Legislature(2003 - 2004)

04/30/2003 02:07 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
                    ALASKA STATE LEGISLATURE                                                                                  
    SENATE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE                                                                  
                         April 30, 2003                                                                                         
                           2:07 p.m.                                                                                            
                                                                                                                                
MEMBERS PRESENT                                                                                                               
                                                                                                                                
Senator Thomas Wagoner, Chair                                                                                                   
Senator Gary Stevens                                                                                                            
Senator Georgianna Lincoln                                                                                                      
Senator Kim Elton                                                                                                               
                                                                                                                                
MEMBERS ABSENT                                                                                                                
                                                                                                                                
Senator Robin Taylor, Vice Chair                                                                                                
                                                                                                                                
COMMITTEE CALENDAR                                                                                                            
                                                                                                                                
SENATE BILL NO. 183                                                                                                             
"An  Act  authorizing  municipalities  to  provide  for  economic                                                               
development  and  authorizing  municipalities to  expend  revenue                                                               
collected  on an  areawide or  nonareawide basis  to provide  for                                                               
economic development."                                                                                                          
     MOVED CS SB 183 (CRA) OUT OF COMMITTEE                                                                                   
                                                                                                                                
PREVIOUS ACTION                                                                                                               
                                                                                                                                
No previous action to record.                                                                                                   
                                                                                                                                
WITNESS REGISTER                                                                                                              
                                                                                                                                
Brian Hove                                                                                                                      
Aide to Senator Ralph Seekins                                                                                                   
Alaska State Capitol, Room 125                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Introduced SB 183                                                                                         
                                                                                                                                
Mary Jackson                                                                                                                    
Chief of Staff to Senator Thomas Wagoner                                                                                        
Alaska State Capitol, Room 427                                                                                                  
Juneau, AK  99801-1182                                                                                                          
POSITION STATEMENT: Explained provisions of SB 183                                                                            
                                                                                                                                
David Leone                                                                                                                     
Fairbanks North Star Borough                                                                                                    
P.O. Box 71267                                                                                                                  
Fairbanks, AK 99707                                                                                                             
POSITION STATEMENT: Testified on SB 183                                                                                       
                                                                                                                                
Jim Dodson                                                                                                                      
No address provided                                                                                                             
POSITION STATEMENT: Testified on SB 183                                                                                       
                                                                                                                                
Buz Otis                                                                                                                        
No address provided                                                                                                             
POSITION STATEMENT: Testified on SB 183                                                                                       
                                                                                                                                
Jim Drew                                                                                                                        
No address provided                                                                                                             
POSITION STATEMENT: Testified on SB 183                                                                                       
                                                                                                                                
Rick Solie                                                                                                                      
No address provided                                                                                                             
POSITION STATEMENT: Testified on SB 183                                                                                       
                                                                                                                                
Dan Bockhorst                                                                                                                   
Department of Community & Economic Development                                                                                  
550 West Seventh Avenue, Suite                                                                                                  
Anchorage, Alaska 99501-3510                                                                                                    
POSITION STATEMENT: Answered questions regarding SB 183                                                                       
                                                                                                                                
ACTION NARRATIVE                                                                                                              
                                                                                                                                
TAPE 03-12, SIDE A                                                                                                            
                                                                                                                                
CHAIR  THOMAS WAGONER  called the  Senate Community  and Regional                                                             
Affairs Standing Committee meeting to  order at 2:07 p.m. Present                                                               
were  Senators Gary  Stevens, Georgianna  Lincoln  Kim Elton  and                                                               
Chair Thomas Wagoner.                                                                                                           
                                                                                                                                
The first order of business to come before the committee was SB                                                                 
183.                                                                                                                            
                                                                                                                                
             SB 183-MUNICIPAL ECONOMIC DEVELOPMENT                                                                          
                                                                                                                                
BRIAN HOVE, aide to bill sponsor Senator Ralph Seekins, read the                                                                
following into the record:                                                                                                      
                                                                                                                                
     Current state law places a limitation on second-class                                                                      
      boroughs with respect to expending funds designated                                                                       
     for economic development purposes.                                                                                         
                                                                                                                                
     Presently,  second-class boroughs  may  only use  these                                                                    
     funds  on a  non-areawide  basis. This  means that  the                                                                    
     Fairbanks  North Star  Borough  can  only deploy  these                                                                    
     funds on  projects located outside  the city  limits of                                                                    
     Fairbanks and North Pole.                                                                                                  
                                                                                                                                
