Legislature(2019 - 2020)ADAMS ROOM 519
04/16/2019 09:00 AM House FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| HB38 | |
| Capital Projects Review Presentation: Village Safe Water | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| += | HB 38 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| + | TELECONFERENCED |
HOUSE FINANCE COMMITTEE
April 16, 2019
9:00 a.m.
9:00:04 AM
CALL TO ORDER
Co-Chair Wilson called the House Finance Committee meeting
to order at 9:00 a.m.
MEMBERS PRESENT
Representative Neal Foster, Co-Chair
Representative Tammie Wilson, Co-Chair
Representative Jennifer Johnston, Vice-Chair
Representative Dan Ortiz, Vice-Chair
Representative Ben Carpenter
Representative Andy Josephson
Representative Gary Knopp
Representative Bart LeBon
Representative Kelly Merrick
Representative Colleen Sullivan-Leonard
Representative Cathy Tilton
MEMBERS ABSENT
None
ALSO PRESENT
Ruth Kostik, Acting Administrative Services Director,
Department of Environmental Conservation, Office of
Management and Budget
PRESENT VIA TELECONFERENCE
Marty Brewer, Director, Village Safe Water Program,
Department of Environmental Conservation
SUMMARY
HB 38 APPROP: CAPITAL BUDGET
HB 38 was HEARD and HELD in committee for further
consideration.
CAPITAL PROJECTS REVIEW PRESENTATION: VILLAGE SAFE WATER
Co-Chair Wilson reviewed the meeting agenda.
HOUSE BILL NO. 38
"An Act making appropriations, including capital
appropriations, supplemental appropriations,
reappropriations, and other appropriations; making
appropriations to capitalize funds; and providing for
an effective date."
9:00:39 AM
^CAPITAL PROJECTS REVIEW PRESENTATION: VILLAGE SAFE WATER
9:00:41 AM
RUTH KOSTIK, ACTING ADMINISTRATIVE SERVICES DIRECTOR,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION, OFFICE OF
MANAGEMENT AND BUDGET, provided a PowerPoint presentation
titled "Village Safe Water Funding Overview, Department of
Environmental Conservation, Presentation to the House
Finance Committee," dated April 16, 2019 (copy on file).
She began on slide 2 and detailed that the Village Safe
Water (VSW) Program under the Department of Environmental
Conservation (DEC) funded water and wastewater
infrastructure projects in rural Alaska. The program was
divided into two allocations: 1) first time service and 2)
expansion, upgrade, and replacement of existing service.
She communicated that the projects were not allocated by
community or project - the multiyear priority list allowed
the department to ensure funding was allocated to projects
that were ready to go and did not get stuck in projects
that may get stalled out along the way.
Ms. Kostik reported that at any given time the multiyear
priority list included roughly three years' worth of
project funding need. The funding shown on slide 2
reflected 75 percent federal and 25 percent General Fund
(GF) and statutory designated program receipts.
Co-Chair Wilson asked where the designated receipts came
from. She wondered who paid for the program.
Ms. Kostik answered that often times DEC and the program
brought heavy equipment into villages. For example, when
DEC brought an excavator into a village, the community may
end up buying the machine. She elaborated that the scenario
was more cost effective for the community because they did
not have to pay to ship the machine. Under the scenario,
the money was considered program income and was deposited
back into the program for other project costs.
9:02:39 AM
Ms. Kostik turned to a bar chart on slide 3 and reviewed
the funding for rural water and sewer improvements from FY
15 to FY 19. The green portion of the bar reflected the GF
match provided by the state, the yellow portion showed
funding from the Environmental Protection Agency (EPA)
infrastructure grants (IG), and the purple segment
reflected the United States Department of Agriculture
(USDA) rural development (RD) grants. She noted that the
EPA and USDA funds were matched with state funds. The blue
portion of the bar showed funding from the Indian Health
Service (IHS) and the brown portion was EPA tribal set-
aside funds - neither required state matching funds.
Co-Chair Wilson asked if there was a match from
communities.
