HB 71-AK REGIONAL ECONOMIC ASSISTANCE PROGRAM  3:49:16 PM CHAIR OLSON announced that the final order of business would be HOUSE BILL NO. 71, "An Act extending the termination date of the Alaska regional economic assistance program; and providing for an effective date." 3:49:31 PM REPRESENTATIVE SHELLEY HUGHES, Alaska State Legislature, stated HB 71 would extend the Alaska Regional Development Organization (ARDOR). She explained this bill would extend the ARDOR program from 2013 - 2018. She highlighted that the ARDOR program was established in 1988, and will celebrate its silver jubilee this year. The DCCED has been encouraged to formation of these organizations. The department offers grants each year to qualifying ARDOR organizations that provide technical assistance to communities. Currently, 12 ARDOR organizations exist statewide, at a cost of approximately $62,000 per year per ARDOR. The ARDORs require one-third in matching funds, including 20 percent from local sources, she stated. The ARDORS have been successful in leveraging state funding by a three to one ratio, with some ARDORS obtaining an eight to one funding ratio. Since inception in 1988, the ARDORS have not been audited. Thus she is currently requesting an audit be performed, which will go to the Legislative Budget & Audit Committee for consideration. She offered her belief that the ARDORs are working well, but there may be some ways to improve the organization's functions. ARDORs were formed, based on the belief that a locally driven initiative, partnering with state and other entities would be the best combination to figure out good economic development ideas. Surely this would allow for healthier communities, and for stronger local sustainable economies, she also said. She related an audit could be completed in about two years. 3:52:43 PM REPRESENTATIVE SADDLER asked for the number of staff for the program. REPRESENTATIVE HUGHES answered that the ARDOR program has one coordinator although was not certain about additional staff since each ARDOR is governed by its own board. 3:53:31 PM REPRESENTATIVE HERRON asked whether it would be appropriate to change the sunset date to two years in the bill since it would take two years to conduct the audit. REPRESENTATIVE HUGHES agreed. CHAIR OLSON suggested an audit might take three years and he offered to further discuss this with the LB&A committee. 3:54:24 PM SHELLY WRIGHT, Executive Director, Southeast Conference, Alaska Regional Development Organization (ARDOR), Department of Commerce, Community & Economic Development (DCCED), said the Southeast Conference is the ARDOR for Southeast Alaska. She asked to speak briefly about the advantages of ARDORs, noting each region is different. She emphasized the value of having ARDORs is the ability to partnership with the state in planning processes and in collaboration efforts. She highlighted that the state helps organize the ARDORs and assists them in getting together periodically, which is very valuable for regional development organizations statewide. She reported the funding for ARDORs is unrestricted funding and most funding is received through the grant process and is project-oriented funding. The Southeast Conference receives grants and contracts on specific projects for the program to keep the administrative costs low, and allow the project funding to be spent on the specific project. 3:56:22 PM MS. WRIGHT related that Southeast Conference has been in existence since 1958. She said she is privileged to serve in a seasoned organization, noting the Southeast Conference is a membership organization. She pointed out information in members' packet that more fully describes the funding process, how the money is leveraged, and lists ARDOR's top ten priorities. She characterized the Southeast Conference as a very active development organization that works with 23 incorporated and 21 unincorporated communities. The group meets biannually to work on annual and five-year plans. She asked to speak in favor of the five-year extension to the ARDOR program since the additional time would provide security for planning purposes for the ARDORs. She further asked members to consider funding ardors to the maximum limit. 3:57:51 PM REPRESENTATIVE MILLETT asked her to speak to successes of the Southeast Conference. She said she is most familiar with the energy projects that the Southeast Conference has worked on, but would like her to speak to the relationship with the DCCED. MS. WRIGHT answered that the Southeast Conference has been able to keep the Kake Petersburg Intertie project moving forward despite the numerous roadblocks. She said the ARDOR works to keep the environmental impact statement moving forward and to keep organizations informed, including the U.S. Forest Service and the DOT&PF. She related that Southeast Alaska Power Agency (SEAPA) - the utility that will run the project - and Inside Passage Electric Cooperative (IPEC) - the current utility - have signed an agreement through facilitation of Southeast Conference. She mentioned the energy coordinator has also assisted Reynolds Creek Hydroelectric Project in moving forward, with a project manager and business plan. She reported that the Southeast Conference created the Integrated Resource Plan to help Southeast Alaska communities develop their energy projects. She stated the Southeast Conference is very interested in the Alaska Marine Highway System (AMHS), and serves as a communications conduit between the governor's office and the 180 Southeast Conference members. Additionally, the ARDORs work with the state agencies, such as the DCCED, on regional development plans and energy plans. The ARDORs also share information between organizations. In fact, the Department of Labor & Workforce Development also uses the ARDORs to provide them with a link of what is happening in the regions. The Alaska Workforce Investment Board (AWIB) also works with the ARDORs to assess what is