     It is desirable for the  Borough to have the ability to                                                                    
     utilize  economic  development  funds  on  an  areawide                                                                    
     basis.  In  this way,  worthy  projects  can be  funded                                                                    
     irrespective of  their location  - within,  or without,                                                                    
     municipal boundaries  - so long as  the project remains                                                                    
     within  the  greater  Borough boundary.  Such  projects                                                                    
     will  benefit   the  entire  Borough   community  while                                                                    
     physical  location, whether  within city  boundaries or                                                                    
     not, is considered immaterial to this greater good.                                                                        
                                                                                                                                
     This  legislation is  proposed  at the  request of  the                                                                    
     Fairbanks North Star  Borough as well as  the Cities of                                                                    
     Fairbanks  and   North  Pole.   In  summary,   it  will                                                                    
     facilitate the  development of  economically attractive                                                                    
     projects  throughout the  entire  Fairbanks North  Star                                                                    
     Borough   without   regard    to   internal   municipal                                                                    
     boundaries. Senate Bill 183's companion is HB 126.                                                                         
                                                                                                                                
SENATOR GARY  STEVENS asked becoming a  first-class borough would                                                               
entail.                                                                                                                         
                                                                                                                                
MR.  HOVE replied  it might  require other  changes that  weren't                                                               
palatable to people living in the Fairbanks area.                                                                               
                                                                                                                                
SENATOR GARY  STEVENS remarked  it would  be interesting  to know                                                               
what the differences entail.                                                                                                    
                                                                                                                                
MR. HOVE  advised Mr.  Leone might be  better equipped  to answer                                                               
the question.                                                                                                                   
                                                                                                                                
SENATOR KIM  ELTON said his thoughts  ran along the same  line as                                                               
Senator Stevens'. He  also noted that in the  last several months                                                               
the   Local  Boundary   Commission   (LBC)   has  addressed   the                                                               
organization of part of the  Unorganized Borough and the Governor                                                               
and some  legislators have spoken  about consolidation  of school                                                               
districts.                                                                                                                      
                                                                                                                                
SB 183  is one approach to  the Fairbanks goal and  another is to                                                               
consolidate government functions in the  same way as is discussed                                                               
in the  Unorganized Borough or  with school districts.  The first                                                               
approach  is   counter-intuitive  to  much  of   the  information                                                               
presented  by the  LBC in  their Unorganized  Borough Report.  He                                                               
asked whether  consolidation might not  be a better goal  so such                                                               
issues don't have to be addressed one at a time.                                                                                
                                                                                                                                
MR. HOVE replied  it is his understanding  that various proposals                                                               
have  been  put forth  to  consolidate  but  they were  met  with                                                               
resistance. He  continued, "In this particular  instance, I don't                                                               
think  that they  should be  stopped or  prevented from  pursuing                                                               
this  worthy endeavor  here simply  because we  don't want  to go                                                               
from second  to first [class borough]  or do some of  those other                                                               
things like you're suggesting."                                                                                                 
                                                                                                                                
SENATOR  ELTON remarked  this would  be an  accommodation for  an                                                               
urban community  that wants  to accomplish a  bit more  than they                                                               
are able  to under  the current  type of  government, but  at the                                                               
same time the Administration and  some legislators aren't willing                                                               
to accede to the wishes  of local communities like Petersburg and                                                               
Wrangell or Skagway. Legislators are  put in the awkward position                                                               
of favoring one and not the other.                                                                                              
                                                                                                                                
MR. HOVE  stated he had  his hands full understanding  the issues                                                               
in the Fairbanks area and  isn't familiar with the examples cited                                                               
and couldn't speak to the comparison.                                                                                           
                                                                                                                                
MARY  JACKSON,  staff  to  Senator  Wagoner  and  the  committee,                                                               
responded  to  Senator  Elton's concern  and  explained  the  two                                                               
dynamics are  legally separate. She  said, the Skagway  issue and                                                               
whether it  does or does  not become a  borough is a  function of                                                               
the constitutionally established LBC  and, "you really don't have                                                               
anything you can  do about them. You do have  some things you can                                                               
do about  the authorities you  give to  first-class, second-class                                                               
boroughs and  cities." The sponsor  is trying to put  an economic                                                               
program in place  for the borough that  encompasses the Fairbanks                                                               
North Pole area.                                                                                                                
                                                                                                                                