Ms. Kostik answered in the negative. By statute, the
program was not allowed to require a community match. She
continued to review slide 3. She highlighted that EPA
funding had more than doubled from FY 16 to FY 17 due to
the hard work of the state's congressional delegation. She
reported the expectation for an increase of $5 million in
FY 20.
9:04:02 AM
Ms. Kostik turned to slide 4 and reviewed the primary
sources of Alaska sanitation rural facility improvement
funding. The slide showed a three-year annual average of
federal fiscal years 2016 to 2018. She shared that DEC
partnered with the Alaska Native Tribal Health Consortium
(ANTHC) on the projects. She detailed that VSW and ANTHC
staff managed the construction projects for communities.
She noted that the communities tended to not have the
capacity to manage large scale projects. The slide included
the various pots of money flowing into the program through
VSW and ANTHC. The funding on the left in yellow
represented state match, USDA-RD, and EPA-IG funds. The
blue and purple shown in the middle reflected IHS and EPA
tribal set-aside funding - the state did not provide match
funding for these categories; the funding was eligible for
Native villages only. Funding on the right of the slide
included additional funding ANTHC pursued including
Department of Energy and other funds for Native villages.
Representative Josephson asked for clarification on what
constituted a non-Native village. He asked if the community
of Pelican was an example.
Ms. Kostik deferred the question to a colleague.
Representative Josephson highlighted the IHS fund source
shown in purple (on slide 4) that went to Native villages
only. He asked for the distinction between a non-Native and
Native village.
MARTY BREWER, DIRECTOR, VILLAGE SAFE WATER PROGRAM,
DEPARTMENT OF ENVIRONMENTAL CONSERVATION (via
teleconference), replied that ANTHC defined Native
communities as those with a Native population over 55
percent.
Co-Chair Wilson asked whether there were administrative
costs (e.g. 10 to 20 percent) associated with the VSW
program.
Ms. Kostik responded that administrative costs for the
program were referred to as EMT (engineering, management,
and travel costs); a certain percentage of every grant was
allocated for EMT costs to allow VSW or ANTHC staff to
manage the projects.
Co-Chair Wilson asked if there was a range in the cost.
9:07:16 AM
Ms. Brewer replied there was an 8 percent [EMT] cap for RD-
funded projects.
Co-Chair Wilson asked if the cap applied to all grants.
Ms. Brewer answered that the cap only applied to RD grants.
Co-Chair Wilson asked if there was an EMT cost range for
the other grants.
Ms. Brewer replied that the EMT cost was typically between
8 and 15 percent.
Representative Josephson noted that the administration had
taken the position that it should not necessarily fully
invest state funds to achieve the largest match available
under federal law. However, he did not believe that was the
case with the state GF shown in green on slide 3. He
observed there was $1.5 million less and asked if it
reflected some diminishment of state contribution.
Ms. Kostik answered that the department took advantage of
every federal dollar appropriated for the VSW program. The
amounts appropriated by the federal government annually
could fluctuate. She noted that the federal government was
currently deciding the budget that would fund VSW projects
in the coming fiscal year. She elaborated that the program
often ended up with "old" money. She explained that other
states were not as good as Alaska at spending all of their
federal money. She furthered that if the VSW program did
not have enough federal rewards in one year to fully
utilize its match, it sometimes received prior-year money
left over from other states.
9:09:38 AM
Representative Josephson where the state was in providing
water and wastewater for all of the states 230 villages.
Ms. Kostik replied that she would address the question
later in the presentation.
Co-Chair Wilson asked if all of the GF money had to be a
match to federal dollars.
Ms. Kostik answered that the previous year the legislature
had appropriated match funding above and beyond the
required amount - the program was doing some work that was
funded by GF match only.
Co-Chair Wilson surmised it was not all GF match.
Ms. Kostik agreed. She turned to slide 5 and reported that
it cost approximately $250,000 to $500,000 per home to
provide first time service via traditional pipe centralized
service in villages. She explained that communities
remaining unserved were the most challenging. She detailed
that houses may be spread farther apart, they did not have
a great identified source of water to begin with, and the
cost of getting supplies to remote areas was very
expensive. She elaborated that most people's homes had
buried pipes, whereas, some of the more challenging
locations had permafrost and it was not as easy to bury
pipes and run them to houses. She furthered that there were
other logistical challenges including freezing conditions.
