00 CS FOR SENATE BILL NO. 88(FIN) 01 "An Act relating to grants to municipalities, named recipients, and unincorporated 02 communities; establishing capital project matching grant programs for municipalities 03 and unincorporated communities; establishing a local share requirement for capital 04 project grants to municipalities, named recipients, and unincorporated communities; 05 and providing for an effective date." 06 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 07 * Section 1. PURPOSE. (a) The legislature recognizes the continued need for state-funded capital projects (1) 08 that are of regional or statewide significance, (2) that meet basic 09 needs, such as educational facility projects constructed under AS 14.11 and village safe water 10 projects, or (3) for which costs will exceed the amount available to a municipality or a 11 community under the capital project matching grant program. The legislature also recognizes 12 the continued need for legislatively directed funding of other capital projects. 13 (b) It is the purpose of this Act to 14 (1) provide a capital project funding system that is equitable to municipalities, 01 unincorporated communities, and named grant recipients throughout the state; 02 (2) enhance the role of communities in initiating and prioritizing the 03 construction of capital projects; 04 (3) encourage a sense of local ownership in capital projects by requiring local 05 participation in the funding of those projects; and 06 (4) improve the process for making grants for capital projects by providing a 07 more orderly and thoughtful planning process that involves the local community, the executive 08 branch, and the legislature. 09 * Sec. 2. AS 36.10.180(a) is amended to read: 10 (a) The preferences established in AS 36.10.150 - 36.10.175 apply to work 11 performed 12 (1) under a contract for construction, repair, preliminary surveys, 13 engineering studies, consulting, maintenance work, or any other retention of services 14 necessary to complete a given project that is let by the state or an agency of the state, 15 a department, office, state board, commission, public corporation, or other 16 organizational unit of or created under the executive, legislative, or judicial branch of 17 state government, including the University of Alaska and the Alaska Railroad 18 Corporation, or by a political subdivision of the state including a regional school board 19 with respect to an educational facility under AS 14.11.020; 20 (2) on a public works project under a grant to a municipality under 21 AS 37.05.315 or AS 37.06.010; 22 (3) on a public works project under a grant to a named recipient under 23 AS 37.05.316; 24 (4) on a public works project under a grant to an unincorporated 25 community under AS 37.05.317 or AS 37.06.020; and 26 (5) on any other public works project or construction project that is 27 funded in whole or in part by state money. 28 * Sec. 3. AS 37.05.315(a) is amended to read: 29 (a) When an amount is appropriated or allocated as a grant to a municipality, 30 the Department of Administration shall promptly notify the municipality of the 31 availability of the grant. When the Department of Administration receives an 01 agreement executed by the municipality which provides that the municipality (1) will 02 spend the grant for the purposes specified in the appropriation or allocation; (2) will 03 allow, on request, an audit by the state of the uses made of the grant; and (3) assures 04 that, to the extent consistent with the purpose of the appropriation or allocation, the 05 facilities and services provided with the grant will be available for the use of the 06 general public, the Department of Administration shall pay the grant directly to the 07 municipality. The agreement executed by a municipality under this section shall be 08 on a form furnished by the Department of Administration and shall be executed within 09 60 days after the effective date of the appropriation or allocation. As provided in 10 AS 37.06.030, for each grant to a municipality under this section for a capital 11 project, as defined in AS 37.07.120, the municipality shall contribute a local share 12 of the cost of the capital project for which the grant is made. 13 * Sec. 4. AS 37.05.316(a) is amended to read: 14 (a) When an amount is appropriated or allocated to a department as a grant for 15 a named recipient that is not a municipality, the department to which the appropriation 16 or allocation is made shall promptly notify the named recipient of the availability of 17 the grant and request the named recipient to submit a proposal to provide the goods 18 or services specified in the appropriation act for which the appropriation or allocation 19 is made. At the same time, the department may issue a request for proposals from 20 other qualified persons to provide the same goods or services in the same area. The 21 department shall award the grant to the named recipient unless the Office of the 22 Governor, with due regard for the local expertise or experience of those making 23 proposals, determines that an award to a different