happening on the ground. She concluded that the ARDORs support HB 32 and are happy to do so from the ground up. 4:01:46 PM REPRESENTATIVE SADDLER asked whether the executive director of Southeast Conference is paid from federal or state funds. MS. WRIGHT answered that state and federal funding provides operational funding and covers expenses for staff, rent, and utilities. REPRESENTATIVE SADDLER, after reviewing the fiscal note, remarked that the funding comes from grants and benefits to the ARDOR organization. MS. WRIGHT answered yes. 4:02:36 PM ANDY VARNER, Executive Director, Southwest Alaska Municipal Conference, (SWAMC), Alaska Regional Development Organization (ARDORS), Department of Commerce, Community & Economic Development (DCCED), stated that the SWAMC serves three subregions of Southwest Alaska: the Aleutian/Pribilofs, Bristol Bay, and Kodiak. He said the SWAMC is a large ARDOR and district about the size of Oregon. He stated that Ms. Wright described the ARDORs quite well and the SWAMC uses its funding similarly. The ARDOR grant makes up 20 percent of its operating budget but it also receives federal funds as well as in-kind support. Besides functioning as an ARDOR, the SWAMC has also been designated as an economic development district by the Federal Economic Development Administration. The Alaska Workforce Investment Board (AWIB) and the ARDORs are figuring out how to work best together to resolve workforce issues in regions, noting that the ARDORs are willing partners. The SWAMC has been working on an upcoming three day summit in Anchorage and will also hold two board meetings this week. Aside from economic development planning, SWAMC and other ARDORs have been working on regional energy planning and signing contracts with Alaska Energy Association (AEA). He recalled that several years ago the Southeast Conference began working on energy planning and signed a contract with AEA in the last year or so. He reported that SWAMC currently has a contract with AEA on Bristol Bay and Aleutian regional plans and has also been discussing the Kodiak regional energy plan. Thus SWAMC may do three energy plans. He reported that on Wednesday the SWAMC will hold an energy workshop to discuss energy planning, priorities, and projects. Further, the SWAMC conducted a Broadband telecommunications strategy for the Southwest region that addresses access and adoption issues to improve telecommunications, infrastructure, and usage. He characterized this effort as being a big economic linchpin for the regions. In fact, the SWAMC will attend numerous statewide broadband task force meetings to ensure the rural regions are covered. 4:07:00 PM MR. VARNER emphasized that SWAMC concentrates on thinking big and small, such that by thinking small he means helping mom and pop businesses, tourism operators, and bed and breakfast (B&B) operators bridge the digital divide. For example, SWAMC helps bridge the digital divide by conducting workshops and by providing support with the current Vista volunteer's expertise. This effort helps small businesses and the local economy thrive; however, this region is large that SWAMC must also think bigger and focus more on the region as a whole. In doing so, SWAMC focuses on the energy planning previously mentioned, as well as on infrastructure planning. He pointed out two subregions are served by the AMHS planning so SWAMC works to communicate the regional needs to the DOT&PF. The SWAMC has also considered transshipment in terms of the opening up of Arctic region, which will be discussed at the economic development summit later this week. Further, SWAMC has worked to help Southwest Alaskans participate in fisheries, noting SWAMC's economist is also a fisherman and researches the region's fisheries. Additionally, SWAMC participates in the fishery maritime initiative the University of Alaska is working on to enhance the fisheries industry. To summarize, the SWAMC works with other ARDORS on economic development issues, such as food and agriculture, energy planning, or education programs. For example, SWAMC partnered with the Anchorage Economic Development Corporation (AEDC) to tour the Kodiak launch facility with a Lockheed Martin representative. In conclusion, the ARDORs have been working together to leverage expertise to move the economy forward and partner on projects, especially given tighter funding, to move the economy forward. He emphasized that the ARDOR funding is extremely important to SWAMC since it "keeps the lights on." The SWAMC has been an ARDOR for 25 years, which means this year the ARDORs celebrate their Silver Jubilee. Finally, the SWAMC has enjoyed working with DCED to make the program as good as it can be. 4:10:32 PM REPRESENTATIVE MILLETT asked how much of the $807,539 in funding SWAMC receives. MR. VARNER answered $62,122. He explained the funds are evenly divided among the 12 ARDORs. 4:10:55 PM REPRESENTATIVE JOSEPHSON asked for the nature of the energy plans and whether the SWAMC is working on thermal, hydroelectric, or wind power. MR. VARNER answered the SWAMC has taken a comprehensive look at available options and alternatives for communities. For example, SWAMC traveled to Adak recently with an energy engineer and two SWAMC staff to meet with different leaders to assess options and help the community map out an energy future. He pointed out the area has enormous hydroelectric potential, but it has never been developed. One thing SWAMC can do is to help the community and the region prioritize energy projects and pathways to help the local energy situation, which should also help the region's economy. In fact, the main reason SWAMC has been involved is to create economic development opportunities. Thus, SWAMC will help with resource assessment and to prioritize projects and alternatives in order to map out an energy future for the region. 4:12:29 PM CHAIR OLSON stated that public testimony would be held open. [HB 71 was held over.]