She would discuss what DEC was doing to bring the cost down
later in her presentation.
9:11:46 AM
Representative LeBon would not characterize the systems as
self-contained, but as community systems.
Ms. Kostik answered in the affirmative. She detailed that
the systems were traditional structure with a centralized
water point or wastewater collection point with pipes
running to individual houses as opposed to a self-contained
system that served only one home or small group of homes.
Representative LeBon asked if the program looked at self-
contained systems.
Ms. Kostik answered in the affirmative and would further
address the question later in the presentation.
Co-Chair Wilson asked how the state justified the idea to
communities that had their own individual home systems. She
pointed out that there was only a small group of homes in
the Fairbanks North Star Borough that had water and sewer -
most of the homes had wells and individual septic systems.
She asked why it was acceptable to use federal and state
money to pay for water in sewer in areas when there was a
bulk of residents who were required to put in and maintain
systems themselves.
9:13:06 AM
Ms. Kostik replied that it was more of a policy call. Per
statute, VSW-eligible projects went to communities with
populations of 1,000 or less. The federal funding was
available specifically for those types of communities. She
stated that part of it was it was where the money was.
There had been a big push to eliminate honey buckets from
villages and the program was the outgrowth of that push.
Co-Chair Wilson agreed with the effort to eliminate honey
buckets; however, she believed there were other systems
people could put in and may be able to better afford the
maintenance compared to what VSW was installing for free.
She did not know whether communities were able to maintain
the systems.
Ms. Kostik answered that DEC currently had an initiative
pertaining to the issue.
Representative Carpenter asked if Ms. Kostik would provide
a cost comparison between city-wide or village-wide systems
with individual site systems.
Ms. Kostik answered that one of the goals of the Alaska
Water Sewer Challenge Project was to design a system that
would cost no more than $125,000 per home. The cost was
still expensive but represented a fraction of the cost of a
centralized system.
Representative Tilton asked how DEC addressed the
maintenance and operations of systems after installation.
Ms. Kostik responded that when VSW funded a project, part
of the criteria was ensuring the community could
demonstrate it had the capacity to operate and manage the
project, which included looking at potential utility rates.
The department worked on the frontend to ensure communities
had the capacity prior to installing a system that the
community would not be able to use.
Ms. Kostik turned to slide 6 and reviewed grant projects
that had been funded in FY 18 in addition to projects that
had been identified and added to the list. There were
currently 173 active VSW projects throughout rural Alaska
with the oldest dating back to 2014. The active projects
included 117 construction projects, 43 planning projects,
and 13 design projects.
9:16:25 AM
Ms. Kostik moved to slide 7 and addressed the eligibility
criteria. She shared that projects were added to the
multiyear priority list and identified for funding through
an application process. Applications were submitted
annually - the application period was currently underway
and ended on May 10. Once the application period closed, a
committee made up of individuals from DEC, ANTHC, IHS, EPA,
and USDA met and scored applications based on criteria
shown on slide 7. She elaborated that a scoring matrix
assigned points to the different criteria. She highlighted
that the ability for a community to operate and maintain a
project was weighted heavily (the component reflected the
second largest points available).
Representative Carpenter asked about current construction
projects listed on slide 6. He asked if the projects fell
under the $500,000 per home solution or the $125,000
standalone solution.
Ms. Kostik answered that it was a mix. There were two
allocations including first-time service and
expansion/upgrade/replacement of existing systems. She
explained that many of the listed projects were for
critical upgrades to existing systems. The department was
not currently adding new first-time service projects to the
multiyear priority list due to the high cost.
Representative Carpenter understood from Ms. Kostik's
earlier testimony that the program's focus in the past had
been on a centralized system and it was currently looking
at an alternative with individual systems. He asked if the
current project planning was focused on individual systems
or centralized systems.