party would better serve the public 24 interest. If the grant is awarded to a party other than that named by the legislature, 25 the basis of that action shall be stated in writing at the time the grant is issued and a 26 copy of the written statement shall be sent to the Legislative Budget and Audit 27 Committee. A grant agreement must be executed within 60 days after the effective 28 date of the appropriation or allocation. As provided in AS 37.06.030, for each grant 29 made under this section for a capital project, as defined in AS 37.07.120, the 30 named grant recipient shall contribute a local share of the cost of the capital 31 project for which the grant is made. 01 * Sec. 5. AS 37.05.317(a) is amended to read: 02 (a) When an amount is appropriated or allocated as a grant under this section 03 to an unincorporated community, it shall be disbursed as follows: 04 (1) Within 45 days after the effective date of the appropriation or 05 allocation, the Department of Community and Regional Affairs shall notify the 06 governing body of the unincorporated community, if any, that a grant is available. 07 (2) The Department of Community and Regional Affairs shall 08 determine if there is a qualified incorporated entity in the community area that will 09 agree to receive the grant and administer it, subject to terms generally applicable to 10 private grantees. If there is more than one such entity, the Department of Community 11 and Regional Affairs shall select the most qualified and the grant shall be awarded to 12 that incorporated entity for the purposes specified in the appropriation act. However, 13 the Department of Community and Regional Affairs shall give preference to a 14 nonprofit corporation organized by a community for receipt of the grant. 15 (3) If there is no incorporated entity qualified to receive the grant, the 16 grant may not be awarded [DEPARTMENT OF COMMUNITY AND REGIONAL 17 AFFAIRS SHALL ADMINISTER THE PROGRAM AS SPECIFIED IN THE 18 APPROPRIATION ACT DIRECTLY OR THROUGH AGENTS OR CONTRACTORS 19 WITH WHOM IT MAY CONTRACT IN THE COMMUNITY AREA]. 20 * Sec. 6. AS 37.05.317 is amended by adding a new subsection to read: 21 (c) As provided in AS 37.06.030, for each grant to an unincorporated 22 community under this section for a capital project, as defined in AS 37.07.120, the 23 incorporated entity to whom the grant is awarded shall contribute a local share of the 24 cost of the capital project for which the grant is made. 25 * Sec. 7. AS 37.05.318 is repealed and reenacted to read: 26 Sec. 37.05.318. ADOPTION OF REGULATIONS. (a) The Department of 27 Administration for grants under AS 37.05.315, the Department of Community and 28 Regional Affairs for grants under AS 37.05.317, and a department that administers a 29 grant under AS 37.05.316 30 (1) may adopt regulations that impose additional requirements or 31 procedures to implement, interpret, make specific, or otherwise carry out the applicable 01 provisions of AS 37.05.315 - 37.05.317 for grants administered by the department; 02 (2) shall adopt regulations providing for periodic audits of the use of 03 money for grants administered by the department, including audit of the department's 04 determination of the value of, and adequacy of the verification of the actual use of, 05 locally funded or contributed labor under AS 37.06.030 on capital projects funded 06 under AS 37.05.315 - 37.05.317. 07 * Sec. 8. AS 37.05.321 is amended by adding a new subsection to read: 08 (b) No more than 10 percent of the total amount of money spent on land 09 acquisition, planning, design, or construction of a capital project funded in whole or 10 in part with money granted under AS 37.05.315 - 37.05.317 may be used for 11 administrative expenses. No more than five percent of the total amount of money 12 spent on acquisition of equipment and equipment repair costs for a capital project 13 funded in whole or in part with money granted under AS 37.05.315 - 37.05.317 may 14 be used for administrative expenses. 15 * Sec. 9. AS 37 is amended by adding a new chapter to read: 16 CHAPTER 06. CAPITAL PROJECT MATCHING GRANT PROGRAMS. 17 Sec. 37.06.010. MUNICIPAL CAPITAL PROJECT MATCHING GRANT 18 PROGRAM. (a) The municipal capital project matching grant program is established 19 in the department. Grants to municipalities under this program shall be administered 20 as provided in this section. 