She explained committee substitute  \H Cook 4/29/03 addresses the                                                               
unintended consequence  of disrupting all  second-class boroughs.                                                               
The bill  was intended  to accommodate  the Fairbanks  North Star                                                               
Borough and  doesn't necessarily fit  the needs or wishes  of any                                                               
other borough. All cities under  a second-class borough currently                                                               
are  able to  have economic  development powers  if they  choose.                                                               
However, if  current language were  adopted to  give second-class                                                               
boroughs  economic development  authority,  then  all the  cities                                                               
under the  borough would  have to  abdicate that  authority. Even                                                               
though Fairbanks wants to do so,  it was not the sponsor's intent                                                               
that all  cities under a  second-class borough be required  to do                                                               
so. The proposed  CS is to accommodate the issue  of Fairbanks by                                                               
establishing a population threshold of 80,000.                                                                                  
                                                                                                                                
SENATOR GARY STEVENS  remarked this was an  interesting point and                                                               
the   implications  of   such  a   change   would  need   careful                                                               
examination.                                                                                                                    
                                                                                                                                
MS. JACKSON  replied this was  an unintended consequence  and the                                                               
concern is legitimate. A second-class  borough has chosen to have                                                               
fewer  authorities. In  this case,  one of  those boroughs  wants                                                               
more and this  is a mechanism to provide for  that. That is local                                                               
authority  and local  autonomy and  local power.  Senator Wagoner                                                               
believes this  is reasonable and that  is the reason for  the CS.                                                               
To have  this automatically happen  to all  second-class boroughs                                                               
isn't local autonomy.                                                                                                           
                                                                                                                                
SENATOR  GARY  STEVENS asked  how  complicated  it would  be  for                                                               
Fairbanks to become a first-class borough.                                                                                      
                                                                                                                                
MS. JACKSON  advised first-class  borough powers are  outlined in                                                               
Section 29.35.200  and second-class  borough powers  are outlined                                                               
in Section 29.35.210 copies of which  were attached to the CS. To                                                               
go from a second-class borough  to a first-class borough requires                                                               
a vote of the people to authorize adoption of the powers listed.                                                                
                                                                                                                                
SENATOR GARY STEVENS asked if  the voters could select the powers                                                               
they wanted.                                                                                                                    
                                                                                                                                
MS. JACKSON  told him  they could, but  there were  some required                                                               
powers as  outlined in  Title 29 such  as schools  and elections.                                                               
Home rule  is the ultimate  flexible municipal  structure because                                                               
it allows a choice of powers and provides the most options.                                                                     
                                                                                                                                
SENATOR  ELTON  said  he  was   returning  to  the  philosophical                                                               
orientation  that  appears  to   be  driving  the  discussion  on                                                               
consolidation of school districts or  organizing a portion of the                                                               
Unorganized  Borough. Fairbanks  wants  the  statutes amended  to                                                               
affect  only second-class  boroughs  that  have populations  over                                                               
80,000.  If  the  philosophy  that   consolidation  is  good  and                                                               
duplication  of government  services is  bad and  therefore fewer                                                               
school  districts  are  needed  then SB  183  goes  against  that                                                               
philosophy. This  provides an accommodation that  makes it easier                                                               
to come to a decision not to consolidate.                                                                                       
                                                                                                                                
MS. JACKSON replied  this would help Fairbanks to  go forward and                                                               
assume another  power even though  they don't want to  assume all                                                               
the  powers  of a  first-class  borough.  It is  a  consolidation                                                               
because  the cities  would have  the powers  consolidated in  the                                                               
boroughs.  She  described this  as  an  aid in  the  evolutionary                                                               
process toward a first class borough.                                                                                           
                                                                                                                                
SENATOR ELTON said  he'd be the first to argue  there ought to be                                                               
local options  to accommodate government  that is closest  to the                                                               
people. That  principle would be  applied in  SB 183, but  not in                                                               
the requests regarding certain borough formation.                                                                               
                                                                                                                                
MS.  JACKSON said  she wouldn't  disagree,  but it  goes back  to                                                               
legislative   jurisdiction.    The   Homer    annexation   became                                                               
contentious because of the limited  authority the Legislature has                                                               
in that regard.                                                                                                                 
                                                                                                                                
SENATOR  ELTON   replied  the   Legislature  is   exercising  its                                                               
preference in SCR 12 by highlighting  four areas of the state for                                                               
borough formation.                                                                                                              
                                                                                                                                
MS. JACKSON  noted those listening  online didn't have a  copy of                                                               
the proposed CS and asked the  Chair whether he would like her to                                                               
speak to it.                                                                                                                    
                                                                                                                                
CHAIR WAGONER  asked for a  motion to  adopt the proposed  CS for                                                               
discussion purposes.                                                                                                            
                                                                                                                                
SENATOR  ELTON made  a motion  to adopt  CS Work  Draft \H  dated                                                               
4/29/03  for discussion.  There  being no  objection,  it was  so                                                               
ordered.                                                                                                                        
                                                                                                                                