Ms. Kostik answered that DEC was not ready to fund
individual decentralized systems for new construction. They
were currently in the pilot testing phase. The program was
not currently adding any new first-time service projects to
the multiyear priority list.
Co-Chair Wilson asked why the state was doing upgrades and
replacements if communities were vetted for their ability
to maintain the systems after installation. She thought it
should have been part of the initial plan.
Ms. Kostik answered that many of the systems were aging and
had been built when the state had substantial funds. She
explained that perhaps they had not been as careful at the
time compared to current day. She relayed that there had
been some critical failures, things that had not been built
as well, and some projects may not have met the need of a
community or were oversized. She elaborated that the
program was had to go back to fix those issues.
Co-Chair Wilson asked if the department was requiring
communities to provide a plan showing they would put money
into future upgrades.
9:20:35 AM
Ms. Brewer answered that the program required an assessment
of a community's financial and managerial capacity to
operate and maintain a system - even if the VSW program was
just making improvements. She reported that some of the
systems were aging out and were decades old and communities
did not have the money to make the major upgrades required.
Co-Chair Wilson stated it was her point. She found it
disturbing that in the past the state had installed systems
any way it wanted because it had a lot of money. She spoke
about the current methods dealing with best practices. She
provided a scenario where upgrades were needed but a
community could not show its ability to make additional
upgrades in 10 to 15 years. She wondered if VSW would do
the upgrade and hope for the best 15 years down the road.
Ms. Brewer responded that a business plan was required for
each project to assess a community's capacity to operate
and maintain the system. Part of the plan required the
community to set funding aside for future repairs and
updates.
Co-Chair Wilson asked for verification that a community
would have to prove it could fund the future work. She
wondered if a community did not have the funding, the state
would not do the upgrades.
Ms. Brewer answered that a community had to demonstrate it
had the capacity to operate and maintain the systems.
Co-Chair Wilson asked if a community had to demonstrate its
capacity to make updates in the future.
Ms. Kostik affirmed.
Co-Chair Wilson shared that North Pole had 2,000 residents,
but only 500 residents were on the septic water system
(those individuals did not qualify). She explained the
individuals had to bond for over $2 million because of DEC
rules about where they were releasing sewage. She stressed
that the individuals did not qualify for the VSW program,
but they had a very small tax base of 500 people who had to
maintain the system (it was not possible to charge all
residents because they were not all receiving the
services). She did not know how the statute originated. She
reported that the 500 individuals also had to demonstrate
their capacity to make upgrades on their own; they had also
received some federal funding.
9:23:19 AM
Ms. Kostik moved to slide 8 and reported that the past year
the legislature funded $4 million in additional GF above
the required federal match. The funds were used for "band
aid" projects to address minor health threats through the
repair and replacement of existing systems that were not
otherwise eligible for federal rewards. The department
reviewed the grants quarterly and would make approximately
$1.5 million in FY 19 to fund 20 new projects. She
highlighted that the state operated the Alaska Clean Water
and Drinking Water State Revolving Loan Funds.
Traditionally, the loans had been used to make large loans
to municipalities and other qualified organizations for
infrastructure work. The funds were funded annually by
capitalization grants from the EPA. She detailed that DEC
was required to issue a certain amount of subsidy in the
term of loan forgiveness annually. The department would
begin issuing microloans to VSW-eligible communities up to
$50,000 for system upgrades that were not otherwise
eligible. She noted the loans would be highly subsidized.
She relayed that communities could take out a loan for
larger upgrades that arose.
Co-Chair Wilson asked for an example of what would not
qualify.
Ms. Kostik asked if Co-Chair Wilson was referring to
federal funding.
Co-Chair Wilson affirmed.
Ms. Kostik provided a scenario where the roof over a water
tank was leaking and it would eventually deteriorate the
building. She explained that the situation was not at a
critical point, but perhaps in five or ten years it would
fail if the problem was not addressed at present. Federal
funding was not available under the scenario, but a
community could use the infrastructure grants or microloan
program to replace the roof.
9:26:02 AM
Representative Carpenter asked if the microloan program
came out of the state revolving loan fund.
