Legislature(1995 - 1996)
02/14/1996 01:37 PM CRA
* first hearing in first committee of referral
= bill was previously heard/scheduled
= 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 packets. 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 bear. 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 past. 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.