MS. JACKSON explained the CS accomplishes the following:                                                                        
                                                                                                                                
   · Revises the title to reflect only certain second-class                                                                     
     boroughs rather than all municipalities.                                                                                   
   · Amends   statutes   regarding   second-class   boroughs   AS                                                               
     29.35.210(d) by specifying economic development authority                                                                  
     for those with a population of more than 80,000.                                                                           
   · Deletes previous statute amendment that provided for                                                                       
     economic development authority for all municipalities.                                                                     
   · Deletes previous repealer of AS 29.35.210(a)(8) that was                                                                   
     specific to economic development. (This required second-                                                                   
     class boroughs to provide the service only on a non-                                                                       
     areawide basis.)                                                                                                           
                                                                                                                                
She  also  pointed  out  the  list  of  cities  within  organized                                                               
boroughs that may or may not be impacted.                                                                                       
                                                                                                                                
SENATOR GARY  STEVENS asked if  Fairbanks and Anchorage  were the                                                               
only cities with populations greater than 80,000.                                                                               
                                                                                                                                
MS. JACKSON said that was correct.                                                                                              
                                                                                                                                
SENATOR  ELTON  asked  what  the  population  is  in  the  Mat-Su                                                               
borough.                                                                                                                        
                                                                                                                                
MS. JACKSON informed him the population is 65,241.                                                                              
                                                                                                                                
SENATOR ELTON  noted this  would apply to  the Mat-Su  borough if                                                               
they continue to grow.                                                                                                          
                                                                                                                                
MS. JACKSON agreed.                                                                                                             
                                                                                                                                
She recapped saying the net  result is that second-class boroughs                                                               
with  populations that  exceed 80,000  may  provide for  economic                                                               
development  that  benefits the  borough  on  an areawide  basis.                                                               
Section  1  provides  the  authorization  for  the  funds  to  be                                                               
expended.                                                                                                                       
                                                                                                                                
SENATOR  GARY STEVENS  asked what  the current  population is  in                                                               
Fairbanks.                                                                                                                      
                                                                                                                                
MS. JACKSON replied the Fairbanks population is 84,791.                                                                         
                                                                                                                                
SENATOR ELTON asked how they handle economic development.                                                                       
                                                                                                                                
MS.  JACKSON  said  every  entity   takes  a  slightly  different                                                               
approach. Kenai  Peninsula has  an economic  development district                                                               
(ARDOR) and the  borough and all municipalities  are members. The                                                               
ARDOR acts  as the overall  economic development planner  for the                                                               
second-class  Kenai Peninsula  Borough. It  is her  understanding                                                               
that, in Fairbanks,  the ARDORs and municipalities  agree this is                                                               
a good way to do business.                                                                                                      
                                                                                                                                
SENATOR  ELTON asked  whether a  municipality could  change their                                                               
mind without requesting an amendment to the statutes.                                                                           
                                                                                                                                
MS. JACKSON said she didn't think so.                                                                                           
                                                                                                                                
SENATOR GEORGIANNA  LINCOLN asked why Fairbanks  wouldn't elect a                                                               
home rule form of government to accomplish the same thing.                                                                      
                                                                                                                                
MS.  JACKSON  replied  that  might  be  a  lengthy,  arduous  and                                                               
possibly contentious  undertaking. They  would need to  appoint a                                                               
home rule charter  group and spend up to 24  months formulating a                                                               
charter.  Public   hearings  would   subsequently  be   held  and                                                               
ultimately the charter would be voted upon.                                                                                     
                                                                                                                                
SENATOR LINCOLN asked if that was an option.                                                                                    
                                                                                                                                
MS. JACKSON said  it was; they could opt for  home rule or first-                                                               
class borough, but  they probably wouldn't be able  to unify like                                                               
Juneau or Anchorage.                                                                                                            
                                                                                                                                
SENATOR LINCOLN  asked if economic  development in  Fairbanks had                                                               
to be outside the municipality.                                                                                                 
                                                                                                                                
MS. JACKSON  replied the borough is  responsible for non-areawide                                                               
authority  so  the  borough can  undertake  economic  development                                                               
functions within the borough, but  outside the two municipalities                                                               
of North Pole and Fairbanks.                                                                                                    
                                                                                                                                
SENATOR LINCOLN then asked about areas  such as Ester or Fox. She                                                               
questioned  how they  would be  protected or  represented because                                                               
they are part of the borough, but  may not have a presence on the                                                               
assembly.                                                                                                                       
                                                                                                                                
MS. JACKSON was sure the  borough was apportioned, but she didn't                                                               
know whether they had designated seats.                                                                                         
                                                                                                                                
