sources which included about $6 million of funding from other federal, state, and local government. The ARDORs charge fees for services of business that participate, through membership, federal grants, from the private sector, contributions, etc. About $600,000 state funding leverages roughly $6 million in other funds for the ARDORs. Number 2164 REPRESENTATIVE JERRY SANDERS moved and asked unanimous consent to move HB 35 out of committee with individual recommendations and accompanying zero fiscal note. Hearing no objection, HB 35 was moved out of the House Community and Regional Affairs Committee.
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