Legislature(2011 - 2012)BARNES 124

02/14/2011 01:00 PM RESOURCES

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Heard & Held
Heard & Held
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            HB 123-CLEAN WATER FUND: LINKED DEPOSITS                                                                        
1:04:12 PM                                                                                                                    
CO-CHAIR SEATON  announced that  the first  order of  business is                                                               
HOUSE BILL  NO. 123, "An Act  relating to the Alaska  clean water                                                               
1:04:57 PM                                                                                                                    
KATIE KOESTER,  Staff, Representative  Paul Seaton,  Alaska State                                                               
Legislature,  introduced  HB  123  on  behalf  of  Representative                                                               
Seaton, sponsor.   She said the  bill would expand access  to the                                                               
Alaska Clean Water  Fund, which is a revolving  fund comprised of                                                               
mostly federal  dollars for  the purpose  of improving  the water                                                               
systems in the  state.  Currently, only  municipalities and state                                                               
agencies  have access  to these  clean water  dollars and  HB 123                                                               
would broaden  the access to that  fund.  The Alaska  Clean Water                                                               
Fund  is   used  mostly  by   municipalities  for   point  source                                                               
pollution,  such as  septic systems.   Nonpoint  source pollution                                                               
dollars are also  in the fund and these are  the type of programs                                                               
that are  being talked about  under HB 123.   An example  of what                                                               
would not fall under HB 123  is a private company borrowing Clean                                                               
Water  Fund money  for  a  giant private  septic  system.   Those                                                               
systems  are point  source pollution  and are  only available  to                                                               
municipalities and state agencies.                                                                                              
1:06:18 PM                                                                                                                    
MS.  KOESTER explained  that  HB 123  would  establish a  "linked                                                               
deposit  program" to  access the  Clean  Water Fund  dollars.   A                                                               
linked deposit  would allow the  state agency to put  Clean Water                                                               
Fund dollars into a bank and  then the bank would loan that money                                                               
to the  borrower.   The relationship between  the state  and bank                                                               
would be a certificate of deposit:   the state would basically be                                                               
investing those Clean  Water Fund dollars in a bank  and then the                                                               
bank's   responsibility  would   be  to   vet  an   applicant  or                                                               
prospective  borrower, which  is who  is being  referred to  when                                                               
talking about expanding access to  Clean Water Fund dollars.  The                                                               
bank would  also have the  responsibility to collect  payment and                                                               
follow up on any loan defaults.                                                                                                 
MS. KOESTER  related how  the program would  work.   A non-profit                                                               
organization  would   bring  a  project  to   the  Department  of                                                               
Environmental Conservation  (DEC) for  approval.   The department                                                               
would make  sure it is an  eligible project that falls  under the                                                               
mission  of  the  Clean  Water Fund.    Eligible  projects  would                                                               
include anything  that would contribute  to a  healthy watershed,                                                               
such  as   green  space  development,  on-site   septic  systems,                                                               
agricultural   best  practices,   storm  water   management,  and                                                               
brownfield  remediation,  to name  a  few.   The  definition  for                                                               
eligible  nonpoint source  pollution  projects  is broad  because                                                               
when talking about  runoff, rainwater, and streams it  is hard to                                                               
point a finger at it.                                                                                                           
1:08:36 PM                                                                                                                    
MS. KOESTER pointed  out that this program is used  in many other                                                               
states.    The  committee  packets include  examples  about  some                                                               
agricultural, brownfield  remediation, and on-site  septic system                                                               
programs instituted in  Ohio as a way to broaden  access to Clean                                                               
Water Fund dollars.  She drew  attention to a booklet on members'                                                               
desks  from  the  Homer  Soil  and  Water  Conservation  District                                                               
[entitled Landscape  Suitability Map]  that is  a manual  on best                                                             
practices  for development.   The  district received  a grant  to                                                               
develop a landscape suitability map  of the entire Homer area and                                                               
identify projects  that could  be used  for green  development of                                                               
subdivisions and land use in the Homer area.                                                                                    
MS.  KOESTER  provided an  example  of  how this  linked  deposit                                                               
program could be used under HB  123 for the bettering of Alaska's                                                               
water systems.   The Homer  Soil and Water  Conservation District                                                               
would  take  these  best  management   practices  to  DEC.    The                                                               
