03/29/2012 09:00 AM Senate STATE AFFAIRS

                 HB 316-MILITARY FACILITY ZONES                                                                             
                                                                                                                                
9:43:23 AM                                                                                                                    
CHAIR  WIELECHOWSKI announced  that the  committee would  hear HB
,  which  allows  the  Department  of  Military  and  Veterans                                                               
Affairs (DMVA) to establish "military  facility zones." These are                                                               
zones of  economic and industrial  production that  help military                                                               
bases  fulfill their  mission.  The bill  passed  the House  with                                                               
great  bipartisan support.  About  13 percent  to  17 percent  of                                                               
Alaska's economic  activity can  be attributed to  military bases                                                               
around the state.                                                                                                               
                                                                                                                                
REPRESENTATIVE STEVE THOMPSON, sponsor  of HB 316, introduced the                                                               
bill.  He  said   that  HB  316  provides  a   flexible  tool  to                                                               
municipalities  to stimulate  businesses  in Alaska  that are  in                                                               
close proximity  to a military facility.  Military facility zones                                                               
create opportunities  for significant  benefit to Alaska  and the                                                               
nation. This  bill is  inclusive of all  Alaska, urban  and rural                                                               
alike.  These zones  promote the  expansion of  infrastructure to                                                               
benefit both military and civilian objectives.                                                                                  
                                                                                                                                
He reported  that there are  32 military installations  in Alaska                                                               
that  have more  than  24,000 active  duty  and reserve  National                                                               
Guard  troops  serving in  Alaska,  with  37,000 military  family                                                               
members.  The  annual  payroll amounts  to  $1.5  billion.  These                                                               
facilities include the  U.S. Army, the U.S. Air  Force, the Navy,                                                               
Marine  Corps, the  Coast Guard,  and  their respective  National                                                               
Guard and reserve components.                                                                                                   
                                                                                                                                
He   continued  to   say  that   military   facility  zones   are                                                               
successfully  employed   in  other  states,  such   as  Virginia,                                                               
Alabama, Texas, Florida, Maryland, and  Arizona. They are used as                                                               
vehicles to obtain and administer  funds for business development                                                               
specifically  relating to  military activities  that enhance  the                                                               
military's  mission and  make military  bases more  efficient and                                                               
effective.  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                                                               
of Alaska's  regional economies  and military  communities should                                                               
Congress  choose to  implement the  federal Base  Realignment and                                                               
Closure Act (BRAC).                                                                                                             
                                                                                                                                
THOMAS  STUDLER, staff,  Representative Steve  Thompson, provided                                                               
information  related to  HB  316  on behalf  of  the sponsor.  He                                                               
thanked  the committee  for hearing  the bill.  He read  from the                                                               
following sponsor statement:                                                                                                    
                                                                                                                                
     '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.'  HB 316  provides a  very flexible                                                                    
     tool to municipalities to  stimulate business in Alaska                                                                    
     in the close proximity of military facilities.                                                                             
                                                                                                                                
     HB 316  gives statutory authority to  the Department of                                                                    
     Military and  Veterans' Affairs to  establish 'military                                                                    
     facility zones'  within the  State of  Alaska. Military                                                                    
     facility zones are designated  areas in close proximity                                                                    
     to  a  military  base (facility)  where  industrial  or                                                                    
     economic development  will directly enhance  the base'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) and/or  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  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 forces.                                                                                  
                                                                                                                                
9:48:18 AM                                                                                                                    
CHAIR WIELECHOWSKI opened public testimony.                                                                                     
                                                                                                                                
CRAIG CAMPBELL, President and  CEO, Alaska Aerospace Corporation,                                                               
testified in  support of  HB 316, which  provides ways  for local                                                               
communities  to  help military  stay  in  Alaska. He  shared  his                                                               
experience with military bases outside  of Alaska where there are                                                               
many  military-related businesses  right next  to bases.  This is                                                               
not so in  Alaska. Other states try to BRAC-proof  their bases by                                                               
creating  partnerships with  businesses. They  make an  effort to                                                               
offset military  costs and entice  businesses to  communities. He                                                               
maintained that this effort should be  made in Alaska in order to                                                               
support the  military. Alaska Aerospace supports  this effort due                                                               
to  their involvement  with missile  activity. He  said the  bill                                                               
would make building a launch  complex economically feasible to do                                                               
in Kodiak.                                                                                                                      
                                                                                                                                
9:53:09 AM                                                                                                                    
MCHUGH  PIERRE, Deputy  Commissioner,  Department  of Military  &                                                               
Veterans  Affairs, testified  in  support of  HB  316. He  stated                                                               
support for local communities as  they bring forward the military                                                               
facility zone designation.                                                                                                      
                                                                                                                                
CHAIR  WIELECHOWSKI asked  if the  bill has  an impact  on Alaska                                                               
Housing Finance Corporation (AHFC}.                                                                                             
                                                                                                                                
ERIN  HAVELOCK,   Multi-Family  Underwriter   Supervisor,  Alaska                                                               
Housing  Finance Corporation,  answered questions  related to  HB
.  He stated  that the  statutory authority  to finance  loans                                                               
would  not be  affected; AHFC  would  simply be  notified of  the                                                               
application for the military facility zone.                                                                                     
                                                                                                                                
SENATOR PASKVAN asked about federal new market tax credits.                                                                     
                                                                                                                                
MR.  HAVELOCK replied  that the  new market  tax program  targets                                                               
commercial businesses, not private home financing.                                                                              
                                                                                                                                
SENATOR PASKVAN asked  if the new market tax  credits require the                                                               
creation of a military facility zone.                                                                                           
                                                                                                                                
MR.  HAVELOCK thought  that  was a  question  better directed  to                                                               
Alaska Industrial  Development & Export Authority  (AIDEA), which                                                               
handles commercial loans.                                                                                                       
                                                                                                                                
9:56:48 AM                                                                                                                    
CHAIR WIELECHOWSKI noted wording in the bill that includes AHFC.                                                                
                                                                                                                                
MR.  HAVELOCK  responded  that  AHFC  would  be  involved  if  an                                                               
application  for  residential  housing was  presented  through  a                                                               
corporation or through partnering lenders.                                                                                      
                                                                                                                                
CHAIR  WIELECHOWSKI inquired  if low  interest residential  loans                                                               
would be made available in a military facility zone.                                                                            
                                                                                                                                
MR.  HAVELOCK  replied  that  AHFC  did  not  envision  having  a                                                               
priority for a military facility zone.                                                                                          
                                                                                                                                
CHAIR  WIELECHOWSKI  addressed  the  same question  to  the  bill                                                               
sponsor.                                                                                                                        
                                                                                                                                
REPRESENTATIVE THOMPSON explained that there  would be a need for                                                               
more housing if the Marine  Corp Base would expand. A corporation                                                               
would make a deal with the  Marine Corp and build subdivisions of                                                               
housing,  enabling   the  corporation  to  receive   federal  tax                                                               
credits. AHFC  would be  involved in  providing housing  loans to                                                               
persons interested in buying housing.                                                                                           
                                                                                                                                
CHAIR WIELECHOWSKI closed public testimony.                                                                                     
                                                                                                                                
REPRESENTATIVE THOMPSON  said the  bill was  another tool  in the                                                               
tool box for  communities and military base commanders  to use to                                                               
enhance military expansion.                                                                                                     
                                                                                                                                
CHAIR WIELECHOWSKI noted HB 316 would be set aside.