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
HOUSE COMMUNITY AND REGIONAL AFFAIRS
STANDING COMMITTEE
February 5, 1997
8:05 a.m.
MEMBERS PRESENT
Representative Ivan Ivan, Chairman
Representative Scott Ogan
Representative Joe Ryan
Representative Jerry Sanders
Representative Al Kookesh
Representative Reggie Joule
MEMBERS ABSENT
Representative Fred Dyson
COMMITTEE CALENDAR
*HOUSE BILL NO. 35
"An Act extending the termination date of the Alaska regional
economic assistance program; and providing for an effective date."
- MOVED HB 35 OUT OF COMMITTEE
*HOUSE BILL NO. 86
"An Act relating to the payments in lieu of taxes program for
cities in the unorganized borough; and providing for an effective
date."
- MOVED HB 86 OUT OF COMMITTEE
(* First public hearing)
PREVIOUS ACTION
BILL: HB 35
SHORT TITLE: EXTEND REG. ECONOMIC ASST PROGRAM
JRN-DATE JRN-PG ACTION
01/13/97 37 (H) PREFILE RELEASED 1/3/96
01/13/97 37 (H) READ THE FIRST TIME - REFERRAL(S)
01/13/97 37 (H) CRA, FINANCE
02/05/97 (H) CRA AT 8:00 AM CAPITOL 124
02/05/97 239 (H) CRA RPT 6DP
02/05/97 239 (H) DP: JOULE, OGAN, SANDERS, KOOKESH, RYAN
02/05/97 239 (H) IVAN
02/05/97 239 (H) FISCAL NOTE (DCRA)
02/05/97 239 (H) REFERRED TO FINANCE
BILL: HB 86
SHORT TITLE: CITIES: PAYMENTS IN LIEU OF TAXES
JRN-DATE JRN-PG ACTION
01/24/97 137 (H) READ THE FIRST TIME - REFERRAL(S)
01/24/97 137 (H) CRA, FINANCE
02/05/97 (H) CRA AT 8:00 AM CAPITOL 124
02/05/97 240 (H) CRA RPT 5DP 1NR
02/05/97 240 (H) DP: JOULE, SANDERS, RYAN, KOOESH, IVAN
02/05/97 240 (H) NR: OGAN
02/05/97 240 (H) ZERO FISCAL NOTE (DCRA)
02/05/97 240 (H) REFERRED TO FINANCE
WITNESS REGISTER
BROOKE SELMER
Arctic Development Council
P.O. Box 371
Barrow, Alaska 99723
Telephone: (907) 852-4146
POSITION STATEMENT: Testified on HB 35
PAUL FUHS
Alaska ARDOR Association
10652 Porter Lane
Juneau, Alaska 99801
Telephone: (907) 790-3030
POSITION STATEMENT: Testified on HB 35
JEROME SELBY, Mayor
Kodiak Island Borough
710 Mill Bay Road
Kodiak, Alaska 99615
Telephone: (907) 486-9300
POSITION STATEMENT: Testified on HB 35
WAYNE STEVENS, Executive Director
Kodiak Chamber of Commerce
P.O. Box 1485
Kodiak, Alaska 99615
Telephone: (907) 486-5557
POSITION STATEMENT: Testified on HB 35
JAMES A. ELSON, Chairman
Kenai Peninsula Borough Economic Development
District
P.O. Box 2788
Kenai, Alaska 99611
Telephone: (907) 283-3335
POSITION STATEMENT: Testified on HB 35
ALICE RUBY, President
Southwest Alaska Municipal Conference
Box 121
Dillingham, Alaska 99576
Telephone: (907) 562-7330
POSITION STATEMENT: Testified on HB 35
JAMES WINCHESTER, Executive Director
Prince William Sound Economic Development
Council
P.O. Box 1553
Valdez, Alaska
Telephone: (907) 835-2085
POSITION STATEMENT: Testified on HB 35
LAMAR COTTON, Deputy Commissioner
Department of Community & Regional
Affairs
P.O. Box 112100
Juneau, Alaska 99811-2100
Telephone: (907) 465-4700
POSITION STATEMENT: Testified on HB 35
MARY STADUM, Executive Director
Southwest Alaska Municipal Conference
3300 Arctic, Suite 203
Anchorage, Alaska 99503
Telephone: (907) 562-7380
POSITION STATEMENT: Testified on HB 35
DOUG SMITH, Executive Director
Matsu Resource Conservation & Development
351 West Park, Number 100
Wasilla, Alaska 99654
Telephone: (907) 373-1062
POSITION STATEMENT: Testified on HB 35
BILL ROLFZEN
State Revenue Sharing
Division of Municipal & Regional
Assistance
Department of Community & Regional
Affairs
P.O. Box 112100
Juneau, Alaska 99811-2100
Telephone: (907) 465-4750
POSITION STATEMENT: Testified on HB 86
KEN WEAVER, Manager
City of Bethel
P.O. Box 388
Bethel, Alaska
Telephone: (907) 543-2047
POSITION STATEMENT: Testified on HB 86
ACTION NARRATIVE
TAPE 97-4, SIDE A
Number 016
CHAIRMAN IVAN IVAN called the House Community and Regional Affairs
Standing Committee meeting to order at 8:03 a.m. Members present
at the call to order were Representatives Ogan, Sanders, Ryan and
Joule. Representative Kookesh joined the proceedings at 8:10 a.m.