Ms. Kostik agreed.
Representative Carpenter asked if the subsidy came from
general funds.
Ms. Kostik answered in the negative. She explained that it
was loan forgiveness - a requirement by EPA for the
capitalization funds received annually. There was a certain
portion of loans issued by the program annually that VSW
was required to subsidize (or basically not write off).
Representative Carpenter asked if the revolving loan fund
received an annual appropriation. His understanding of a
revolving loan fund with forgiveness was that money would
go out and at some point, it would not come back in. He
imagined the fund depleted eventually. He asked for the
funding source.
Ms. Kostik answered that there were several appropriations
related to the revolving loan funds. She detailed there
were language appropriations in the capital budget that
allowed the program to accept the federal capitalization.
The state was required to match the capitalization, which
the EPA allowed DEC to do by issuing one-day bonds from the
interest earnings on the loan fund. The program also had
two capital projects for the subsidies. She explained there
was a clean water and drinking water subsidy capital
appropriation in the budget, which was from the loan fund.
For accounting purposes, the subsidy was like a grant - the
program recorded the expenditure of the subsidy in the
capital appropriations.
9:28:30 AM
Representative Carpenter found it hard to call a fund that
was not being repaid, a revolving loan fund. He thought it
sounded like a grant.
Ms. Kostik answered that the loans were repaid for the most
part. There was a percentage of loans that got subsidized.
The program's largest customer from the loan fund was the
Municipality of Anchorage, which was large enough that it
did not receive any subsidy and fully paid back its loans.
Most communities received small subsidies. She detailed
that the subsidy amount for normal loans was approximately
10 to 20 percent of the loan amount. Most of the loans were
repaid and second-cycle money in the loan fund - the money
was replenishing itself and received new capitalization
funds annually.
Representative Carpenter asked for a list of the
outstanding loans to see what was repaid and what was
subsidized.
Co-Chair Wilson requested the current balance of the loan
fund as well.
Ms. Kostik replied that she would follow up with the
information.
Vice-Chair Johnston shared that she was familiar with the
revolving loan funds because of her experience with the
Municipality of Anchorage. She explained that for years
Anchorage was the only place using the funds because most
other projects were grants. She detailed that the loans
were low interest and the Municipality of Anchorage had a
large number of them. She stated that the rate of return
was likely sufficient to cover any subsidy.
9:30:37 AM
Vice-Chair Ortiz asked if there was an annual
recapitalization of the revolving loan fund. He asked if
there was a regular funding source.
Ms. Kostik answered in the affirmative. She explained there
was a federal EPA grant that came in through a language
appropriation in the budget to capitalize the fund. She
detailed that it was not a regular capital appropriation;
it was an annual language appropriation under fund
capitalization.
Co-Chair Wilson clarified that the legislature gave DEC the
authority in the capital budget to accept the federal
funds.
Vice-Chair Ortiz asked for verification that the
recapitalization fund source was federal, not state.
Ms. Kostik agreed.
Co-Chair Wilson remarked it was still the state's money
because it paid taxes.
Representative Josephson asked if the Municipality of
Anchorage borrowed $50,000 or less through the microloan
program.
Ms. Kostik answered in the negative. She clarified that the
microloan program specifically targeted VSW-eligible
communities. The Municipality of Anchorage took out loans
of $3 million or more at one time.
Representative Josephson asked for verification the subject
was beyond the information on slide 8 of the PowerPoint.
Ms. Kostik agreed.
Co-Chair Wilson asked if any subsidies were done on the
loans mentioned by Representative Josephson.
Ms. Kostik answered in the affirmative. She elaborated that
there were numerous eligibility requirements for the
subsidies related to a community's poverty level,
population, and other.
Co-Chair Wilson surmised that although the Municipality of
Anchorage may be a low income area within a community, it
was not considered because eligibility was based on the
entire population and not on an individual's ability to
repay the loan.
Ms. Kostik replied it was her understanding that
eligibility was based on a municipality as a whole and not
on a specific area. She would have to confirm with program
staff and follow up.