SENATOR  LINCOLN replied  perhaps  someone  from Fairbanks  could                                                               
provide an answer.                                                                                                              
                                                                                                                                
SENATOR GARY STEVENS  asked if the cities of  Fairbanks and North                                                               
Pole currently had economic development councils.                                                                               
                                                                                                                                
MS. JACKSON said Fairbanks people  could answer then restated the                                                               
intent  of the  CS, which  was to  assist the  City of  Fairbanks                                                               
without impacting all second-class boroughs in Alaska.                                                                          
                                                                                                                                
SENATOR LINCOLN  asked it  the people that  wrote to  support the                                                               
original bill also supported the CS.                                                                                            
                                                                                                                                
MS. JACKSON  replied that was why  she was speaking at  length to                                                               
the  CS  so those  listening  online  could understand  what  was                                                               
intended and  make that  determination. As  long as  Fairbanks is                                                               
able to  do economic development  it could be assumed  they would                                                               
be supportive.                                                                                                                  
                                                                                                                                
SENATOR LINCOLN asked if the LIO sites had copies of the CS.                                                                    
                                                                                                                                
MS. JACKSON advised she doesn't  release a CS until the committee                                                               
has  adopted  it  officially.  That  was  done  and  the  CS  was                                                               
distributed to the LIO sites.                                                                                                   
                                                                                                                                
CHAIR WAGONER called for public testimony.                                                                                      
                                                                                                                                
DAVID  LEONE,  Special  Assistant  to the  Fairbanks  North  Star                                                               
Borough Mayor's office, thanked  Ms. Jackson for fully explaining                                                               
the  CS.  He  advised  economic   development  efforts  run  into                                                               
difficulty because  of the  requirement to  differentiate between                                                               
areawide and  non-areawide boundaries.  They appreciate  that the                                                               
CS alleviates the unintended consequences of the original bill.                                                                 
                                                                                                                                
He  added the  intent  is to  maximize  the economic  development                                                               
function within  the borough. The  cities of Fairbanks  and North                                                               
Pole  and the  North  Star Borough  work  cooperatively but  it's                                                               
difficult to  adhere to the  letter of the law  that non-areawide                                                               
funds  in economic  expenditures are  not crossing  that boundary                                                               
between city and borough.                                                                                                       
                                                                                                                                
SENATOR ELTON  asked if the bed  tax in the Fairbanks  area was a                                                               
city or a borough tax.                                                                                                          
                                                                                                                                
MR. LEONE replied  the city accumulates the city bed  tax and the                                                               
borough  handles  the accumulation  and  collection  of the  non-                                                               
areawide bed tax.                                                                                                               
                                                                                                                                
SENATOR ELTON  asked if those  revenues were co-mingled  and used                                                               
in a coordinated effort.                                                                                                        
                                                                                                                                
MR.  LEONE  said  they  aren't put  together.  For  example,  the                                                               
borough   helps   fund   the   Fairbanks   Economic   Development                                                               
Corporation or  the Fairbanks Convention and  Visitors Bureau and                                                               
the city would  likewise contribute. Again you come  to the issue                                                               
of ensuring that a dollar given  by the borough doesn't cross the                                                               
line between non-areawide and the  City of Fairbanks and the City                                                               
of North Pole. The funds are separate, but used in cooperation.                                                                 
                                                                                                                                
SENATOR  ELTON remarked  SB 183  would allow  co-mingling of  the                                                               
funds if the city and borough so desired.                                                                                       
                                                                                                                                
MR. LEONE replied it gives the  borough the freedom to expend the                                                               
non-areawide bed tax and non-areawide  mil levy that is collected                                                               
for economic development. It wouldn't  impact the cities' ability                                                               
to allocate their funds for  economic development within the city                                                               
limits.                                                                                                                         
                                                                                                                                
SENATOR GARY STEVENS  asked if the cities of  Fairbanks and North                                                               
Pole had taken action to support the CS.                                                                                        
                                                                                                                                
MR. LEONE  advised both cities  passed resolutions in  support of                                                               
the  original  legislation. The  borough  doesn't  see that  this                                                               
would impact  the cities' ability to  determine specific economic                                                               
development  opportunities within  the city  limits. It  provides                                                               
flexibility to  maximize economic  development effort  within the                                                               
borough in  support of  the North  Star Borough  and the  City of                                                               
Fairbanks and the City of North Pole.                                                                                           
                                                                                                                                
SENATOR GARY  STEVENS asked if this  would in no way  affect what                                                               
the cities are currently doing in terms of economic development.                                                                
                                                                                                                                
