Legislature(2001 - 2002)
04/04/2001 01:45 PM Senate CRA
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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
HB 16-HOME RULE COMMUNITIES
REPRESENTATIVE FRED DYSON, bill sponsor, introduced the bill. When
he first was elected to the legislature, Vic Fischer told him that
this was an important issue that needed addressing.
Article 10 in the Alaska Constitution encourages self-determination
in Alaska's communities. HB 16 allows existing second class cities,
or unincorporated areas, to form a home rule community. This is
similar to a second class city but the community is able to write
their own charter, which allows them flexibility in determining the
scope of their governing powers and the services that will be
provided.
It is his hope that this will remove some of the disincentives
associated with organizing. It should also allow communities the
ability to organize a form of government that they are comfortable
with and is more traditional and culturally appropriate.
He called member's attention to the final pages of the "Achieving
Alaska Native Self-Governance" report by The Economics Resource
Group, Inc. and The Institute of Social and Economic Research,
University of Alaska, Anchorage dated May 1999. There are also
letters of support from the Southeast Conference, Hyder and several
individuals including Vic Fischer and Richard Burton.
SENATOR LINCOLN asked how HB 16 coincides with SB 48.
REPRESENTATIVE DYSON said his bill only addresses what are
presently second class cities and they should still be able to
write their own charter if they are located in an area that is
incorporated into a borough. However, he would defer part of the
question to Tamara Cook when she arrives.
CHAIRMAN TORGERSON asked which disincentives this bill is trying to
correct.
REPRESENTATIVE DYSON said communities wouldn't be required to have
an audit of their books every year as is now required of second
class cities.
CHAIRMAN TORGERSON said whether a second class city could get out
of the audit requirement with public dollars.
REPRESENTATIVE DYSON said yes, if they switched to a home rule
community.
CHAIRMAN TORGERSON asked if that was in the bill or just a result
of the bill.
REPRESENTATIVE DYSON said the requirement that they do not have to
have an audit is in the bill but "it doesn't say to second class
cities you can now switch. And of course in order to become a home
rule community it's got to go through the boundary commission and
that whole process."
In the last few years, there have been nearly as many communities
dissolving themselves as organizing under state law.
A question that arose when similar legislation was introduced last
year is, "Are you trying to keep communities from organizing as
tribes?" His answer is no; he's hoping many communities will do
both.
SENATOR LINCOLN asked about the economic benefits and drawbacks to
the bill.
Number 128
REPRESENTATIVE DYSON said the major benefit is to make it easier
for individuals to organize for self-determination. Also,
communities will be able to organize in ways that are culturally
and traditionally familiar.
SENATOR LINCOLN asked for economic benefits and drawbacks.
REPRESENTATIVE DYSON said the advantage is that a state
organization is provided that Community and Regional Affairs can
communicate with and funnel monies and programs through. It gives
the community status in state law so bonding is possible; a
property tax of up to 2 mills may be imposed if so desired.
The only disadvantage he can think of is the disadvantage of self-
determination because responsibility is always uncomfortable.
CHAIRMAN TORGERSON asked whether this would be available to just
second class cities and not first class cities.
REPRESENTATIVE DYSON said first class cities may now form their own
charters. This bill extends the privilege to current second-class
cities.
CHAIRMAN TORGERSON asked what powers might be lost if a community
organized as home rule.
REPRESENTATIVE DYSON said nothing that can presently be done as a
second-class city would be lost under home rule. Basically, the
bill adds "or home rule community" after "second class city" to
sections of Title 29.
CHAIRMAN TORGERSON asked for questions. There were none.
KEVIN RITCHIE, from the Alaska Municipal League, views this as a
positive bill that allows second class cities to write their own
charter. Community discussion and decision about effective self-
government is a positive event and to the extent that it would be
an enticement to organize, this too is viewed as a benefit.
Another benefit is that a home rule community may be reclassified
as a home rule city. It is a reasonable step that doesn't change
the requirements or responsibilities of communities; it allows
second class cities to determine what will make their city operate
better through formation of a charter.
CHAIRMAN TORGERSON asked for an interpretation of the difference
between home rule community and home rule city.
MR. RITCHIE said, "You can have this charter but you don't have the
broad powers of a home rule city. A home rule city, obviously, has
any power not prohibited to it. A second class city has only powers
not restricted by its charter"
CHAIRMAN TORGERSON said, "You're saying it would have to do with
charter with the home rule community also. I don't see the
difference. Can't a second class city petition for a home rule city
now?"