department  would  determine  and   approve  the  eligibility  of                                                               
projects  for  Clean  Water  Fund  dollars,  such  as  stormwater                                                               
management,  leaving  green space  in  a  subdivision, and  other                                                               
practices outlined  in the  booklet.  Once  approved by  DEC, the                                                               
developer would  go through  a development  accreditation process                                                               
with the  Homer Soil and  Water Conservation District.   Then the                                                               
developer  would go  to a  bank for  a project  loan using  these                                                               
Clean Water  Fund dollars that  the state  has put into  the bank                                                               
and for  which the bank  is paying  a below-market value  rate to                                                               
the state.   The  bank would  charge the  developer an  amount to                                                               
administer this loan.                                                                                                           
1:11:39 PM                                                                                                                    
MS. KOESTER  noted that  broadening access  to these  Clean Water                                                               
Fund  dollars has  been  successful in  other  states because  it                                                               
provides  a market  driven incentive  for healthy  water systems,                                                               
rather than  using enforcement.   She  directed attention  to the                                                               
Alaska Clean  Water Fund Intended  Use Plan for Fiscal  Year 2009                                                               
in the  committee packet.  She  read from page 2,  long term goal                                                               
5, which  states:   "Increase the pace  at which  available funds                                                               
are loaned  by marketing to  existing and potential  new eligible                                                               
entities by  expanding the  overall funds  usage.   Potential new                                                               
entities  may include  lending  to  non-profit organizations  for                                                               
water  quality type  of  projects, and  to  homeowners through  a                                                               
link-deposit program for on-site septic system improvements."                                                                   
1:12:55 PM                                                                                                                    
CO-CHAIR FEIGE understood the state  would deposit money with the                                                               
bank, the  bank would  pay a  lower-than-market interest  rate to                                                               
the state  for use of  that money, and  then the bank  would loan                                                               
that money  to people, entities,  or non-profits.  He  asked what                                                               
interest rate the bank would charge.                                                                                            
MS. KOESTER replied  the bank would charge an  interest rate that                                                               
it feels acceptable for its risk  in assuming that borrower.  She                                                               
confirmed that  Co-Chair Feige's understanding of  the program is                                                               
CO-CHAIR FEIGE inquired what risk  the bank would be taking since                                                               
it is the state's money.                                                                                                        
MS. KOESTER  responded there  is still a  risk that  the borrower                                                               
might default.   The real reason why  the risk is on  the bank is                                                               
so that  the bank will do  the proper vetting of  that applicant.                                                               
The applicant would have to have  collateral or a credit score or                                                               
go through any other type of  process necessary to access a loan.                                                               
The difference  is that someone might  not be able to  get a loan                                                               
for some  of these  projects because the  capital does  not exist                                                               
without being able to access the Clean Water Fund dollars.                                                                      
1:14:25 PM                                                                                                                    
CO-CHAIR FEIGE  asked how much  of the current funding  stream is                                                               
being  utilized   by  the  municipalities  and   other  qualified                                                               
entities that are presently allowed to borrow from the fund.                                                                    
MS.  KOESTER deferred  to DEC  for the  exact numbers.   However,                                                               
based   on  her   conversations  with   the  U.S.   Environmental                                                               
Protection Agency (EPA) about the  goals that were established to                                                               
increase the access and increase the  lending of the funds, it is                                                               
the sponsor's  belief that there is  room in that fund  to expand                                                               
1:15:19 PM                                                                                                                    
REPRESENTATIVE  P.  WILSON  understood  the  state  provides  the                                                               
money, but  she inquired  whether the  money comes  directly from                                                               
the state or  from the federal government.   She further inquired                                                               
whether the state gets this money back when the bank is repaid.                                                                 
MS. KOESTER answered that the  Clean Water Fund is mostly federal                                                               
dollars,  so  it is  a  federal-state  revolving loan  fund  that                                                               
exists in  all the  states for  cleaning up  water systems.   The                                                               
state  would get  the  money back  from the  banks  along with  a                                                               
lower-than-market interest.   It would be just like  the state is                                                               
investing  funds in  a bank  instead of  right now  where all  of                                                               