21 (b) The municipal capital project matching grant fund is established in the 22 department and consists of appropriations to the fund. Appropriations to the fund do 23 not lapse except as provided in (f) of this section. The money in the fund is held by 24 the department in custody under this subsection for each municipality. The department 25 shall establish, for each municipality, an individual grant account within the fund. As 26 provided in this subsection, each fiscal year the department shall allocate, to the 27 individual grant accounts, appropriations to the fund. The department shall credit 28 interest earned on money in an individual grant account to that account. Except as 29 provided in (c) of this section, the amount allocated under this subsection to an 30 individual grant account in a fiscal year is determined by multiplying the total amount 31 appropriated to the fund during that fiscal year by a fraction, 01 (1) the numerator of which equals for a municipality with a population 02 (A) under 1,000, the amount equal to that population multiplied 03 by 1.5; 04 (B) of at least 1,000 but less than 5,000, the amount equal to 05 that population multiplied by 1.4; 06 (C) of at least 5,000 but not greater than 10,000, the amount 07 equal to that population multiplied by 1.2; 08 (D) of over 10,000, the amount equal to that population; and 09 (2) the denominator of which equals the sum of the numerators 10 calculated for all municipalities under (1)(A) - (D) of this subsection. 11 (c) A minimum of $25,000 shall be allocated to each municipality's individual 12 grant account each fiscal year under (b) of this section. The department shall reduce 13 allocations under (b) of this section on a pro rata basis, based upon the population of 14 the municipalities, if necessary to fund the minimum amount for each municipality. 15 If appropriations are not sufficient to fully fund the minimum amount for each 16 municipality, the amount appropriated shall be allocated equally among the 17 municipality individual grant accounts. 18 (d) By October 1 of each fiscal year, each municipality shall submit to the 19 governor a prioritized list of capital projects and estimated costs to be financed with 20 money from the municipality's individual grant account established under (b) of this 21 section. The list must include the amount and source of the local share required by 22 AS 37.06.030. The governor shall include in the capital improvements program 23 presented to the legislature under AS 37.07.060 the projects submitted by each 24 municipality that the governor recommends for funding. If, in the capital 25 improvements program, the governor includes projects in other than the priority order 26 submitted by a municipality, the governor shall provide the legislature with a written 27 statement of the reasons for that action. 28 (e) The legislature may make appropriations from a municipality's individual 29 grant account established under (b) of this section to the municipality for capital 30 projects under this section. Subject to appropriations under this subsection and to the 31 local share requirements of AS 37.06.030, each municipality may draw amounts from 01 its individual grant account for a capital project, in accordance with an appropriation 02 for that project. In accepting a draw, the municipality covenants with the state that 03 it will provide for the operation and maintenance of the capital project for which the 04 draw is used for the practical life of the project, and acknowledges that the state is not 05 responsible for operating or maintaining the capital project or for paying for its 06 operation or maintenance. This requirement does not apply to use of money from a 07 draw for repair or improvement of an existing facility that is operated or maintained 08 by the state at the time that the draw is made if the repair or improvement for which 09 the draw is used will not substantially increase the operating or maintenance costs to 10 the state. No more than 10 percent of the total amount of money spent on land 11 acquisition, planning, design, or construction of a capital project funded in whole or 12 in part with money appropriated under this subsection may be used for administrative 13 expenses. No more than five percent of the total amount of money spent on 14 acquisition of equipment and equipment repair costs for a capital project funded in 15 whole or in part with money appropriated under this subsection may be used for 16 administrative expenses. If a municipality provides grant money from a draw to 17 another recipient, the municipality may not use any of the money from the draw for 18 administrative expenses. The municipality and its agents, contractors, and 19 subcontractors shall comply with the hiring preferences under AS 36.10 in hiring 20 employees to be paid wholly or in part with money from a draw. 21 (f) A municipality shall repay to the department money drawn from its 22 individual grant account if substantial, ongoing work on the capital project is not 23 started within five years after the effective date of the appropriation from which the 24 draw is funded. Money repaid shall be deposited into the general fund. Money from 25 an allocation to a municipality's individual grant account that has not been drawn out 26 by the municipality within five years after the effective date of the appropriation from 27 which the allocation is funded lapses into the general fund. 28 (g) For purposes of this section, in calculating the population of a borough the 29 population of each city in the borough is excluded. The determination of population 30 shall be based upon data used by the Department of Community and Regional Affairs 31 under AS 14.17.140, AS 29.45.110, and AS 29.60.140 - 29.60.150. 