MR. RITCHIE said it could. "The difference between a home rule city
and a home rule community would be the whole class of
responsibility that comes with being a first class or a home rule
city."
CHAIRMAN TORGERSON responded that it's limited by their charter.
MR. RITCHIE said, "As limited by the charter, right."
CHAIRMAN TORGERSON said you could do that now. He wanted that on
the record.
REPRESENTATIVE DYSON said there are two things; to be a home rule
city there must be land planning and they must become their own
school district. Those are two significant responsibilities that
some communities don't want to or aren't prepared to accept.
"Another classification, and Tam will be able to speak to it, they
are a general law community unless they choose to organize, and we
end up being their government. So they have the chance to have
their own and not have to be governed by the general law rules,
right?"
SENATOR PHILLIPS asked Mr. Ritchie why there wasn't a letter from
the Alaska Municipal League although he assumes they endorse the
idea.
MR. RITCHIE said the letter is forthcoming.
SENATOR AUSTERMAN asked about joint insurance.
MR. RITCHIE said that second class cities are now eligible to be a
member of the joint insurance association. If you weren't a city
and then became a home rule community you would be a municipality
under the definition of the state law and you would be eligible to
be served.
GLEN MARUDE of Tok testified in support of HB 16. He views HB 16 as
a stepping-stone toward borough formation.
Number 300
JOHN PEARSON, Economic Development Planner for the Community of
Hyder, testified in support of HB 16. This may be a major factor in
the further development of the community. The community currently
has their own fire department, emergency services, library, visitor
center, museum, provides snow removal, operates a cable TV service,
maintains a landfill, oversees a state owned boat harbor, was
recently approved by the FCC for a low power FM radio station and
operates a one room school. Also, there is a bottled water plant
that employees 26 people and should increase to employ 41 people by
the end of August.
This bill will give the community the opportunity to participate in
state bonding programs and they could also take advantage of
opportunities such as the ferry authority. Several years ago Hyder
was denied this opportunity because of the organization of the
community. Under home rule community status, they would be able to
participate. There is incentive to participate with Prince of Wales
to become a member of the authority. There are, in fact, a number
of state programs that they would like to participate in but are
currently denied because of the community status.
Currently, Hyder is doing reasonably well economically because of
the bottled water project, a small community project that was
started by residents that were looking beyond unemployment and
welfare. Two years ago, with their own money and help from the
Economic Development Administration (EDA) they located a market and
developed a plant. They are able to blow their own bottles and
manufacture their own shipping pallets thus providing more
employment opportunities. It is because of this prosperity they
fear annexation by the Ketchikan borough.
What they are doing in Hyder is an example of what could be done in
many communities around the state. In Southeast there are 13
communities that could take advantage of HB 16 and realistically,
three will do so. "We see passage of HB 16 as giving Hyder the
opportunity to become a bigger player in the scheme of things in
the State of Alaska."
CHAIRMAN TORGERSON asked why they don't form a second class city.
MR. PEARSON said that the high cost of surveying and platting has
been a drawback. He doesn't know how the school would be affected
but the community didn't think they were ready to form a second
class city.
SENATOR LINCOLN said that the testifier from Tok called this a
stepping-stone toward formation of a borough. She wondered whether
Mr. Pearson viewed it the same way.
MR. PEARSON said it would give Hyder the breathing room it needs as
a community and if the Ketchikan borough annexes the area around
Hyder that wouldn't be a problem. They are not objecting to living
in the neighborhood of a borough but they are not prepared to be
included in a borough.
SENATOR PHILLIPS asked about the process whereby they decided on a
water bottling plant. This seems to be an excellent example of
making something out of nothing.
MR. PEARSON said it began with a call from a woman who needed
100,000 gallons of water delivered to Detroit on a daily basis.
Charlie Northrip from the Juneau Economic Development Council had
referred her saying this was a man who would be interested in such
a project. At that time, there was no place in Alaska that could
deliver that volume of bottled water but he said he'd come up with
a solution.
He approached the Economic Development Administration and was told
they would help with funding if he would develop and oversee the
development of the project. He was familiar with Hyder and knew
they had a real need for economic development so that's where he
began. With $800,000, lots of volunteer help and no Davis Bacon
requirements they were able to build the plant and begin operation.