Representative Dyson was absent.
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.
HB 86 CITIES: PAYMENTS IN LIEU OF TAXES
Number 2177
CHAIRMAN IVAN, as sponsor, presented HB 86 to the committee. This
legislation would give the Department of Community and Regional
Affairs the authority to pass through federal funds to cities in
the unorganized borough. He read the sponsor statement into the
record.
House bill 86 establishes the payment in lieu of taxes program
within the Department of Community and Regional Affairs for home
rule and general law cities located in the unorganized borough
within federally designated areas of Alaska.
The payment in lieu of taxes program or PILT is financed by funds
the state will receive annually from the federal government under
31 U.S.C. 6901 - 31 U.S.C. 6902, which was passed as part of the
Omnibus Parks and Public Lands Management Act of 1996 (P.L. 104-
333, sec. 1033). The particular section (sec. 1033) of this
federal legislation was sponsored by Senator Stevens to allow
cities in the unorganized borough to receive payment.
The main purpose of this bill is to provide a method for the
Department of Community and Regional Affairs to distribute the
annual funding and to establish criteria to determine whether a
city is eligible to receive payment under the program as intended
by federal law. The amount of money to be distributed to each
eligible home rule and general law city in the unorganized borough
will be based upon the population of the city as certified by the
commissioner of the department for the fiscal year preceding the
year in which payment is made to the city. This bill establishes
an annual payment date of November 1 of the state fiscal year. The
money received by the cities from this program may be used for any
general propose for which a city is authorized under federal, state
or local law. Finally, the bill is given an immediate effective
date in order to meet the first year's application and payment
schedule set out in the bill.
Number 2330
REPRESENTATIVE SCOTT OGAN asked about the zero fiscal note attached
to this legislation and whether or not this was because of the pass
through nature of the federal funds. He also wondered if this was
a new program that simply enables this new legislation to allow
these communities to receive this money?
CHAIRMAN IVAN stated that yes, this was the case.
Number 2347
BILL ROLFZEN, State Revenue Sharing, Department of Community and
Regional Affairs, testified on HB 86. He stated that
Representative Ogan was correct, that these are new federal funds
which will be coming into the state. This legislation provides the
mechanism for the department. Once those payments are received,
they will be distributed directly to the cities.
Number 2360
REPRESENTATIVE JOE RYAN asked what the administrative fee the
department will charge to handle this fund.
MR. ROLFZEN stated that there will be no fee which is reflected in
the zero fiscal note.
REPRESENTATIVE RYAN asked what would happen if these funds stop
coming into the state. Would the state be expected to supplement
them?
MR. ROLFZEN stated that no, these are federal funds coming into the
state. The organized boroughs receive their payments directly from
the Bureau of Land Management (BLM) at the federal level. The
department will be the liaison, so to speak, to receive the
payments and turn them around to distribute since the department
already deals with the municipalities and they have all the systems
in place to take the money and distribute it out with a zero fiscal
note.
Number 2392
REPRESENTATIVE OGAN noted that there is a sovereignty issue coming
up before the state and he asked what happens when a community
becomes a sovereign nation?
MR. ROLFZEN stated that as eligibility for distribution, there are
certain criteria which a community must meet, mainly that they are
a functioning municipality organized under state law. If a
community dissolves its municipal government, they would no longer
be eligible.
TAPE 97-4, SIDE B
Number 000
REPRESENTATIVE SANDERS asked how this money would be distributed,
whether on a per capita basis or per area?
MR. ROLFZEN stated that at the federal level they determine what
the payment for that federal census area is based on a somewhat
convoluted formula that incorporates the amount of entitlement
federal lands within that area and the population. Once they do
this calculation they send the state a check for that area. The
state then, with this legislation in place, will distribute this
funding to each city within that area on a strict per capita basis.
Number 034
REPRESENTATIVE OGAN asked if there was any idea of the numbers they
were talking about.
MR. ROLFZEN said at this time it would be pure speculation, but it
will probably be several million dollars, any where between $1
million and $5 million.
Number 090
KEN WEAVER, Manager, City of Bethel, testified on HB 86. After
examination of the information he had on HB 86 he supports this
concept. It would be especially beneficial in the bush communities
and the rural areas, particularly Bethel, which has had a reduction
in other revenue sources from the fish tax and sales tax revenue as
a result of the reverse multiplying affect from this reduced
revenue. He did ask whether there would be a population cap on the
communities of 5,000 residence or more.
MR. ROLFZEN stated that there is a population ceiling cap at the
federal level when they determine the payment for each federal
census area, but as far as a state program the proposed legislation
does not include a population ceiling cap, but just a straight per
capita base.
Number 168
REPRESENTATIVE SANDERS moved and asked unanimous consent to move HB
86 out of committee with individual recommendations and
accompanying zero fiscal note. Hearing no objection, HB 86 was
moved out of the House community and Regional Affairs committee.
ADJOURNMENT
Number 175
CHAIRMAN IVAN adjourned the meeting at 8:55 a.m.
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