Legislature(1995 - 1996)

02/14/1996 01:37 PM CRA

Audio Topic
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
         SB 207 REVENUE BONDS: WATER & WASTE PROJECTS                        
 Number 138                                                                    
 CHAIRMAN TORGERSON brought up SB 207 as the next order of business            
 before the Senate Community & Regional Affairs Committee.  He                 
 stated it is his intent today to concentrate on the cap level we              
 want imposed.  There are several recommendations in members' bill             
 Number 114                                                                    
 SENATOR ZHAROFF asked which communities would actually be affected            
 by SB 207.                                                                    
 CHAIRMAN TORGERSON thinks that would depend on the language we put            
 in the bill now.  Currently, he thinks everyone supports that every           
 municipality must have a revenue stream.  Senator Hoffman has asked           
 the committee to expand this and look at housing authorities.  If             
 we do get into housing authorities, the scope of this bill will be            
 changed to bring in things that aren't a municipality.  There are             
 currently 162 municipalities in the State of Alaska.                          
 KEITH KELTON, Department of Environmental Conservation, stated, in            
 answer to Senator Zharoff's question, that in members' bill packets           
 is a list of the communities that DEC has made loans to in the six-           
 year history of this program.  They are primarily larger, urban               
 communities that have a dedicated revenue stream.  This does not              
 preclude a smaller community with a revenue stream from entering in           
 to this program.  Any incorporated community with a revenue stream            
 is eligible.  He believes there have been 24 loans to date.  One              
 third of which have gone to Anchorage; that third represents about            
 60% of the money that has been loaned.  It is anticipated that some           
 of the smaller communities will participate in this program.  But             
 it is fair to say that the program is predominately designed to aid           
 the larger communities.                                                       
 Number 070                                                                    
 CHAIRMAN TORGERSON asked Mr. Kelton if he's reviewed the amendment            
 that Mr. Sharp sent to the committee defining "other qualified                
 entity" and changing the name from state agencies.  It goes on to             
 say "regional housing authority".  Do you support that amendment?             
 What would the impact of that amendment be?                                   
 MR. KELTON responded that he sees no problem with that amendment.             
 He really doesn't see an impact to the program with that amendment.           
 The amount to be loaned will depend upon the ability to repay the             
 loan.  For a regional housing authority to qualify, it is his                 
 understanding that this can only happen if they're tied in with a             
 municipal government, and the municipal government remains                    
 responsible for repaying the loan.  The government would remain the           
 responsible entity.  He asked for verification of his analysis of             
 the amendment.                                                                
 CHAIRMAN TORGERSON thinks Mr. Kelton's analysis is correct.   The             
 chairman asked Mr. Sharp if he would like to make a statement.                
 Number 030                                                                    
 LEE SHARP, testifying from Anchorage, thinks that once there is an            
 agreement, the regional housing authority could exercise all of the           
 authority of the municipality with respect to that particular                 
 facility.  However, the state would still be in control of which              
 entity they're going to lend the money to.                                    
 TAPE 96-7, SIDE A                                                             
 Number 001                                                                    
 MR. SHARP stated that the municipality is the entity that would               
 ultimately be responsible for repaying the loan.                              
 Number 010                                                                    
 CHAIRMAN TORGERSON asked Mr. Sharp how he reads the agreement                 
 between a municipality and a service area.  Is that covered in the            
 interagency language?  Or is the intent to include a service area?            
 MR. SHARP responded that there is no intent to include a service              
 area.  He still thinks that ultimately, it is the borough that                
 would be the responsible agency.  You could have a service area for           
 the purpose of establishing a sewer system.  But it would still be            
 the borough that would be responsible for establishing fees to be             
 charged and ensuring repayment of the loan.                                   
 Number 040                                                                    
 CHAIRMAN TORGERSON asked if there could be a service area and a               
 mill rate levied instead of a fee.  Also, if the municipality could           
 then dedicate that money as a revenue source.                                 