MR. LEONE  replied it  would affect  them positively  rather than                                                               
negatively.                                                                                                                     
                                                                                                                                
SENATOR LINCOLN  asked if that would  also be the case  for small                                                               
communities within the borough.                                                                                                 
                                                                                                                                
MR.  LEONE said  economic  development in  the borough  currently                                                               
helps small communities  such as Ester and Fox  because they have                                                               
no powers to collect taxes.                                                                                                     
                                                                                                                                
SENATOR LINCOLN asked if that would diminish under SB 183.                                                                      
                                                                                                                                
MR. LEONE said current support  for those outlying communities in                                                               
the borough wouldn't change. They  would continue to be supported                                                               
by the borough economic development funds.                                                                                      
                                                                                                                                
SENATOR LINCOLN  asked if outlying communities  would be impacted                                                               
because those funds would be spread more thinly.                                                                                
                                                                                                                                
MR. LEONE  replied those small  communities would benefit  to the                                                               
same extent as Fairbanks and North Pole.                                                                                        
                                                                                                                                
SENATOR ELTON  asked if the new  language on page 1,  lines 11-14                                                               
was loose in  terms of the kind of  economic development benefits                                                               
the city and borough would be authorized to pick.                                                                               
                                                                                                                                
MR. LEONE  said that  language gives the  borough the  ability to                                                               
utilize  non-areawide funds  in an  areawide fashion.  He doesn't                                                               
see it negatively impacting the  city it simply augments areawide                                                               
economic development activities within the borough.                                                                             
                                                                                                                                
SENATOR  GARY  STEVENS  remarked  he wasn't  sure  SB  183  would                                                               
accomplish  what  the  borough  wants. He  didn't  interpret  the                                                               
language  on lines  11-14 of  the CS  as allowing  the cities  to                                                               
continue.                                                                                                                       
                                                                                                                                
MR. LEONE  said he  couldn't speak from  a legal  standpoint, but                                                               
what they would like to  expand non-areawide funds on an areawide                                                               
basis in support  of economic development. There  is no intention                                                               
to take  away choices or  opportunities the City of  Fairbanks or                                                               
the City  of North  Pole now  have. It is  to augment  the entire                                                               
effort in developing the economy.                                                                                               
                                                                                                                                
MS.  JACKSON commented  that it's  important  to understand  that                                                               
both Fairbanks  and North Pole  are home rule  municipalities and                                                               
thus have  charters. The CS  provides for the North  Star Borough                                                               
and it  may provide  for economic  development that  benefits the                                                               
borough on an areawide basis.                                                                                                   
                                                                                                                                
SENATOR  GARY STEVENS  used Kodiak  as an  example saying  it's a                                                               
home  rule  city  with  a police  department  in  a  second-class                                                               
borough that  doesn't have  a police  department. If  the borough                                                               
decided  to go  into police  protection, they  would establish  a                                                               
borough-wide police  department and the  city would no  longer be                                                               
able to have one.                                                                                                               
                                                                                                                                
In the instance  of Fairbanks, he questioned  whether the borough                                                               
taking over  economic development would preclude  the cities from                                                               
have an economic development department.                                                                                        
                                                                                                                                
MS. JACKSON  didn't believe  they would  be precluded  because of                                                               
the agreement forged between the borough and the two cities.                                                                    
                                                                                                                                
CHAIR WAGONER stated he wanted  to protect his staff and although                                                               
she is  well versed on Title  29 and is giving  her best opinion,                                                               
she isn't an attorney.                                                                                                          
                                                                                                                                
SENATOR ELTON had the same  type of questions as Senator Stevens.                                                               
He questioned whether  the cities could pick  and choose economic                                                               
development   activities   or  would   they   have   to  make   a                                                               
determination  that  they  are   going  to  assume  any  economic                                                               
development.                                                                                                                    
                                                                                                                                
MS. JACKSON didn't know.                                                                                                        
                                                                                                                                
CHAIR WAGONER opined the cities  would have the option because SB                                                               
183 doesn't take that option away from home rule cities.                                                                        
                                                                                                                                
SENATOR ELTON suggested it might be  safer to add "some types" to                                                               
describe economic development.                                                                                                  
                                                                                                                                
MS. JACKSON  admitted he might  be on  the right track.  She said                                                               
this  is an  evolutionary process  on the  way to  a first  class                                                               
borough and  there's nothing  wrong with that,  as long  as there                                                               
are some parameters.                                                                                                            
                                                                                                                                
SIDE B                                                                                                                        
1:53 pm                                                                                                                         
                                                                                                                                