those loans  are issued to  municipalities or state  agencies and                                                               
for  which a  lower-than-market value  interest rate  is applied.                                                               
The state gets those dollars back  at a nominal interest rate and                                                               
that is  why it is  a revolving fund -  it keeps growing  and the                                                               
state is able to expand programs.                                                                                               
1:16:55 PM                                                                                                                    
REPRESENTATIVE KAWASAKI asked  how much money is in  the fund and                                                               
how much is encumbered.                                                                                                         
MS. KOESTER  understood that the  fund is at around  $45 million.                                                               
She deferred to DEC to answer the question in more detail.                                                                      
REPRESENTATIVE KAWASAKI  observed in  paragraph 2 of  the sponsor                                                               
statement that community  organizations, developers, non-profits,                                                               
and individuals would  have access to borrowing these  funds.  He                                                               
inquired  whether a  Native  village  corporation, a  cooperative                                                               
that   is  regulated   by  "RCA",   or   a  community   supported                                                               
agricultural farm would be included as eligible borrowers.                                                                      
MS. KOESTER  understood that  any type  of organization  would be                                                               
eligible and would  not have to be a non-profit.   The money just                                                               
has to  be spent on  projects that  are eligible for  Clean Water                                                               
Fund dollars.                                                                                                                   
REPRESENTATIVE KAWASAKI  requested a  broader definition  of what                                                               
the Clean Water Fund currently spends money on.                                                                                 
1:18:55 PM                                                                                                                    
REPRESENTATIVE  MUNOZ asked  whether  Ms.  Koester's referral  to                                                               
"state funds"  means the funds that  are in the Clean  Water Fund                                                               
MS.  KOESTER replied  correct, she  is talking  about the  Alaska                                                               
Clean Water  Revolving Loan  Fund.  She  allowed it  is confusing                                                               
because that fund  is federal dollars, but the  state has control                                                               
over those dollars.                                                                                                             
1:19:22 PM                                                                                                                    
REPRESENTATIVE  MUNOZ requested  further  explanation about  what                                                               
would be linked under the bill.                                                                                                 
MS.  KOESTER  explained that  the  Clean  Water Fund  is  already                                                               
available  to municipalities,  so  right  now municipalities  can                                                               
already apply to DEC  for a loan under that fund.   Under HB 123,                                                               
access  to  this  fund  would  be  expanded  by  saying  that  an                                                               
individual, through a  bank, can have access to  Clean Water Fund                                                               
dollars with  an eligible  project.   The state's  treasury would                                                               
put an  amount of money  in a bank  as a certificate  of deposit,                                                               
say  $100.   The bank  would  pay interest  to the  state, say  2                                                               
percent, over  the life of  the loan.   The bank would  then loan                                                               
that $100  to say,  John, a  developer in Homer,  who is  doing a                                                               
green development that  will have a green space.   The bank would                                                               
charge John an interest rate of  7 percent, of which 5 percent is                                                               
to cover the bank's  risk of loaning to John and  2 percent is to                                                               
cover its administration fee to the state.                                                                                      
1:21:26 PM                                                                                                                    
CO-CHAIR  SEATON interjected  that  the relation  of this  linked                                                               
deposit system is the developer  can get cheaper capital, and can                                                               
have access  to capital, when  the interest rate  might otherwise                                                               
prevent the  development from  going forward.   At  extremely low                                                               
interest rates  this might not  be beneficial, but  when interest                                                               
rates  go  high  developers  have   a  hard  time  getting  money                                                               
economically enough to do a  development; thus the linked deposit                                                               
would allow  for water  systems to be  improved, whether  that is                                                               
catchment  ponds  or  other water  system  improvements.    Water                                                               
systems does  not just mean  water to  the house, it  means water                                                               
systems flowing down through a planned development.                                                                             
REPRESENTATIVE  MUNOZ inquired  whether the  fund grows  as loans                                                               
are paid off with  interest, or is the fund meant  to stay at the                                                               
level of $45 million.                                                                                                           
MS. KOESTER responded that the  Alaska Clean Water Fund does grow                                                               
and  the  interest  received  is  re-loaned  to  other  qualified                                                               