Vice-Chair Johnston explained that the areas were service
areas. She explained that even if an area within a service
area had high needs and low income, the general service
area paid. For example, Girdwood had a small population and
had to completely redo its system. She relayed that the
whole Municipality of Anchorage was paying for the project
because it was one large service area.
Co-Chair Wilson pointed out the inequality. She remarked
that people outside of villages also struggled to pay their
bills. She thought it may be necessary to look at existing
statute and consider that other areas struggled and may
need the grants as well.
9:34:27 AM
Ms. Kostik moved to slide 9 and relayed that the VSW
program did not provide ongoing funding for maintenance and
operations of programs. She shared that DEC's operating
budget included an operator, training, and certification
program that trained water and wastewater system operators
who took a test and received certification to run the
systems. The program also partnered with regional health
corporations to provide remote maintenance workers (15 to
16 throughout the state serving different regions) for
technical assistance or in the case of emergency (e.g. when
pipes froze in the winter). The program worked closely with
partners (regional health corporations, RUBA, and community
leaders) to ensure the state was providing assistance to
communities to help build their financial and managerial
capacity.
Co-Chair Foster looked at the RUBA acronym on slide 9. He
wondered if there were efforts to address communities that
did not have the capacity to pay for system operations. He
realized there were various systems, with pipe being the
most expensive. He asked what efforts were made to look at
a situation where a community had a low capacity to pay,
yet under the RUBA scoring system it received more points
for having more capacity to pay for the system. He noted it
was a difficult situation where communities had no service
or needed an upgrade but were the least likely to get the
service.
Ms. Kostik replied that it was her understanding in terms
of scoring for the systems, the VSW program did not use
RUBA scoring. The program had been reevaluating its
scoring.
9:37:33 AM
Ms. Brewer augmented that RUBA's primary function was not
scoring, but capital improvement. She explained that DEC
used RUBA scoring as one component of its overall best
practice scoring to evaluate a community's financial and
managerial capacity to take on new projects. The RUBA score
was only one component in the overall scoring matrix. The
scoring matrix also included whether a community had an
operator certified at the appropriate level to manage the
system in addition to a community's financial capacity.
Co-Chair Foster asked how much weight was put towards the
financial capacity of a community to maintain a system.
Ms. Kostik answered that a community's financial capacity
was heavily weighted. She noted that it was not only the
RUBA scoring component and included all of the various
pieces of the managerial and operating capacity.
Co-Chair Foster would continue to work with the program on
the issue.
9:39:46 AM
Vice-Chair Johnston asked what RUBA stood for.
Ms. Kostik replied that RUBA stood for Rural Utility
Business Advisor.
Co-Chair Wilson asked who paid for operator training and
certification.
Ms. Kostik answered that the operators taking the training
paid fees to take certification classes and tests.
Co-Chair Wilson asked if remote maintenance workers were
state employees or individuals hired by the communities.
Ms. Kostik replied that it was a mix. Three to four of the
remote maintenance workers were state employees and the
other 11 were employees of regional health corporations.
The department passed through funding for the non-state
employees.
9:40:53 AM
Ms. Kostik moved to slide 10 and reported that 86 percent
of rural homes had indoor plumbing and sewer. She reported
that the figure had grown by 30 percent in the past decade.
She highlighted a bar chart showing there were
approximately 2,600 unserved homes in rural Alaska, most of
which were located in communities targeted for future
service.
Representative Josephson commended the department for its
progress. He noted that Ms. Kostik had testified there was
currently a hiatus on moving into communities that had no
service at all. He asked why and assumed it was to cover
and complete projects in the gray area status.
Ms. Kostik responded that the hiatus was primarily related
to the $500,000 cost per home. The next slide would show
that the overall cost to provide the centralized piped
service to the homes was high. The department wanted to get
farther down the path of the Water Sewer Challenge Project
to look at the decentralized options in a less expensive
way rather than continuing to build large, expensive
systems.
Representative Josephson could imagine what it looked like
for other communities [without service]. He stated that
essentially, the unserved communities drew water from some
location that was tested from time to time. He believed it
was the case for a location without a water system. He
asked if his statements were accurate.