SENATOR GARY  STEVENS specified  his concern  was to  protect the                                                               
cities so he  was interested in hearing from  Fairbanks and North                                                               
Pole to determine whether they  are comfortable with the language                                                               
in the CS.                                                                                                                      
                                                                                                                                
MS.  JACKSON pointed  out Senator  Stevens was  the chair  of the                                                               
next committee of referral.                                                                                                     
                                                                                                                                
JIM  DODSON,  Chairman  of  the  Fairbanks  Economic  Development                                                               
Corporation, testified  in support  of the  committee substitute.                                                               
Economic   development  doesn't   understand   city  or   borough                                                               
boundaries. The bill  doesn't give the city  any additional power                                                               
nor  does  it  take  away any  existing  power.  The  corporation                                                               
mission  statement is  to  bring  new jobs  to  Fairbanks and  it                                                               
doesn't address  where those new  jobs are or where  they impact.                                                               
The impact is  positive to the entire community if  they are able                                                               
to accomplish the goal. The City  of Fairbanks, the City of North                                                               
Pole  and the  North Star  Borough recognize  that and  have made                                                               
this request.                                                                                                                   
                                                                                                                                
SENATOR GARY STEVENS  asked if this would affect  what the cities                                                               
or the university could do individually.                                                                                        
                                                                                                                                
MR. DODSON  replied this  gives the  borough no  additional power                                                               
other than the  ability to spend economic  development dollars in                                                               
the entire  area. It doesn't affect  the dollars taken in  by the                                                               
city.                                                                                                                           
                                                                                                                                
SENATOR GARY  STEVENS asked  if the  borough assuming  this power                                                               
would, it  in no way, infringe  on the cities' right  to have the                                                               
same power within its boundaries.                                                                                               
                                                                                                                                
MR. DODSON said it wouldn't.                                                                                                    
                                                                                                                                
BUZ OTIS was unable to deliver  his testimony but it was faxed to                                                               
Senator Wagoner's office.                                                                                                       
                                                                                                                                
JIM  DREW from  the  Fairbanks  Economic Development  Corporation                                                               
(FEDC) made the following points:                                                                                               
                                                                                                                                
   · There is need for economic development itself and it is                                                                    
     enhanced by SB 183. FEDC is  trying to bring in new business                                                               
     and  new jobs  to  the community.  An  economy that  expands                                                               
     products  and services  it sells  to the  world is  the only                                                               
     known  long-term  forum  of sustainable  economic  security.                                                               
     Alaska  hasn't increased  exports or  replaced imports  it's                                                               
     just  increased consumption.  No  additional private  sector                                                               
     generated wealth has been created.                                                                                         
   · The CS provides opportunity to do more in terms of funding                                                                 
     coordination   to   meet    the   objectives   of   economic                                                               
     development. It  would give flexibility to  more efficiently                                                               
     use available funds over an entire area.                                                                                   
                                                                                                                                
RICK  SOLIE  from  the  Fairbanks  North  Star  Borough  Assembly                                                               
supported  CSSB  183 because  it  would  allow the  community  to                                                               
better focus  on economic development  activities in  the borough                                                               
and  within  the communities.  Specifically,  it  takes the  non-                                                               
areawide  power   of  economic  development  that   is  currently                                                               
available and allows  that power to become an  areawide power. He                                                               
agreed  with  Ms. Jackson  that  the  cities would  retain  their                                                               
economic  development power  were this  to be  adopted. Both  the                                                               
city and the  borough agree they could  continue their respective                                                               
efforts.                                                                                                                        
                                                                                                                                
The  city has  its  own  council and  their  own  mil rate.  They                                                               
determine their  expenditure on various items  including economic                                                               
development  activities  and  tourism marketing.  Similarly,  the                                                               
borough has its own assembly and  its own millage rate. They have                                                               
an areawide  .5-mil tax and  a non-areawide 13.6-mil tax.  SB 183                                                               
would  allow  the 13.5-areawide  mils  to  be  used to  fund  all                                                               
economic development activities.                                                                                                
                                                                                                                                
SENATOR ELTON  said he had  two issues. First, could  the borough                                                               
assume  some economic  development projects  or must  they assume                                                               
all  under  this  legislation? Second,  the  legislation  clearly                                                               
gives boroughs  the power  if they so  choose. This  option comes                                                               
from the  word "may" on  line 13 of  the CS. However,  it doesn't                                                               
appear that cities  have that option without asking  for a change                                                               
in the statutes.                                                                                                                
                                                                                                                                