projects.   That  is  how it  currently works  and  how it  would                                                               
continue to work.                                                                                                               
1:23:26 PM                                                                                                                    
REPRESENTATIVE GARDNER  understood that  HB 123 would  expand the                                                               
entities that  can borrow the  money that is  essentially federal                                                               
money that  the state has control  of.  But rather  than have DEC                                                               
or   the   state  take   the   loan   applications  and   provide                                                               
administration, it would  be done through a bank and  the bank is                                                               
willing  to provide  a lower  interest  rate because  it has  the                                                               
security of the state's certificate of deposit.                                                                                 
MS. KOESTER confirmed that this is correct.                                                                                     
REPRESENTATIVE  GARDNER noted  that  the language  that would  be                                                               
added  by  HB  123  is  "to  persons,  municipalities,  or  other                                                               
qualified entities...."  She asked  what that specifically really                                                               
means.   For example,  Kensington Mine  has built  settling pools                                                               
next to  its roads so that  the runoff does not  go directly into                                                               
streams,  which is  clearly a  water  quality issue.   She  asked                                                               
whether Kensington  Mine would be  a qualified entity for  a loan                                                               
for something like these settling ponds.                                                                                        
MS.  KOESTER   allowed  that  the  sponsor   has  struggled  with                                                               
"qualified entities"  because if it  is defined too  tightly then                                                               
no one  is really eligible.   She said her understanding  is that                                                               
Kensington  Mine  would  be  eligible   by  working  through  the                                                               
approval process that the project is eligible for.                                                                              
REPRESENTATIVE GARDNER commented that  if large industrial groups                                                               
such as those  on the North Slope are eligible,  there would need                                                               
to be  a limitation on  the scale so that  one or two  big groups                                                               
did not  take all  the funds  and leave  "John in  Homer" without                                                               
access to the money.                                                                                                            
MS. KOESTER  agreed, saying limitations  on the money  would have                                                               
to be developed because there is  a need for municipalities.  She                                                               
deferred to DEC to speak to the current limitations.                                                                            
1:26:15 PM                                                                                                                    
CO-CHAIR FEIGE observed that the  first section of HB 123 defines                                                               
the  projects, which  is  the existing  law:   public  wastewater                                                               
collection, treatment, or discharge  systems; nonpoint sources of                                                               
pollution; and estuary conservation  and management programs.  He                                                               
inquired why  private persons would  need to be added  because it                                                               
seems to him that persons do  not have the responsibility for any                                                               
of those particular projects.                                                                                                   
MS. KOESTER answered  that individual persons would  not be added                                                               
for  point  source  pollution  projects,   such  as  solid  waste                                                               
management systems.   There are two sections of the  fund - point                                                               
source  and  nonpoint  source.   Individual  borrowers  would  be                                                               
eligible for  nonpoint source pollution  because it is  much more                                                               
difficult to  point a finger  at something like  pesticide runoff                                                               
or a  development that  has issues  with pavement  and stormwater                                                               
management  that are  harder to  mitigate.   So,  the bill  would                                                               
really  provide a  market incentive  for individuals  to consider                                                               
those aspects when developing.                                                                                                  
CO-CHAIR  FEIGE asked  whether the  Alaska Clean  Water Revolving                                                               
Loan Fund is just different terminology  for the same thing or is                                                               
something different.                                                                                                            
MS. KOESTER replied  it is the Alaska Clean  Water Revolving Loan                                                               
Fund and  HB 123 would  just expand  the eligible borrowers  to a                                                               
portion  of that  fund, which  is the  nonpoint source  pollution                                                               
portion of that fund.                                                                                                           
1:28:32 PM                                                                                                                    
REPRESENTATIVE FOSTER  inquired whether any pushback  is expected                                                               
from state agencies  or municipalities that fear  the $45 million                                                               
might not  grow and  so more  people would  be fighting  for this                                                               
piece of the pie that is not growing.                                                                                           
MS.  KOESTER responded  she  believes  municipalities have  first                                                               
priority.   It is the  sponsor's understanding that  Alaska could                                                               