JOHN KUNIK from Glennallen said he knew that a home rule community
would not constitute a school district but wondered whether a home
rule city would constitute a school district.
CHAIRMAN TORGERSON said it would.
JOHN KUNIK testified via teleconference from Glennallen and asked
whether his community could tax the pipeline if the ad valorem tax
a home rule community or second class city could levy was four
percent of assessed value rather than two percent.
CHAIRMAN TORGERSON responded that they could do whatever was in the
charter. The pipeline can be taxed up to the amount all other
residents are taxed, which is up to 20 mills.
CHAIRMAN TORGERSON asked Tamara Cook whether any powers would be
automatically granted to a home rule community that would not be
granted to an unincorporated community or would it depend on their
charter.
TAMARA COOK, Director of Legislative Legal Services, said basically
it would be what is in their charter although the power to tax
would be granted to them and is not granted to a community.
Essentially, home rule communities would operate as a second class
city with more or less the same restraints. The main distinguishing
points between operating as second class city and a home rule
community are that when the charter is written, it could be written
in a way that is more restrictive and that a second class city may
elect to take on the provision of various services and exercise
various powers. If a home rule community has a strict charter, it
takes the power to make decisions about the kinds of service to
provide away from the governing body and places it in the hands of
the people and a charter cannot be expanded without a vote of the
people.
In Alaska, we look upon a charter as the sort of thing that a
sophisticated community would utilize and in this case, a charter
could act as a shield, and create a form of government that is more
restrictive than a typical second class city.
CHAIRMAN TORGERSON asked what automatic powers would be included in
addition to taxation, land entitlement and boundary determination.
MS. COOK said when they file their incorporation petition they must
file the same type of information.
CHAIRMAN TORGERSON asked whether there was a land grant that would
automatically go to the community.
MS. COOK thought they are included.
CHAIRMAN TORGERSON said, "10 percent unreserved, unappropriated
land like anybody else forming up." He thought this would be the
case unless they are precluded by the legislature.
MS. COOK thought they would be treated the same as a second class
city.
CHAIRMAN TORGERSON said, "If Hyder wanted to go right over and take
right up to Ketchikan they could, right?" With a chuckle, he said
this would be an opposite land grab.
He said he knows the Local Boundary Commission (LBC) is involved
but who determines the boundaries? Is it a petition to LBC?
MS. COOK said, yes, there's a petition process. The LBC ultimately
approves a petition for incorporation of any class of municipality
and it may also recommend changes to a petition before approval is
granted.
CHAIRMAN TORGERSON returned to the question of taxation powers that
a community could or could not charter itself out of.
MS. COOK agreed that they could charter themselves into a limit if
they chose to.
CHAIRMAN TORGERSON said if taxation is a power that is
automatically granted, what about zoning powers?
MS. COOK said that second class cities are currently permitted but
not required to zone. It depends upon whether they are in a borough
that is exercising the zoning power.
Assuming you are dealing with a second class city that is not in
that situation, it is not obligated to zone, and because of the way
HB 16 is drafted, neither would home rule communities. The charter
of a home rule community could say it was or was not going to zone.
CHAIRMAN TORGERSON said schools would not be an issue.
MS. COOK agreed there couldn't be a school district.
CHAIRMAN TORGERSON asked whether a mayor and council or some form
of leadership would be required.
MS. COOK said yes, the Alaska Constitution requires a city to have
a council and a borough have an assembly.
CHAIRMAN TORGERSON asked whether there is a potential problem with
elections if the leadership is able to choose their own titles.
MS. COOK does not see selecting a name as a legal problem. Home
rule communities created under HB 16 are subject to the existing
provisions that apply to home rule municipalities and they are also
subject to limitations that apply to second class cities.
CHAIRMAN TORGERSON asked whether they would be responsible for
their own elections.
MS. COOK said they would operate their own elections.
CHAIRMAN TORGERSON said that is just like a second class city does
now.
MS. COOK agreed. For example, if a home rule community said, in
their charter, the community may not conduct an election, the state
has no requirement to do it for the community so such a charter
would be self defeating because there would be no one to conduct an
election.
SENATOR LINCOLN asked Ms. Cook to outline the economic benefits and
drawbacks in having a home rule community.
MS. COOK asked if she wanted a comparison between other kinds of
communities or as opposed to non-incorporated status.