01 (h) The provisions of AS 37.05.321 apply to a grant and draws made under 02 this section, and to earnings from the grant and draws. 03 (i) In this section, unless specified otherwise, "department" means the 04 Department of Administration. 05 Sec. 37.06.020. UNINCORPORATED COMMUNITY CAPITAL PROJECT 06 MATCHING GRANT PROGRAM. (a) The unincorporated community capital project 07 matching grant program is established in the department. Grants to unincorporated 08 communities under the program shall be administered as provided in this section. 09 (b) The unincorporated community capital project matching grant fund is 10 established in the department and consists of appropriations to the fund. 11 Appropriations to the fund do not lapse except as provided in (h) of this section. The 12 money in the fund is held by the department in custody under this subsection for each 13 unincorporated community eligible for an allocation under this subsection. The 14 department shall establish an individual grant account within the fund for each 15 unincorporated community that was entitled to receive state aid under AS 29.60.140 16 during the preceding fiscal year. As provided in this subsection, each fiscal year the 17 department shall allocate, to the individual grant accounts, appropriations to the fund. 18 An unincorporated community is eligible for an allocation in a fiscal year if the 19 community was eligible to receive state aid under AS 29.60.140 during the preceding 20 fiscal year. The department shall credit interest earned on money in an individual 21 grant account to that account. Except as provided in (c) of this section, the amount 22 allocated under this subsection to an individual grant account in a fiscal year is 23 determined by dividing the total amount appropriated to the fund during that fiscal year 24 by the number of unincorporated communities eligible for an allocation during that 25 fiscal year. 26 (c) A minimum of $25,000 shall be allocated to each eligible unincorporated 27 community's grant account each fiscal year under (b) of this section. If appropriations 28 are not sufficient to fully fund the minimum amount for each eligible unincorporated 29 community, the amount appropriated shall be allocated equally among the eligible 30 unincorporated communities. 31 (d) The department shall designate, in each eligible unincorporated community, 01 an incorporated nonprofit entity or a Native village council that agrees to receive and 02 spend grant money allocated to the unincorporated community's individual grant 03 account under (b) of this section. If there is more than one qualified entity in a 04 community, the department shall designate the entity that the department finds most 05 qualified to make draws from that unincorporated community's individual grant 06 account and spend the money. If there is no qualified incorporated nonprofit entity or 07 Native village council in an unincorporated community that will agree to receive and 08 spend money allocated to the community under (b) of this section, draws may not be 09 made from the unincorporated community's individual grant account and the amount 10 allocated to the account lapses into the general fund. 11 (e) By October 1 of each fiscal year, the incorporated nonprofit entity or 12 Native village council designated by the department under (d) of this section shall 13 submit to the governor a prioritized list of capital projects and estimated costs to be 14 financed with money from the community's individual grant account established under 15 (b) of this section. The list must include the amount and source of the local share 16 required by AS 37.06.030. The governor shall include in the capital improvements 17 program presented to the legislature under AS 37.07.060 the projects submitted by 18 designated entities under this subsection that the governor recommends for funding. 19 If, in the capital improvements program, the governor includes projects in other than 20 the priority order submitted by a designated entity, the governor shall provide the 21 legislature with a written statement of the reasons for that action. 22 (f) The legislature may make appropriations, from an unincorporated 23 community's individual grant account established under (b) of this section, for the 24 unincorporated community for capital projects under this section. Subject to 25 appropriations under this subsection and to the local share requirements of 26 AS 37.06.030, an entity designated by the department under (d) of this section may 27 draw, on behalf of the unincorporated community, amounts from that community's 28 individual grant account for a capital project in accordance with an appropriation for 29 that project. In accepting a draw, an entity designated by the department under (d) of 30 this section acknowledges that the state is not responsible for operating or maintaining 31 a capital project for which the draw is used, or for paying for its operation or 01 maintenance. The acknowledgment does not apply to use of money from a draw for 02 repair or improvement of an existing facility that is operated or maintained by the state 03 at the