HB 316-MILITARY FACILITY ZONES  1:50:18 PM CO-CHAIR THOMPSON announced that the next order of business would be HOUSE BILL NO. 316, "An Act relating to military facility zones in the state; relating to the development of housing in military facility zones; relating to the financing of projects in military facility zones; and providing for an effective date." 1:50:33 PM THOMAS STUDLER, staff, Representative Steve Thompson, Alaska State Legislature, introduced HB 316 on behalf of Representative Thompson, sponsor. Mr. Studler said the bill gives statutory authority to the Department of Military & Veterans' Affairs (DMVA) to establish military facility zones within the state. These zones are designated areas nearby military bases or facilities where industrial or economic development will directly enhance the military's ability to fulfill its mission. Military facility zones are successfully employed in other states as vehicles to obtain and administer funds for business development specifically relating to military activities. Funding for such zones in Alaska may be available from the Alaska Industrial Development and Export Authority (AIDEA), the Alaska Housing Finance Corporation (AHFC), or from federal New Market Tax Credits. Federal, state, or local public or private funding sources, credit, or guarantee programs can be made available directly to municipalities and boroughs that are working on specifically approved projects within a military facility zone. Military facility zones create opportunities for significant benefits to Alaska and to the nation. They will enhance economic activity near military installations and thereby facilitate economic growth and development in the state, especially where local governments are working in close partnership with their military counterparts. The zones promote expansion of infrastructure to benefit both military and civilian objectives, such as civil defense, homeland security, and emergency response. They will enhance the nation's military capabilities by helping bases operate more effectively and efficiently. Finally, military facility zones in Alaska will clearly demonstrate the state's continuing and substantive support for the armed services, and help defend against the negative impacts on Alaska's regional economies and military communities that might occur should Congress choose to implement the federal Base Realignment and Closure Act (BRAC). 1:53:28 PM REPRESENTATIVE MILLER asked for a clear definition of what constitutes a military facility zone. [Although not specifically stated, HB 316 was set aside and taken up later in the meeting.] HB 316-MILITARY FACILITY ZONES  CO-CHAIR THOMPSON returned the committee's attention to HB 316. 1:56:35 PM DALE NASH, Chief Executive Officer, Alaska Aerospace Corporation, Department of Military & Veterans' Affairs (DMVA), informed the committee that Lockheed Martin is the largest defense contractor in the U.S. and the world. He said HB 316 derived from working closely with Lockheed Martin in order to improve the state's position with military customers and the aerospace support industry. Several states have adopted similar legislation to create economic facility zones in support of military installations, so the state is in a position to help facilitate a reduction in costs for the military, thus becoming more competitive. When states partner with the military and its industrial base - for example, with Lockheed - costs are kept down for all. These zones are specific to the military and should not be confused with other economic development zones. He said the intent of the bill is to affect the area within a reasonable driving distance from military installations; for example, to enable the base to set up low-cost housing without the burden of a large capital investment. Mr. Nash advised that most military installations have a large industrial base nearby; however, Alaska has few aerospace support companies. Nearby support facilities allow contractors to resupply equipment without shipping material long distances. He assured the committee this would help the Kodiak Launch Complex grow in support of the National Aeronautics and Space Administration (NASA) or the military. This approach can also be an effective way to address the BRAC process because the military should focus its concern on ships, planes, and troops, and not on recreation centers, shopping, and more. Sharing these costs with the military would help attract military expansion, including the utilization of space on a base that may now be idle. Finally, Mr. Nash pointed out that this is enabling legislation effective statewide for all branches of the military. 2:03:37 PM REPRESENTATIVE CISSNA asked whether there are ways to make the legislation "pay[ing] attention to exactly what this state is like." She observed that Alaska has many small communities spread over vast regions, and the position of the state - relative to other states and nearby land masses - is critical to security. She opined Alaska should be strengthening its borders and "planning ahead" when locating military sites. CO-CHAIR THOMPSON held Representative Cissna's question for Deputy Commissioner Pierre. 2:06:01 PM REPRESENTATIVE MILLER asked whether an economic zone or a military facility zone could be established on a military base or territory. MR. NASH explained that other states have established "co-use" on a base, but he said "I don't think the military base nor the commander would want to come under the legislation of a military effectiveness zone;" the intent is for the zone to be close. He agreed the state has a strategic location, but cautioned that its location alone will not guarantee Alaska will not turn into a training outpost with a skeleton crew. MR. NASH, in response to Representative Cissna, said the Kodiak Launch Complex is located on Narrow Cape. 2:09:21 PM REPRESENTATIVE CISSNA observed there are a number of other places in the state that have a history of military bases. MR. NASH agreed, but pointed out that HB 316 is trying to focus on protecting the missions that the state now has. He referred to the transfer of F-16s from Eielson Air Force Base in Fairbanks to Joint Base Elmendorf-Richardson in Anchorage, saying the focus now is to work with industry in support of a military installation to bring expansion, or to protect existing missions. He added that the legislation will allow the state "to react with the local communities and boroughs ... if opportunities arise; we do not want to have to wait for another legislative cycle to begin the process." 