Ms. Kostik answered that she would have to check with
drinking water program staff. She stated that many
communities without in-home service had a washeteria or
central watering point, which would be tested and regulated
as a public drinking water system.
Representative Josephson addressed wastewater and noted
there was typically a dumping site separate from a garbage
site. He remarked on concern with bath tissue, fecal
coliform and other related issues. He asked if he was
accurate.
Ms. Kostik answered there would be a sewage lagoon or other
similar dumping point where communities dumped their honey
buckets.
9:44:27 AM
Vice-Chair Ortiz understood that the $500,000 per household
price tag was important to consider. He wondered if holding
off and reassessing or working on a superior alternative
had ongoing opportunity costs in terms of public health
(i.e. higher rates of illness) that should be considered.
Ms. Kostik responded in the affirmative. She detailed that
running water in a home promoted better hygiene and
cleanliness. She elaborated that running water meant a
person was more likely to wash their hands and do laundry
and dishes more frequently. The issue was about managing
the cost of the system over the health needs.
Co-Chair Wilson commended DEC for working to determine a
more affordable option for communities. She reasoned that
although it may delay installation for some communities, in
the long run, something more cost-effective with easier
maintenance was preferable.
Ms. Kostik moved to slide 11 showing a pie chart of rural
Alaska sanitation funding need of $1,420,503,024. The blue
portion of the chart reflected communities with a first-
time service need based on the cost of a centralized pipe
system to unserved homes. The yellow portion reflected
areas needing minor updates that were not eligible for
federal funding under the current model. The orange portion
represented upgrades to address substantial health threats
funded by upgrades/replacements funding included in DEC's
appropriations.
9:46:35 AM
Co-Chair Foster looked at slide 10 showing a total of 2,600
unserved homes. He noted that there were 650 homes not
targeted for future service. He asked if the $850 million
shown in blue on slide 11 was based on the 2,000 homes
getting pipe service.
Ms. Kostik answered in the affirmative; the amount was
based on the number of unserved homes.
Co-Chair Foster asked if it was likely all of the [2,000]
homes would get pipe service.
Ms. Kostik replied that the plan was for the homes to be
served by some form of running water, but it may not be
piped service. She detailed that there may be a centralized
system that included a water recycling system in homes. The
goal going forward was to avoid building new pipe systems
for the remainder of the 2,000 unserved homes.
Co-Chair Foster looked at the $1.4 billion total on slide
11 and asked if it had been held fairly constant or was
increasing substantially in the past 5 to 10 years.
Ms. Kostik answered that the number had decreased over the
past five years since she had been with the department. She
explained that much of the decrease was related to
finishing some of the projects that were currently underway
- as those came online the number decreased.
Representative Carpenter looked at the $1.4 billion need on
slide 11. He reasoned that the figure could be interpreted
as a $325,000 need if the cost per home decreased. He
reasoned that the $1.4 billion would look like less than
$500,000.
Ms. Kostik answered that if the VSW program moved to a less
expensive system, the number would decrease, but not to
$500,000. She relayed that the cost would be closer to
$125,000 per home for first-time service.
Representative Carpenter corrected that he had meant $500
million.
Ms. Kostik agreed.
Co-Chair Wilson asked if the $1.4 billion figure on slide
11 was based off of $500,000 [per home]. She reasoned that
if the cost per home decreased to $125,000 it would
substantially lower the $1.4 billion figure.
Ms. Kostik agreed. The current math was based on a
traditional centralized pipe system and not a new approach.
The math had not yet been done, but the reduction per home
would dramatically decrease the $1.4 billion.
9:50:21 AM
Ms. Kostik moved to slide 12 related to the Alaska Water
and Sewer Challenge Project. She detailed that the project
had started five or six years earlier as a research and
development project. She reported that there had been a
capital appropriation by the legislature about six years
back that kicked the project off. The project had started
off with six teams that were given criteria for what the
system needed to do, and they had all worked up designs.