time that the draw is made if the repair or improvement for which the draw is 04 used will not substantially increase the operating or maintenance costs to the state. No 05 more than 10 percent of the total amount of money spent on land acquisition, planning, 06 design, or construction of a capital project funded in whole or in part with money 07 appropriated under this subsection may be used for administrative expenses. No more 08 than five percent of the total amount of money spent on acquisition of equipment and 09 equipment repair costs for a capital project funded in whole or in part with money 10 appropriated under this subsection may be used for administrative expenses. The 11 designated entity and its agents, contractors, and subcontractors shall comply with the 12 hiring preferences under AS 36.10 in hiring employees to be paid wholly or in part 13 with money from a draw. 14 (g) An entity designated by the department under (d) of this section that is a 15 Native village council may not draw money from an unincorporated community's 16 individual grant account unless the council waives immunity from suit for claims 17 arising out of activities of the council related to the draw. A waiver of immunity from 18 suit under this subsection must be on a form provided by the Department of Law. 19 Neither this subsection nor any action taken under it enlarges or diminishes the 20 governmental authority or jurisdiction of a Native village council. 21 (h) An entity designated by the department under (d) of this section shall repay 22 to the department money it has drawn from an unincorporated community's individual 23 grant account if substantial, ongoing work on the project is not started within five 24 years after the effective date of the appropriation from which the draw is funded. 25 Money repaid shall be deposited into the general fund. Money from an allocation to 26 an unincorporated community's individual grant account that has not been drawn out 27 by a designated entity within five years after the effective date of the appropriation 28 from which the allocation is funded lapses into the general fund. 29 (i) The limitations of AS 44.47.140 do not apply to a grant made under this 30 section. 31 (j) The provisions of AS 37.05.321 apply to a grant and draws made under this 01 section, and to earnings from the grant and draws. 02 (k) In this section, unless specified otherwise, "department" means the 03 Department of Community and Regional Affairs. 04 Sec. 37.06.030. LOCAL SHARE REQUIREMENTS. (a) For each capital 05 project grant for a municipality under AS 37.05.315, each draw made under 06 AS 37.06.010 or 37.06.020, and each capital project grant made to a named grant 07 recipient under AS 37.05.316, the municipality or named grant recipient shall 08 contribute a local share to the cost of the capital project for which the grant or draw 09 is made. The amount of the local share equals the local share percentage as calculated 10 under (1) of this subsection, divided by the state share percentage as calculated under 11 (2) of this subsection, multiplied by the amount of the grant or draw. For purposes 12 of this subsection, 13 (1) the local share percentage is 14 (A) 30 percent for a municipality with, or a named grant 15 recipient located in a municipality with, a population of 5,000 or more; 16 (B) for a municipality with, or a named grant recipient located 17 in a municipality with, a population of 1,000 - 4,999, the greater of 18 (i) 15 percent of the amount of the grant or draw; or 19 (ii) the amount that would be received by the 20 municipality from a property tax levy of 1/1000th of a mill per $1,000 21 of grant funds received under AS 37.05.315, 37.05.316, or 22 AS 37.06.010, but not more than 30 percent of the amount of the grant 23 or draw; 24 (C) for a municipality with, or a named grant recipient located 25 in a municipality with, a population of under 1,000, the greater of 26 (i) five percent of the amount of the grant or draw; or 27 (ii) the amount that would be received by the 28 municipality from a property tax levy of 1/1000th of a mill per $1,000 29 of grant funds received under AS 37.05.315, 37.05.316, or 30 AS 37.06.010, but not more than 30 percent of the amount of the grant 31 or draw; 01 (D) five percent for a named grant recipient located in an 02 unincorporated community; 03 (2) the state share percentage equals one minus the local share 04 percentage; 05 (3) the local share to be contributed by a municipality may be satisfied 06 with (A) federal, municipal, or local money; (B) labor used directly in the construction 07 of the project, land, materials, or equipment; the department shall determine the value 08 of a contribution under this subparagraph; (C) money from another nonstate source; 09 (D) money received by the municipality under AS 29.60.010 - 29.60.375; (E) state 10 taxes refunded or reimbursed to the municipality whose use for the purposes of this 11 subsection is not prohibited; and (F) allocations of state aid for the costs of school 12 construction debt under AS 14.11.100; except as provided in this