HOUSE BILL NO. 198                                                           
                                                                               
       "An Act relating to the Alaska regional economic                        
       assistance program; and providing for an effective                      
       date."                                                                  
                                                                               
  Co-Chair Larson noted that HB 198 changes the Alaska                         
  Regional Development Organizations (ARDOR) Program by rasing                 
  the state grant funding cap to regional development                          
  organizations from $50.0 thousand dollars to $100.0 thousand                 
  dollars a year.  The legislation will provide flexibility in                 
  assessing organizations' ability to raise matching funds.                    
  There is a $750.0 thousand dollar fiscal note from the                       
  Department of Commerce and Economic Development.                             
                                                                               
  CHRISTOPHER GATES, DIRECTOR, DIVISION OF ECONOMIC                            
  DEVELOPMENT, DEPARTMENT OF COMMERCE AND ECONOMIC DEVELOPMENT                 
  spoke in support of HB 198.  He asserted that the ARDOR                      
  program is a jobs and economic development enhnacement.  He                  
  stressed that rural areas have difficulty in providing a one                 
                                                                               
                                2                                              
                                                                               
                                                                               
  to one match.                                                                
                                                                               
  Representative Martin expressed concern with the grant                       
  increase.  He asked why the grant should be raised.  Mr.                     
  Gates emphasized that the programs are successful.  He                       
  stressed that rural tourism is needed to put local residents                 
  to work.  He observed that the Matanuska-Sustina Borough has                 
  proposed the creation of an ARDOR.                                           
                                                                               
  Representative Martin asked for examples of ARDOR's                          
  accomplishments.  Mr. Gates gave examples of accomplishments                 
  of the Kenai ARDOR (see testimony by Mr. Steadman.)                          
                                                                               
  Co-Chair Larson asked the definition or purpose of ARDORs.                   
  Mr. Gates stated that ARDORs assist local economies to                       
  create jobs and economic activity.                                           
                                                                               
  Co-Chair Larson asked which projects would not have been                     
  developed without the help of an ARDOR.  Mr. Gates mentioned                 
  the Forest Task Force Project in Kenai.  He noted that the                   
  Seward sawmill was developed with ARDOR assistance.  He                      
  added that Seward was developed as a cruise ship destination                 
  with the assistance of the area ARDOR.                                       
                                                                               
  Co-Chair Larson asked if private grants are solicited.  Mr.                  
  Gates replied that grants are solicited from private                         
  organization.                                                                
                                                                               
  STAN STEADMAN, EXECUTIVE DIRECTOR, KENAI ARDOR reviewed some                 
  of the accomplishments of the Kenai ARDOR.  He concluded                     
  that the Kenai ARDOR:                                                        
                                                                               
       *    Played a key role in obtaining close to $10                        
            million in U.S. EDA assisted public works                          
            projects, to create 900 jobs;                                      
                                                                               
       *    Managed a nationally acclaimed media campaign to                   
            mitigate impact of the Exxon-Valdez oil spill;                     
                                                                               
       *    Facilitated contacts between Ssangyong Oil of                      
            Korea and Stewart Petroleum leading to successful                  
            oil drilling in Cook Inlet;                                        
                                                                               
       *    Trained 475 persons through the Small Business                     
            Development Center;                                                
                                                                               
       *    Obtained federal funding for investigations of                     
            options for utilization of timber lost to the                      
            spruce bark beetle infestation;                                    
                                                                               
       *    Obtained federal funding for Shellfish                             
            mariculture;                                                       
                                                                               
                                3                                              
                                                                               
                                                                               
       *    Obtained federal funding for development of health                 
            care programs.                                                     
                                                                               
  Mr. Steadman noted the difficulty ARDORs have in supporting                  
  their administrative costs.                                                  
                                                                               
  Representative Hanley observed that the first $50.0 thousand                 
  dollar grant does not require a match.  Mr. Gates stated                     
  that the second $50.0 thousand dollars requires a 1 to 1                     
  match by railbelt ARDORs and a 3 to 1 match by rural ARDORs.                 
  He clarified that matching requirements are specified in                     
  regulations of the Department of Commerce and Economic                       
  Development.                                                                 
                                                                               
  Representative Hanley expressed concern that the first $50.0                 
  thousand dollars is a grant.  He felt that there should be a                 
  match for the entire amount.  He suggested that ARDOR grants                 
  be discontinued after a period of time if no benefits or                     
  match is forthcoming.                                                        
                                                                               
  Mr. Gates emphasized that rural ARDORs cannot provide the                    
  match when no commercial base exists.  Mr. Steadman stressed                 
  that ARDORs help residents to access state and local                         
  programs.                                                                    
                                                                               
  Representative Brown noted that she is a board member of the                 
  Anchorage ARDOR.  She observed that the Anchorage ARDOR                      
  instituted the proposal to consolidate procurement by the                    
  United States military in Anchorage.  She noted that the                     
  Anchorage ARDOR has proposed amendments to HB 198.                           
                                                                               
  Co-Chair Larson HB 198 was HELD in a subcommittee consisting                 
  of Chair Hanley with Representatives Parnell and Brown.