2:11:38 PM CO-CHAIR SADDLER, co-sponsor of HB 316, had the following testimony read by Co-Chair Thompson [original punctuation provided, with some formatting changes]: To Co-Chair Thompson and Members of the MLV Committee: Though I can't be there today, I wanted to put on record my strong support for HB 316, Military Facilities Zones. I was pleased to work on this legislation during the interim with Representatives Thompson and Feige, and to see it come before our committee. I see HB 316 as an important legislative tool to strengthen the position of military facilities in our state. Alaska has 32 different military installations that are critical elements in our state economy. There are more than 24,000 active-duty, Guard and Reserve troops serving in Alaska, with an annual payroll of more than $1.5 billion. About 13 percent of the state economy depends on the military, with the impact being especially significant near the larger installations. These bases are a significant part of our nation's defense structure. They defend the nation's airspace and outer space; rapidly deploy forces around the world in times of crisis; support global logistics and transportation functions; and provide training opportunities that are unmatched elsewhere in the world. We've heard recent news that does not bode well for Alaska's military bases. We've heard news of nearly half-trillion dollars in defense budget cuts over the next 10 years. We've heard of the possible loss of F- 16s from Eielson Air Force Base, and of HC-130s from Joint Base Elmendorf-Richardson. We've heard that nearly 270 civilian jobs are being cut from these two bases. And we've heard the Secretary of Defense raise the prospect of another round in the Base Realignment and Closure (BRAC) process that could mean the further diminution of the military's presence in Alaska. HB 316 can provide a number of significant benefits to our state and nation: · It will provide a mechanism for bringing new federal and state money to bear on the bases. · It will help develop infrastructure that can improve living conditions and economic prospects for the communities surrounding military facilities. · It will help Alaska's bases become more efficient and better able to effectively perform their missions, strengthening the case against their realignment or closure. · It will provide a mechanism to fund expansion of existing facilities to embrace new missions. · It will help protect private - and public-sector jobs. · It will provide another positive demonstration of Alaska's support for the military. I am proud to be a co-sponsor of this legislation; please join me in supporting its passage. Rep. Dan Saddler, Co-Chair, Military and Veterans Affairs Committee 2:14:49 PM MCHUGH PIERRE, Deputy Commissioner, Office of the Commissioner/Adjutant General, Department of Military & Veterans' Affairs, addressed questions that had been asked previously. He clarified that the nearby community will apply for the zone and will designate the size of the zone - up to an area of 500 square miles. The area may overlap an existing military facility, but will not have an impact on existing businesses or other activities. The legislation enables the community to develop the area near the military facility in cooperation with partners such as Lockheed Martin, which are direct contractors with the U.S. Department of Defense (DOD). Other businesses, such as "payday lenders" cannot take advantage of this legislation. For example, if Fairbanks North Star Borough created a zone and a company that contracts with DOD proposes a project in an area near Eielson Air Force Base or Fort Wainwright, the company could qualify for development opportunities such as low-interest loans from AHFC or AIDEA. Mr. Pierre said DMVA feels it is critical to diversify the users of the military installations in order to offset the high cost of operating military installations in Alaska, maintain current missions, expand to new missions, and build the economy. 2:17:25 PM REPRESENTATIVE CISSNA related that some of the residents of Galena want to use facilities at the closed base for harvesting willow, and asked whether this legislation would be relevant to that issue. 2:18:30 PM MR. PIERRE indicated no. House Bill 316 is relevant only to existing, active military installations. In further response to Representative Cissna, he said Fort Greely is a good example of a community with an existing military infrastructure. CO-CHAIR THOMPSON asked whether the legislation could be utilized at a new base. MR. PIERRE said yes. 2:20:28 PM JEFF TROAN, Vice President, Economic Development, Lockheed Martin Corporation, said he has worked for Lockheed Martin for 30 years - 15 years in economic development. He generally works on economic development agreements between Lockheed Martin and states and localities, which lower the cost of business for his company so it can pass the savings on to the military. The zones create an optimum business climate that supports the military mission and lowers the cost of goods and services through enhanced relationships. He noted that in other states the zones follow town planning and are usually out the main gate of the military base and in the surrounding area where an industrial park would be. Mr. Troan gave the example of a military commander who wants to obtain an electronic warfare mission but who has no facilities. A contractor could create the infrastructure necessary to do the mission and share the infrastructure with military personnel. To establish a zone on the base, "enhanced-use leasing or modified enhanced-use leasing" legislation is necessary and the base commander segregates an unused portion of the base, leases it to a private or public entity, and that area is redeveloped to support new missions on the base but with private and public capital instead of military construction funds. This happened at (Indisc.) near Ogden, Utah. 2:25:09 PM MR. NASH returned to Representative Cissna's question about harvesting biofuel at the closed base in Galena. He advised that the legislation could enable harvesting of biofuel in an area near an active base. CO-CHAIR THOMPSON gave an example of a private company using a military facility zone to finance the construction of a gas pipeline to Eielson Air Force Base. MR. NASH agreed this would be a "perfect candidate." REPRESENTATIVE CISSNA opined the military zones - if they are long-term - would be beneficial for local jobs. 2:28:05 PM CO-CHAIR THOMPSON closed public testimony. REPRESENTATIVE MILLER asked whether there are any differences in law enforcement, fire and rescue, or taxes within the zone, once the zone is designated. CO-CHAIR THOMPSON advised the status would not change. 2:29:31 PM REPRESENTATIVE LYNN moved to report HB 316, Version 27-LS1191\I, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 316 was reported out of the House Special Committee on Military and Veterans' Affairs.