SENATOR LINCOLN said either.
MS. COOK said the great economic benefit would be that once you
have an organized municipality, that municipality qualifies for a
number of programs for municipal aid. There is also aid given to
unincorporated communities and it is possible that they would have
to give up that aid but, overall, they would probably qualify for
more aid programs if they were incorporated. Most programs that
provide aid to unincorporated communities have an offsetting
program that provides aid to a municipality of the same size. In
some cases, a community would be substituting its unincorporated
aid for its city aid. Generally though, it would be in a position
to get more aid.
To the extent that the state is more involved in contracting for
the provision of services with local governments, an unincorporated
city with municipal standing would be in a better situation to take
advantage of some of those contract opportunities.
CHAIRMAN TORGERSON asked whether home rule communities would be
able to vote to bond themselves or enter into revenue bonding.
MS. COOK said they would; a municipality of the state has the right
to incur formal debt, both revenue bonds and bond anticipation
notes and general obligation bonds upon a vote of the people.
SENATOR PHILLIPS added that they would also participate in the
municipal bond band.
MS. COOK agreed.
CHAIRMAN TORGERSON remarked that those were all positive aspects.
He asked whether there were differences between a charter that
would create a home rule city and a charter that would create a
home rule community or does the difference arise from the powers
that are adopted in the charter.
MS. COOK said it's just the powers they adopt in their charter that
will create the difference. "However, there are some things in the
statutes that now are required of home rule cities that have
exempted these communities from those provisions in this draft."
Examples are, being a school district and the requirement of
providing for planning and zoning which now applies to home rule
municipalities but will be permitted but not mandatory for these
types of communities.
CHAIRMAN TORGERSON asked who would settle planning and zoning
disputes in Hyder since it would be a community without overlapping
governmental powers from a borough.
MS. COOK said that if they have no planning and zoning powers,
there are no planning and zoning issues.
SENATOR LINCOLN asked about any disadvantages to the state as a
whole to having home rule communities.
MS. COOK could not think of any disadvantages. Most communities
that might elect to become a home rule community could already
become a second class city if they so elected. Therefore, the state
would not be in a different position with respect to setting up
home rule communities than it is right now.
SENATOR LINCOLN asked why the committee wouldn't want to adopt HB
16 after hearing the testimony that was heard today.
MS. COOK asked if the question was directed at her.
SENATOR LINCOLN said, "If you've got an answer to that that'd be
fine."
CHAIRMAN TORGERSON didn't know that it was a question, it sounded
like a statement.
MS. COOK said she represents a policy neutral agency.
CHAIRMAN TORGERSON asked whether home rule community formation
might lead to conflicts with prior LBC determinations.
Side B
MS. COOK thought the LBC would look at an incorporation petition
the same way they do now, which is on a case-by-case basis. There
would be a requirement to submit the proposed home rule charter
with the incorporation petition so the LBC will know what the
charter would look like before they must decide whether or not the
incorporation question should be presented to the people for a
vote. They would be able to decide whether the community has the
economic ability and social cohesiveness to provide some form of
valuable municipal local government.
CHAIRMAN TORGERSON asked how revenue sharing would be determined
for an unincorporated community located in a borough that wanted to
change and has either a high raw fish tax or high payment in lieu
of taxes (PILT) payment from the federal government.
MS. COOK presumes that it would be the same way as with a second
class city. This bill directs the drafting of an additional bill
that brings all other statutes into conformity and also gives
direction to treat home rule communities as second class cities in
any provision addressing second class cities.
CHAIRMAN TORGERSON isn't sure there is a determination on
unorganized boroughs distributing PILT money but home rule
communities would have a claim on any shared revenues from any
source.
MS. COOK'S understanding of PILT money is that it is going to
organized cities in the unorganized boroughs. Communities that are
in the unorganized borough would qualify for PILT money because
they would become organized cities.
CHAIRMAN TORGERSON is assuming the LBC won't let these communities
take in a great deal of federal land but asked whether there is a
way to keep a community from filing for more land than is feasible
for them to manage.
MS. COOK said the only thing she is aware of is the LBC process of
accepting, rejecting or rewriting a petition. She isn't sure how
the LBC reaches their decisions.
CHAIRMAN TORGERSON said he is more comfortable with the bill than
at the beginning of the meeting but it will be held in committee
until a few more questions are answered.
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