be   taking  advantage   of  more   clean  water   opportunities.                                                               
Municipalities are not using the fund  at this point in time to a                                                               
level that would indicate there is an over-demand on the fund.                                                                  
REPRESENTATIVE FOSTER asked how much of the fund is encumbered.                                                                 
MS. KOESTER deferred to DEC.                                                                                                    
REPRESENTATIVE  P. WILSON  inquired how  many applications  there                                                               
are per year and said she would like to hear from DEC.                                                                          
CO-CHAIR SEATON confirmed that DEC would be speaking later.                                                                     
1:30:28 PM                                                                                                                    
REPRESENTATIVE  HERRON understood  banks  would  like it  because                                                               
they can  make money, but more  importantly if a bank  can invest                                                               
in a project that enhances the  bank's investment in a project or                                                               
collateral or  neighbor projects  it is in  its best  interest to                                                               
borrow this  money from the  state to lend  out so that  the bank                                                               
can protect those  projects that may be  surrounding a respective                                                               
project.  He inquired whether  this specific legislation has been                                                               
tried in a previous Alaska legislature.                                                                                         
MS.  KOESTER answered  that House  Bill 200  was introduced  last                                                               
year but was not heard.                                                                                                         
1:31:37 PM                                                                                                                    
REPRESENTATIVE MUNOZ related that at  a recent hearing before the                                                               
House  Community and  Regional  Affairs  Standing Committee,  the                                                               
City of  Unalaska testified  that it  is considering  upgrades to                                                               
its  water  discharge system  to  go  from  a primary  system  to                                                               
secondary.   She  asked whether  Unalaska would  be eligible  for                                                               
these  funds and,  if so,  whether the  fund large  is enough  to                                                               
support those new  requirements that the EPA  is bringing forward                                                               
for many of Alaska's coastal communities.                                                                                       
MS.  KOESTER  replied  that  the  City  of  Unalaska  is  already                                                               
eligible for those funds.   From her limited understanding of the                                                               
potential  implications of  that decision,  she said  it is  much                                                               
larger  than what  many of  the state's  funds combined  would be                                                               
able to handle.                                                                                                                 
1:32:27 PM                                                                                                                    
CO-CHAIR FEIGE  surmised the  upcoming requirements  described by                                                               
Representative  Munoz  are  beyond  the current  ability  of  the                                                               
[Alaska Clean Water Fund] to fund.                                                                                              
MS. KOESTER  understood there is  some potential coming  from the                                                               
EPA for changes to its  requirements that would have far-reaching                                                               
ramifications for many  communities.  However, she  said she does                                                               
not know  very much about this  because it is very  new and there                                                               
are a lot  of assumptions as to which communities  may or may not                                                               
be targeted, including some in the sponsor's district.                                                                          
CO-CHAIR FEIGE, regarding page 2, line  14, of HB 123 that states                                                               
the department  "shall" establish a linked  deposit loan program,                                                               
asked whether it would  be better to say "may" so  as to give DEC                                                               
the option of doing this depending upon demand.                                                                                 
MS.  KOESTER responded  that that  would  be a  policy call;  the                                                               
differences between  "shall" and  "may" are  very large.   Either                                                               
way, statutory  authority is needed  to hold Clean  Water dollars                                                               
somewhere besides the treasury.                                                                                                 
1:34:59 PM                                                                                                                    
LYNN   KENT,  Director,   Division   of   Water,  Department   of                                                               
Environmental Conservation (DEC),  explained that DEC administers                                                               
two separate funds:   the Drinking Water Revolving  Loan Fund and                                                               
the Clean  Water Revolving Loan  Fund that  is the subject  of HB
123.  The Drinking Water Revolving  Loan Fund is tapped out right                                                               
now and no dollars are  available beyond the annual appropriation                                                               
to the  fund in  the federal  grant.   The Clean  Water Revolving                                                               
Loan Fund is about $390 million,  of which a balance of about $42                                                               
million  is currently  available.   While  that may  seem like  a                                                               
large amount of money, there  are some communities poised to seek                                                               
some very  large loans  from that  fund, as  was just  heard, and                                                               
that  has  the  potential  to  tap  out  the  fund  in  a  hurry.                                                               
