HB 25 - RIVER HABITAT PROTECTION TAX CREDIT TAPE 99-3, SIDE B Number 001 CO-CHAIRMAN HARRIS announced the next order of business to be HOUSE BILL NO. 25, "An Act relating to a municipal river habitat protection tax credit." DAVID GUTTENBERG, Legislative Administrative Assistant for Representative Davies, Alaska State Legislature, read the following sponsor statement into the record, This bill, recognizing the need for habitat protection along rivers within a municipality, is a land management tool that provides the option of protecting fish habitat along the rivers by offering a tax credit to property owners along those waterways. Note that this is not an unfunded mandate. It is entirely optional at the local government level. In 1995 the nineteenth legislature recognized the importance of this kind of protection by granting similar legislation along the Kenai River; this bill would simply extend that option to municipalities along other rivers. There are few, if any, other rivers in the state with the fishing pressure that exist along the Kenai. However as state population and tourism continue to grow, many other circumstances will arise where a municipality may wish to encourage habitat protection. This bill will provide one more option for them to consider. Mr. Guttenberg asked if there were any questions. CO-CHAIRMAN HARRIS asked how this was working from the point of view of the Kenai Borough. MR. GUTTENBERG informed the committee that to date there have been 63 tax credits given to property owners. Mr Guttenberg said that he had not made contact with anyone yet. CO-CHAIRMAN HARRIS inquired as to why this was being brought up; are other municipalities interested in taking advantage of such a program. MR. GUTTENBERG explained that the Fairbanks Riverfront Commission deals with the Chena and Tanana Rivers. Some people have expressed interest in having this option. The Fairbanks Riverfront Commission does not have authority, but can offer recommendations to the borough; the assembly would make the decision. Number 060 CO-CHAIRMAN HALCRO inquired as to the procedure to apply for this tax credit. MR. GUTTENBERG explained that HB 25 provides the municipality with the option to create the borough procedure for application of this tax credit. REPRESENTATIVE MURKOWSKI asked if approval by the commissioner of fish & game was required. MR. GUTTENBERG replied no, the Fairbanks Riverfront Commission is a borough commission that can offer recommendations and planning, but does not have any authority. The borough assembly and planning commission would need to deal with this tax credit. Mr. Guttenberg noted that the process in each borough or city is different. Number 093 REPRESENTATIVE MURKOWSKI referred to AS 29.45.046(d) which specifies, "Before an ordinance is adopted under (a) of this section, it must be approved by the commissioner of fish and game." Subsection (a) is what is being amended by HB 25. Procedurally it would be different because the Fairbanks Riverfront Commission would express interest and discuss this option with the Fairbanks Northstar Borough, but ultimately the commissioner of fish and game would have to provide approval. MR. GUTTENBERG agreed. In response to Representative Murkowski's inquiry regarding how the commissioner of fish and game was involved, Mr. Guttenberg indicated that this could have been a concern for offering protection for a site that did not require habitat protection under the original legislation of 1995. Mr. Guttenberg was not sure. In response to Co-Chairman Harris, Mr. Guttenberg explained that the original legislation was site specific because at the end of the session there was an attempt to amend the legislation to include all rivers. However, it was more important to move the legislation through versus returning the legislation to committee. Number 136 JOHN MOHRCICH, Employee of the Kenai River Center, Kenai Peninsula Borough, testified via teleconference. He explained that his position was responsible for reviewing and issuing permits for habitat protection projects on the Kenai River. Mr. Mohrcich said that he also reviews and issues the tax credit program. CO-CHAIRMAN HARRIS asked Mr. Mohrcich if he was in Kenai or working in his present position when the original legislation was enacted. MR. MOHRCICH informed the committee that he was working for the Kenai Peninsula Borough, but not in his current position with the Kenai River Center. In further response to Co-Chairman Harris, Mr. Mohrcich indicated agreement with Mr. Guttenberg's explanation as to why the original legislation was site specific. At the time of the original legislation, Kenai Mayor Don Gillman and Governor Knowles were pushing to establish the Kenai River Center and there was concern the process move forward which probably attributed to the legislation being site specific. REPRESENTATIVE MURKOWSKI asked Mr. Mohrcich to comment on how this is working on the Kenai. MR. MOHRCICH stated that the Kenai Peninsula Borough supports HB 25. The borough believes it beneficial to encourage the protection of the rivers and tributaries through this tax program. "Habitat protection and restoration projects result in preservation of our fisheries and our Alaska watershed." Mr. Mohrcich emphasized that without the tax credit, those building on the riverfront would bear the entire expense of protecting the river while everyone would benefit. He noted that about 15 percent of the land owners that do a habitat project on the Kenai River apply for this tax credit. Mr. Mohrcich believed this illustrated his opinion that these land owners had a desire to take care of their own property and that such people would often proceed with the habitat project even without the tax credit. Mr. Mohrcich stated that the experience has been positive in the Kenai Peninsula Borough. The ordinance establishing the tax credit included a sunset clause for the end of December 1998 which the assembly extended the tax credit program through the year 2001. During that process, no one spoke against the tax credit program. He noted that he had information regarding the number of applications and the amount the tax credit has saved property owners. Number 236 CO-CHAIRMAN HALCRO inquired as to the qualifications necessary to be approved for the creation of a fish habitat protection project on a property. MR. MOHRCICH explained that basically a project would need to reduce erosion, protect the riverbanks and the banks along the tributaries which would include elevated break walls, wooden boardwalks or stairs, floating docks, and the cabling of spruce trees along riverbanks. Mr. Mohrcich said that these are examples of the projects along the Kenai River that are qualifying for the tax credit. REPRESENTATIVE MURKOWSKI referred to AS 29.45.046(d) which she interpreted as saying that a municipality would propose an ordinance to qualify for the credit and the commissioner of fish and game will reply in writing whether the proposed ordinance is approved or disapproved. Representative Murkowski asked if the Department of Fish & Game had been contacted to determine if the department was supportive or not. MR. GUTTENBERG said that he had not heard from the Department of Fish & Game, but that he would make some inquiries. REPRESENTATIVE JOULE pointed out that HB 25 has a House Resources referral where the issue regarding the Department of Fish & Game could be taken up. CO-CHAIRMAN HALCRO noted that there is a zero fiscal note from the DCRA and there is no fiscal note from the Department of Fish & Game; does that happen later in the process? MR. GUTTENBERG believed that it could occur in the next committee of referral or a fiscal note from the Department of Fish & Game could be solicited. Mr. Guttenberg understood that since HB 25 requires no state action, except the comments regarding the Department of Fish & Game, there would probably be little or no fiscal impact. Number 299 CO-CHAIRMAN HALCRO moved to report HB 25 out of committee with individual recommendations and the accompanying zero fiscal note from DCRA. CO-CHAIRMAN HALCRO noted the lack of a fiscal note from the Department of Fish & Game. There being no objection, it was so ordered.