paragraph, the local 13 share may not be satisfied with money from, or with the portion of an asset that was 14 obtained with money from, an appropriation, allocation, entitlement, grant, or other 15 payment from the state; 16 (4) the local share to be contributed by a named grant recipient may 17 be satisfied from (A) federal, municipal, or local money; (B) labor used directly in the 18 construction of the project, land, materials, or equipment; the department shall 19 determine the value of a contribution under this subparagraph; or (C) money from 20 another nonstate source; the local share may not be satisfied with money from, or with 21 the portion of an asset that was obtained with money from, an appropriation, 22 allocation, entitlement, grant, or other payment from the state. 23 (b) For each capital project grant to an unincorporated community under 24 AS 37.05.317 and each draw made under AS 37.06.020, the incorporated entity or 25 Native village council that receives the grant or makes the draw shall contribute a local 26 share of the cost of the capital project for which the grant or draw is made. The 27 amount of the local share equals the local share percentage as calculated under (1) of 28 this subsection, divided by the state share percentage as calculated under (2) of this 29 subsection, multiplied by the amount of the grant or draw. For purposes of this 30 subsection, 31 (1) the local share percentage is 5 percent if the effective date of the 01 appropriation from which the grant or draw is funded is no later than July 1, 1994, and 02 8 percent if the effective date is after July 1, 1994; 03 (2) the state share percentage equals one minus the local share 04 percentage; 05 (3) the local share may be satisfied from (A) federal or local money; 06 (B) locally funded or contributed labor used directly in the construction of the project, 07 land, materials, or equipment; the department shall determine the value of a 08 contribution under this subparagraph; (C) money from another nonstate source; or (D) 09 money received by the unincorporated community under AS 29.60.010 - 29.60.375; 10 except for money received under AS 29.60.010 - 29.60.375, the local share may not 11 be satisfied with money from, or with the portion of an asset that was obtained with 12 money from, an appropriation, allocation, entitlement, grant, or other payment from the 13 state. 14 (c) For purposes of (a) of this section, in calculating the population of a 15 borough the population of each city in the borough is excluded. The determination of 16 population shall be based upon data used by the Department of Community and 17 Regional Affairs under AS 14.17.140, AS 29.45.110, and AS 29.60.140 - 29.60.150. 18 Sec. 37.06.080. ADOPTION OF REGULATIONS. The Department of 19 Administration for grants under AS 37.06.010 and the Department of Community and 20 Regional Affairs for grants under AS 37.06.020 21 (1) may adopt regulations that impose additional requirements or 22 procedures to implement, interpret, make specific, or otherwise carry out the applicable 23 provisions of this chapter for grants administered by the department; 24 (2) shall adopt regulations providing for periodic audits of the use of 25 money for grants administered by the department under this chapter, including audit 26 of the department's determination of the value of, and adequacy of the verification of 27 the actual use of, locally funded or contributed labor on projects funded by a grant 28 under this chapter. 29 Sec. 37.06.090. DEFINITION OF "CAPITAL PROJECT". In this chapter, 30 "capital project" has the meaning given in AS 37.07.120. 31 * Sec. 10. IMPLEMENTATION; APPLICABILITY. (a) Notwithstanding sec. 11 of this 01 Act, a grant for a capital project may not be disbursed or drawn upon under AS 37.05.315 - 02 37.05.317 or AS 37.06, as amended or enacted by this Act, until after June 30, 1993. 03 (b) The changes made by this Act do not apply to a grant awarded under AS 37.05 04 before the effective date of this Act. 05 (c) Notwithstanding provisions relating to lists of projects and appropriations for 06 projects in AS 37.06.010(d) and (e) and AS 37.06.020(e) and (f), as added by sec. 9 of this 07 Act, the office of management and budget shall select projects to be funded with money 08 allocated to individual grant accounts from an appropriation that takes effect during fiscal year 09 1994. Selections shall be made from a list of proposed projects submitted by the grantee in 10 writing and signed by each legislator representing the area in which the projects will be 11 constructed. The Department of Administration shall make grants during fiscal year 1994 for 12 the projects selected by the office of management and budget from the individual grant 13 accounts of municipalities, and the Department of Community and Regional Affairs shall 14 make grants during fiscal year 1994 for the projects selected by the office of management and 15 budget from individual grant accounts of unincorporated community individual grant accounts. 16 * Sec. 11. This Act takes effect immediately under AS 01.10.070(c).