Currently the loan  fund is being used  primarily for communities                                                               
for   their  wastewater   collection,  treatment,   and  disposal                                                               
systems.    The  department  does  fund  some  nonpoint  projects                                                               
through  solid  waste  projects and  stormwater  projects,  again                                                               
through loans to communities.                                                                                                   
MS.  KENT, regarding  the question  of  whether large  industrial                                                               
businesses could get  loans under HB 123, said the  answer is yes                                                               
and no.   She  said she  believes they  would be  prohibited from                                                               
getting a loan for an activity  that is regulated under the point                                                               
source requirements of the Clean  Water Act.  The Kensington Mine                                                               
stormwater  example   that  was  cited  earlier   is  actually  a                                                               
permitted discharge at the mine, so  the mine would likely not be                                                               
eligible for a  nonpoint source loan through  this linked deposit                                                               
program.   She said she believes  that under the way  the bill is                                                               
currently  set   up,  private  industry  could   seek  loans  for                                                               
activities that are nonpoint source pollution oriented.                                                                         
1:37:36 PM                                                                                                                    
MS. KENT, regarding  the question about the source  of the funds,                                                               
explained that the  fund consists of the  annual appropriation by                                                               
the EPA, the  interest the state receives on the  portions of the                                                               
fund  that are  loaned out,  and the  repayments of  the previous                                                               
loans that  have been  issued.   While the  fund is  growing from                                                               
that perspective,  DEC is  concerned that  federal appropriations                                                               
that have  been helping  to capitalize the  fund are  proposed to                                                               
take some pretty severe hits this year.                                                                                         
REPRESENTATIVE GARDNER  requested a definition of  the difference                                                               
between point source and nonpoint source.                                                                                       
MS.  KENT answered  that a  point source  is a  discharge from  a                                                               
facility that  comes from what  EPA calls a  discreet conveyance,                                                               
such  as a  pipe  from a  treatment plant  that  discharges to  a                                                               
surface water.   Nonpoint source  discharge does not come  from a                                                               
discreet conveyance;  for example, pollution from  dog droppings,                                                               
herbicides, or fertilizers that are from  the lawn of a city park                                                               
and that through rainfall run off  into a creek or surface water.                                                               
Another nonpoint example  is rain falling onto  parking lots that                                                               
then  runs off,  carrying  oils  and grease  from  cars into  the                                                               
creek.  The  EPA does not have a regulatory  program for nonpoint                                                               
source discharges.                                                                                                              
1:39:36 PM                                                                                                                    
REPRESENTATIVE KAWASAKI  inquired how  DEC would define  a person                                                               
or other qualified entity for purposes of the regulations.                                                                      
MS.  KENT replied  that DEC  would have  to write  regulations to                                                               
implement  HB 123,  but  as  the bill  is  currently written  the                                                               
eligible entity would not preclude  anyone who has a project that                                                               
would be  eligible under  the terms of  the revolving  loan fund.                                                               
So,  eligible entity  could  include a  private  individual or  a                                                               
private business so  long as the person or entity  had a nonpoint                                                               
source project that fell within  the allowable projects under the                                                               
1:40:21 PM                                                                                                                    
REPRESENTATIVE P.  WILSON, regarding Unalaska having  to meet new                                                               
EPA requirements, noted that Unalaska  goes through a huge amount                                                               
of water because of the number  of processors located there.  She                                                               
surmised that  many municipalities  may be  faced with  having to                                                               
meet these  new EPA requirements.   She asked how much  money the                                                               
State of Alaska receives from  the federal government and whether                                                               
the  program would  be able  to  provide funds  to all  qualified                                                               
entities if the program is kept as it is now.                                                                                   
MS. KENT responded that the  municipalities are always requesting                                                               
money  from  DEC,  not  just  for new  facilities  but  also  for                                                               
upgrading  and replacing  current facilities  and to  accommodate                                                               
growth in  the community.  Therefore,  it is not always  a new or                                                               
higher regulatory  standard that causes municipalities  to seek a                                                               
loan from the department.   Right now the department is receiving                                                               