MR. SOLIE  replied there are no  some-or-all economic development                                                               
powers.   As  a   second-class   borough,   they  have   economic                                                               
development  authority,  but it  is  a  non-areawide power.  This                                                               
isn't a new power; it's an extension of existing power.                                                                         
                                                                                                                                
SENATOR ELTON  used tourism promotion  as an example  of economic                                                               
development  that  is  funded  by  bed taxes.  If  the  city  was                                                               
reluctant to give  up planning and zoning powers  within the city                                                               
limits, that  may preclude  economic development  in terms  of an                                                               
industrial park within the city. He  asked if the city would give                                                               
up  the  ability  to  do  that  if  the  borough  government  was                                                               
exercising  its ability  to provide  for economic  development or                                                               
would they be giving up the opportunity to use borough dollars?                                                                 
                                                                                                                                
MR. SOLIE  replied they aren't  giving up the opportunity  to use                                                               
borough dollars. "There  may be some legal  co-mingling of funds,                                                               
but  our millage  is separate  from the  city's millage.  Whether                                                               
they  raise  the mil  and  choose  to  prioritize more  money  to                                                               
economic  development   is  their  prerogative  and   within  the                                                               
borough, it's the borough's prerogative."                                                                                       
                                                                                                                                
In his mind  there is no link,  but there is a  link with visitor                                                               
marketing.  Fairbanks  Convention   and  Visitors  Bureau  (FCVB)                                                               
receives monies  from the  borough, from  the city,  from members                                                               
and other sources  to market Fairbanks as  a destination. Borough                                                               
dollars  aren't linked  to city  dollars in  that regard  either.                                                               
They go to FCVB and they develop  a program based on the level of                                                               
funding they have. Planning and  zoning are borough powers and SB                                                               
183 wouldn't change that.                                                                                                       
                                                                                                                                
DAN  BOCKHORST  from the  Department  of  Community and  Economic                                                               
Development advised he was available to answer questions.                                                                       
                                                                                                                                
SENATOR GARY STEVENS asked if  they were correct in assuming that                                                               
the  cities wouldn't  lose economic  development powers  when the                                                               
borough assumed those powers.                                                                                                   
                                                                                                                                
MR. BOCKHORST  said it  was an important  question and  he wasn't                                                               
convinced that  both would retain their  powers. Generally, state                                                               
law precludes the  possibility of more than  one local government                                                               
providing  a particular  service to  the  same area.  This is  to                                                               
prevent duplication of tax-levying jurisdictions.                                                                               
                                                                                                                                
He read  AS 29.35.340 that speaks  to the effect of  acquiring an                                                               
areawide  power. If  a borough  assumes  a power  on an  areawide                                                               
basis, it succeeds the power of  a city government with regard to                                                               
that particular power.                                                                                                          
                                                                                                                                
SENATOR GARY  STEVENS repeated it's  important to hear  from both                                                               
the City  of Fairbanks and  the City of  North Pole to  make sure                                                               
they understand that as well.                                                                                                   
                                                                                                                                
SENATOR ELTON agreed  that is an important point  to clarify, but                                                               
SB  183 also  appears  to  be at  odds  with  the Local  Boundary                                                               
Commission   (LBC)  mission   to   encourage  consolidation   and                                                               
efficient government.                                                                                                           
                                                                                                                                
MR. BOCKHORST advised  he was not representing the  LBC that day,                                                               
but he  did recall they  approved the petition  for consolidation                                                               
of local  government of the  City of Fairbanks and  the Fairbanks                                                               
North  Star  Borough  several  years  ago and  it  was  not  well                                                               
received by the  voters. There is a  formal mechanism established                                                               
in the  law that  allows city governments  to transfer  powers to                                                               
borough  government  and  this is  consistent  with  the  general                                                               
constitutional   requirement  of   not  having   more  than   one                                                               
government providing services to the same area.                                                                                 
                                                                                                                                
There was no further testimony.                                                                                                 
                                                                                                                                
CHAIR  WAGONER announced  he would  like  to move  the bill  from                                                               
committee and  get a  legal opinion before  the hearing  in State                                                               
Affairs.                                                                                                                        
                                                                                                                                
SENATOR GARY  STEVENS made a motion  to move CSSB 183  (CRA) from                                                               
committee with individual recommendations and zero fiscal note.                                                                 
                                                                                                                                
SENATOR  ELTON  objected  for  the   purpose  of  stating  he  is                                                               
uncomfortable voting  when he  doesn't have an  answer to  a very                                                               
significant question. He then removed his objection.                                                                            
                                                                                                                                
CSSB 183 (CRA) moved from committee.                                                                                            
                                                                                                                                
CHAIR WAGONER adjourned the meeting at 3:20 pm.                                                                                 

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