The department had selected two or three teams that had
developed prototypes. One successful system had been
selected pertaining to water recycling - it was currently
under a testing phase. The hope was to test the system in
villages in the coming year. In addition to having a system
that met the needs and recycled a certain amount of water
every day, it was important to ensure the community had
buy-in and would use the system. She explained the system
would be installed in some homes to determine how people
liked it and if it worked.
Ms. Kostik explained that the system required a minimal
amount of water each day and recycled gray water from
laundry, dishes, showering, and washing hands. The water
would be recycled for use on those types of services. She
clarified that the system was not currently meant to
recycle the water into drinking water, but perhaps they
would reach that point in the future.
Co-Chair Wilson asked why a community would not use a
system.
Ms. Kostik answered that the system had not been shown to a
community or installed in a home. She explained that a
person may be unsure about using recycled water that may
look different than drinking water.
Co-Chair Wilson asked what the other option would be for a
community. She wondered if the department would still look
at another more expensive pipe water option if enough
individuals were opposed to a recycled water system.
Ms. Kostik did not believe they had gotten that far as of
yet; the system had not yet been tested in homes.
Vice-Chair Johnston asked if DEC would test available space
and maintenance in homes and whether a system could
modernize a washeteria for a group of homes. She explained
that perhaps the system may not be in individual homes, but
it would be less expensive than the cost of piping.
9:53:47 AM
Ms. Kostik replied in the affirmative. She detailed that a
system may not be in a single home but may go to a group of
four homes that share one system. She highlighted that DEC
wanted to ensure a system could be easily maintained and
repaired by homeowners, which was included in the challenge
criteria.
Co-Chair Foster referenced Ms. Kostik's statement that the
water and sewer challenge project had started six years
earlier. He asked how the challenge was funded. He recalled
being told several years earlier that the system was in the
testing phase. He realized it may take years to obtain all
of the data. He wanted to ensure that DEC had the resources
to make sure the project was actively pursued. He observed
that $1.4 billion was substantial. He thought it would be
better if the number could be decreased. He wanted to
ensure the challenge resulted in service to individuals who
currently had no service to partial service. He believed
improving the health in communities should be done sooner
rather than later. He asked if there was a separate funding
line item.
Ms. Kostik replied that six years earlier, the VSW program
had received a capital appropriation of about $3 million
GF. The program had finished off the funds about one to two
years back. In the meantime, the department had worked with
federal funding partners to receive additional funds for
the project. The department currently had fund sources to
continue its work.
Co-Chair Wilson asked if the work would qualify for the
same funding that was going to pipe water system. She
wondered if the program had to be proven prior to receiving
federal funds.
Ms. Kostik deferred the question to her colleague.
Ms. Brewer answered that DEC had to demonstrate the
efficacy and safety of a system before federal funding was
received. The department was currently entering stage four
of the gray water recycling project. The next step was to
install the system into a home-based system and use real
gray water with no human exposure. The department would
treat and test the gray water to ensure it met treatment
standards. The next phase would include human exposure
(skin contact for washing hands and other, but no drinking
water). The department was getting through the challenges
of the liability of exposing human subjects to treated
water.
9:57:43 AM
Co-Chair Wilson asked how long they anticipated the current
phase lasting.
Ms. Brewer answered that the initial phase was anticipated
to last through FY 20. Based on the success of the initial
phase with no human exposure, the department would move to
the second phase including human exposure in FY 21.
Co-Chair Wilson asked if some of the communities may be on
hold for the next two to three years.
Ms. Brewer answered in the affirmative.
HB 38 was HEARD and HELD in committee for further
consideration.
Co-Chair Wilson recessed the meeting until the following
morning.
9:58:59 AM
RECESSED UNTIL 9:00 a.m. April 17, 2019
[Note: See separate minutes dated April 17, 2019, 9:00
a.m.]
| Document Name | Date/Time | Subjects |
|---|---|---|
| HB 38 VSW Multi Year Priority List Oct2018.pdf |
HFIN 4/16/2019 9:00:00 AM |
HB 38 |
| HB 38 HFC 04.16.2019 VSW program updates.pdf |
HFIN 4/16/2019 9:00:00 AM |
HB 38 |