 MR. SHARP responded there would have to be a vote to do something             
 like that.                                                                    
 CHAIRMAN TORGERSON asked if that could be done on just the service            
 area level.                                                                   
 MR. SHARP responded that it could.                                            
 CHAIRMAN TORGERSON asked, would the creation of a service area,               
 with the intent of entering into this agreement, establish that?              
 He thinks it would.  He asked if a municipality would have the                
 power to raise taxes for one service area, or if it would have to             
 be voted on by residents of the area.                                         
 MR. SHARP replied that unless it is a home-rule municipality, there           
 are some additional restrictions on the formation of service areas.           
 The borough assembly can create a service area, then once it's                
 approved by the voters in the service area, the assembly then has             
 the authority to raise taxes in that area.  The assembly does need            
 the voters' approval if they're going to raise the sales tax just             
 in that area.                                                                 
 Number 109                                                                    
 CHAIRMAN TORGERSON stated he does not want municipalities to be               
 precluded from entering into service area agreements with areas.              
 The chairman stated that the amendment needs to cite federal                  
 statute USC 1383.  The chairman has no idea what that is.                     
 MR. SHARP replied that is the Clean Water Act.                                
 CHAIRMAN TORGERSON asked how many regional housing authorities                
 there are in the State of Alaska right now.                                   
 MR. KELTON thinks there are 12 or 13.                                         
 Number 155                                                                    
 SENATOR KELLY asked who Government Finance Associates, Inc. is.               
 MR. KELTON responded that they are the financial advisors to the              
 State Bond Committee in the Department of Revenue.  That company              
 was used as bond counsel to develop SB 207.                                   
 Number 188                                                                    
 CHAIRMAN TORGERSON stated that the Municipality of Anchorage had              
 submitted some suggested amendments, but he thinks they want to               
 withdraw those amendments.                                                    
 SENATOR KELLY asked Mr. Evans if the municipality still wants the             
 amendments adopted, or if they want them withdrawn.                           
 BOB EVANS, Lobbyist, Municipality of Anchorage, thinks they are,              
 but he hasn't talked to them recently.  There are a number of                 
 committees to which the bill still will go, so he thinks there will           
 be opportunities to address that later.                                       
 SENATOR KELLY thinks maybe they just don't want to submit them in             
 the C&RA committee because of committee member opposition.                    
 CHAIRMAN TORGERSON stated it is the committee's intent to work out            
 most of the problems before releasing SB 207 from committee.                  
 Number 199                                                                    
 GEORGE KEENEY, City Planner and Public Works Director, City of                
 Cordova, testifying from Cordova, stated he supports SB 207.  It              
 will give municipalities another option for funding these projects.           
 CHAIRMAN TORGERSON asked Mr. Keeney if he would like to see any               
 amendments to the bill, or if he is happy with it as it is.                   
 MR. KEENEY responded he is happy with the way it is, except he                
 would like to know about the ceiling on the bonds.                            
 CHAIRMAN TORGERSON replied that is currently not in the bill, but             
 it is something the committee is discussing.  He stated that SB 207           
 will be held over for one more meeting, and he asked committee                
 members to think about what kind of cap they'd like to see.  He is            
 hopeful that a couple of the other committee referrals will be                
 waived if the problems can be resolved in this committee.                     
 SENATOR ZHAROFF asked if the cap wasn't simply determined by the              
 funds available.                                                              
 CHAIRMAN TORGERSON stated there is no cap now.  They could sell as            
 many revenue bonds as there is demand.                                        
 MR. KELTON added that it would depend on what the market would                
 SENATOR KELLY stated that one assumption is that it would be                  
 stretched out quite a ways.                                                   
 CHAIRMAN TORGERSON responded that's where we might start.                     
 SENATOR ZHAROFF stated his concern with a cap would be that smaller           
 communities might be edged out of the running for funds.                      