about $12 million  annually in federal allocations  for this fund                                                               
and the  demand for the funds  is going up  and up.  A  few years                                                               
ago DEC  had a much larger  balance in this fund;  the balance is                                                               
going down and DEC expects it to tap out very soon.                                                                             
1:42:36 PM                                                                                                                    
REPRESENTATIVE P. WILSON inquired whether  the fund would be able                                                               
to handle  adding more eligible  entities for these  loans, given                                                               
that  the state  may be  receiving  less money  from the  federal                                                               
government  in  coming  years and  that  municipalities  will  be                                                               
needing upgrades.                                                                                                               
MS. KENT  answered that  it all comes  down to  prioritization on                                                               
use of  the fund.   When conducting  its annual  scoring process,                                                               
the  department primarily  looks  at the  immediate health  needs                                                               
that would result  from a given project.  So,  once the funds are                                                               
tapped out, what is likely to  happen is that those projects that                                                               
meet an  immediate health  need would  outscore projects  that do                                                               
not  provide  such  an  immediate health  benefit.    In  further                                                               
response  to Representative  P.  Wilson, she  said  she does  not                                                               
think  DEC's  eligibility criteria  for  the  loan programs  have                                                               
changed since the fund's inception.                                                                                             
1:44:35 PM                                                                                                                    
CO-CHAIR SEATON opened public testimony on HB 123.                                                                              
1:44:53 PM                                                                                                                    
DEVONY  LEHNER,  Private  Developer,  said  HB  123  would  allow                                                               
another  group  of potentially  eligible  recipients  to come  on                                                               
line, but that  she sees no downside to passing  the bill because                                                               
the state  would still  have the  flexibility to  determine where                                                               
the  money  is allocated.    She  noted  that  she is  a  private                                                               
developer and  that individual  private developers  have profound                                                               
long-term  effects  that  can either  increase  or  minimize  the                                                               
demands on  municipal systems.   She and  her husband  are strong                                                               
advocates of trying to minimize  demands on municipal systems and                                                               
keeping environmental effects from transferring offsite.                                                                        
1:46:57 PM                                                                                                                    
MS. LEHNER stated that she and  her husband are developing an 80-                                                               
acre conservation  subdivision, called Stream  Hill Park.   It is                                                               
located inside  Homer city  limits so there  are many  hoops that                                                               
must be  jumped through.  Over  half of the subdivision  has been                                                               
set aside in  permanent green space that  is primarily drainages,                                                               
not creeks  which require a  buffer anyway.  These  drainages are                                                               
for  handling  large amounts  of  water  coming from  within  the                                                               
subdivision as  well as from  outside it.   She noted  that there                                                               
are many piecemeal developments uphill  from Stream Hill Park, so                                                               
her  subdivision   represents  a   system  between   upslope  and                                                               
downslope development  that can  handle lots of  water.   She and                                                               
her husband  have tried to  create many  ways where water  can be                                                               
flowed, infiltrated,  and cleaned  so that it  will not  become a                                                               
problem downslope.  She pointed  out that impervious surfaces are                                                               
created by development which causes much  more runoff.  So, if no                                                               
mechanisms  are put  in place  for looking  at these  things long                                                               
term, the city will end up  with more and more runoff and already                                                               
the city often has more than it can effectively handle.                                                                         
1:48:49 PM                                                                                                                    
MS.  LEHNER noted  that there  is a  rippling effect  of benefits                                                               
when  developers,  particularly  those  that  control  relatively                                                               
large parcels,  are encouraged to  look at ways of  developing so                                                               
as  to minimize  the demands  on municipal  services.   There are                                                               
currently  no incentives  to  do  what she  and  her husband  are                                                               
trying to do in their development  and they have had to work hard                                                               
with taxing entities to explain  that these parks and open spaces                                                               
are set aside as non-developable  lands for forever and so should                                                               
not be taxed  as developable.  A developer has  lots of issues to                                                               
deal  with  when trying  to  pro-actively  develop in  ways  that                                                               
maximize  watershed  and  community  benefits,  so  any  kind  of                                                               
incentive  could be  significant  for  encouraging developers  to                                                               
look  at   approaches  that  have   long-time  benefits   to  the                                                               
municipality and the  community.  She and her husband  have put a                                                               
trail  in their  open space  system that  is used  by many  Homer                                                               
residents.   Thus,  in addition  to open  space protecting  water                                                               
quality,  it  provides outdoor  activity,  quality  of life,  and                                                               
health benefits.                                                                                                                
MS. LEHNER added  that the benefits are  diverse, widespread, and                                                               
long term.   She urged members to consider the  value of allowing                                                               
developers to  have access to  these kinds of funds  through this                                                               
linked  deposit  program  because  developers  really  shape  the                                                               
communities in which  they are developing.  It is  better to have                                                               
the   developments   designed   in  appropriate   and   long-term                                                               
environmentally  conscious sustainable  ways  than  to be  giving                                                               
money to municipalities to deal  after the fact with the problems                                                               
created by poorly designed developments.                                                                                        
1:51:33 PM                                                                                                                    
REPRESENTATIVE P. WILSON inquired whether  the U.S. Army Corps of                                                               
Engineers would  consider the 40 acres  of land set aside  in Ms.                                                               
Lehner's subdivision as wetlands.                                                                                               
MS. LEHNER replied that very little  of the area set aside in her                                                               
subdivision  is mapped  as wetlands.    Kenai Peninsula  wetlands                                                               
were classified  and mapped in  2005 at  a scale of  1:25,000 and                                                               
those are  the maps  used by  the corps.   Virtually none  of the                                                               
areas  that she  and her  husband have  set aside  are mapped  as                                                               
wetlands even  though they  convey water downhill.   She  and her                                                               
husband are  setting aside much  larger areas than what  would be                                                               
required by the minimum regulatory standards.                                                                                   
1:52:44 PM                                                                                                                    
CO-CHAIR  FEIGE commented  that Ms.  Lehner's subdivision  sounds                                                               
like a  very nice  development that would  be a  good investment.                                                               
He asked  whether Ms. Lehner  could not go  to a bank  and borrow                                                               
money to do this same thing.                                                                                                    
MS. LEHNER responded that she and  her husband have a credit line                                                               
of over $2  million with a bank.  However,  she pointed out, when                                                               
developing within  the city the  developer is required to  put in                                                               
sewer,  water, and  paved roads.    The lots  in her  subdivision                                                               
range from one-quarter  to one-half acre in size which  is a more                                                               
expensive  way to  go than  the  more traditional  way of  having                                                               
roughly  one-acre  individual parcels  with  no  green space  and                                                               
where the buyer must put in  an on-site septic and figure out how                                                               
to put  in a well  or have water  delivered.  Such  a traditional                                                               
development  would have  required much  less money  up front  for                                                               
infrastructure, but it would not  have created a significant open                                                               
space  system.   She said  her testimony  today is  talking about                                                               
folks in  the future who  would be able  to get a  lower interest                                                               
rate  than she  and her  husband were  able to  get.   That lower                                                               
interest rate  would encourage and  allow developers to  use this                                                               
beneficial type of approach.                                                                                                    
CO-CHAIR SEATON held over HB 123.                                                                                               

Document Name Date/Time Subjects
01-HB0123A.pdf HRES 2/14/2011 1:00:00 PM
02-Sponsor Statement HB123.pdf HRES 2/14/2011 1:00:00 PM
04-Innovative use of CWF.pdf HRES 2/14/2011 1:00:00 PM
05.Funding decentralized watewater systems.pdf HRES 2/14/2011 1:00:00 PM
06-Wet Weather.pdf HRES 2/14/2011 1:00:00 PM
07-Green Infrastructure.pdf HRES 2/14/2011 1:00:00 PM
08-Ohio brownfield.pdf HRES 2/14/2011 1:00:00 PM
09-the Ohio example.pdf HRES 2/14/2011 1:00:00 PM
10-Homer Soil and Water Landscape Suitability Map.pdf HRES 2/14/2011 1:00:00 PM
HB0105A.pdf HRES 2/14/2011 1:00:00 PM
Coffman Cove Support HB105-SB44.pdf HRES 2/14/2011 1:00:00 PM
1 14 11 Chenault SESF Transmittal.pdf HRES 2/14/2011 1:00:00 PM
Public Briefing HB105-SB44 1-24-2011.pdf HRES 2/14/2011 1:00:00 PM
RDC Support 1-5-11.pdf HRES 2/14/2011 1:00:00 PM
HB 105
AFA support SESF additions 1-12-11.pdf HRES 2/14/2011 1:00:00 PM
HB 105
Vicinity Map SSE State Forest 12-20-10.pdf HRES 2/14/2011 1:00:00 PM
Parcel Maps SESF 12.20.2010.pdf HRES 2/14/2011 1:00:00 PM
SEACC_SESF_h_02_11.pdf HRES 2/14/2011 1:00:00 PM
HB 105
SAF Letter of Support.pdf HRES 2/14/2011 1:00:00 PM
HB 105
HB0105-1-2-011811-DNR-N.pdf HRES 2/14/2011 1:00:00 PM
HB123-DEC-FC-02-11-11.pdf HRES 2/14/2011 1:00:00 PM
Testimony and Resolution - Southeast Conference.pdf HRES 2/14/2011 1:00:00 PM
HB 105
Testimony - Wayne R. Nicolls.pdf HRES 2/14/2011 1:00:00 PM
HB 105
Testimony - John A. Sandor.pdf HRES 2/14/2011 1:00:00 PM
HB 105
DOF Testimony HB105 2-14-11.pdf HRES 2/14/2011 1:00:00 PM
HB 105
SEAALASKA McDowell Group studies.pdf HRES 2/14/2011 1:00:00 PM
SFIN 4/14/2011 9:00:00 AM
HB 105