 CHAIRMAN TORGERSON replied that one suggested option would be to              
 put a $250,000,000 cap and sunset it, so it comes back before us.             
 There are members who think this program is circumventing the                 
 appropriations process.                                                       
 SENATOR ZHAROFF is concerned that some communities might not be               
 able to get involved if the cap has been reached.                             
 CHAIRMAN TORGERSON thinks the division has criteria and a point               
 system in use.                                                                
 SENATOR KELLY asked if they have had the ability to do this in the            
 Number 255                                                                    
 MR. KELTON responded the way it's worked in the past is that DEC is           
 under some federal requirements for the administration of the                 
 program.  One of those is that we have to go out and solicit input            
 on an annual basis from those communities interested in the                   
 program.  We then rank those projects, put them out for a public              
 hearing, and develop an annual intended use plan.  So it's unlikely           
 that there will be a need that we haven't anticipated.  The only              
 problem he can foresee is if there is a rapid increase in demand              
 above the current level of demand, the cap might cause a problem.             
 If you set the cap on a gross amount, say it can't go over                    
 $100,000,000 on an annual level, or put some kind of an upset limit           
 on an annual basis, if we get one large project--normally we could            
 fund $15,000,000 a year, with an upset provision on a single year             
 base of another $5,000,000 or something, he thinks they could                 
 handle any of the concerns he can foresee happening in the                    
 immediate future.  So he does not think it's a significant problem.           
 SENATOR ZHAROFF asked if the committee could get something along              
 those lines drawn up.                                                         
 CHAIRMAN TORGERSON asked Mr. Kelton if he could draw up something             
 like that.                                                                    
 MR. KELTON responded he would certainly give it a try.                        
 SENATOR KELLY commented that if this were a grant program, there              
 would be no shortage of applicants, however, since it's a loan                
 program, DEC doesn't anticipate such a big rush of applicants.                
 MR. KELTON stated DEC has seen an increase.  The first four years             
 of the program, it was averaging about $7,000,000 per year.  The              
 last two years it's been 12-13 million.  As the general fund                  
 capital budget gets harder to produce, he anticipates an increase.            
 But he doesn't think it will be a dramatic amount.  As the chairman           
 has pointed out, DEC would have the opportunity to come back to the           
 committee with problems.  He doesn't see it as a problem that can't           
 be taken care of.                                                             
 CHAIRMAN TORGERSON asked Senator Zharoff what exactly he wanted               
 drafted up.                                                                   
 Number 270                                                                    
 SENATOR ZHAROFF responded that if there is any type of a safety               
 measure that could be put in SB 207 allowing some flexibility, he             
 would like to see that.                                                       
 CHAIRMAN TORGERSON asked if the federal 80/20 match for this                  
 program was gone.                                                             
 MR. KELTON responded that is a good question, and until they                  
 reauthorize the Clean Water Act, they won't know for sure.  DEC               
 expects the Act to be reauthorized, even though they think it will            
 be at a lower rate.                                                           
 CHAIRMAN TORGERSON stated he would get together with Senator                  
 Zharoff on the language and intent.  He will reschedule SB 207 as             
 soon as possible.                                                             
 SENATOR KELLY sees what Senator Zharoff is worried about: one of              
 the larger cities taking all the money.                                       
 CHAIRMAN TORGERSON shares that concern.  In the past, DEC has                 
 handled that through their ranking system.                                    
 SENATOR KELLY thinks that a lot of the communities getting the                
 80/20 money now won't be eligible for the loan money.                         
 CHAIRMAN TORGERSON also thinks there would be different                       
 requirements than the federal requirements.                                   
 MR. KELTON noted that the requirements become less, as the money              
 cycles through.                                                               
 CHAIRMAN TORGERSON adjourned the Senate Community & Regional                  
 Affairs Committee meeting at 3:32 p.m.                                        

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