HB 316-MILITARY FACILITY ZONES  9:43:23 AM CHAIR WIELECHOWSKI announced that the committee would hear HB 316, which allows the Department of Military and Veterans Affairs (DMVA) to establish "military facility zones." These are zones of economic and industrial production that help military bases fulfill their mission. The bill passed the House with great bipartisan support. About 13 percent to 17 percent of Alaska's economic activity can be attributed to military bases around the state. REPRESENTATIVE STEVE THOMPSON, sponsor of HB 316, introduced the bill. He said that HB 316 provides a flexible tool to municipalities to stimulate businesses in Alaska that are in close proximity to a military facility. Military facility zones create opportunities for significant benefit to Alaska and the nation. This bill is inclusive of all Alaska, urban and rural alike. These zones promote the expansion of infrastructure to benefit both military and civilian objectives. He reported that there are 32 military installations in Alaska that have more than 24,000 active duty and reserve National Guard troops serving in Alaska, with 37,000 military family members. The annual payroll amounts to $1.5 billion. These facilities include the U.S. Army, the U.S. Air Force, the Navy, Marine Corps, the Coast Guard, and their respective National Guard and reserve components. He continued to say that military facility zones are successfully employed in other states, such as Virginia, Alabama, Texas, Florida, Maryland, and Arizona. They are used as vehicles to obtain and administer funds for business development specifically relating to military activities that enhance the military's mission and make military bases more efficient and effective. Military facility zones in Alaska will clearly demonstrate the state's continuing and substantive support for the armed services and help defend against the negative impacts of Alaska's regional economies and military communities should Congress choose to implement the federal Base Realignment and Closure Act (BRAC). THOMAS STUDLER, staff, Representative Steve Thompson, provided information related to HB 316 on behalf of the sponsor. He thanked the committee for hearing the bill. He read from the following sponsor statement: 'An act relating to military facility zones in the state; relating to the development of housing in military facility zones; relating to the financing of projects in military facility zones; and providing for an effective date.' HB 316 provides a very flexible tool to municipalities to stimulate business in Alaska in the close proximity of military facilities. HB 316 gives statutory authority to the Department of Military and Veterans' Affairs to establish 'military facility zones' within the State of Alaska. Military facility zones are designated areas in close proximity to a military base (facility) where industrial or economic development will directly enhance the base's ability to fulfill its mission. Military facility zones are successfully employed in other states as vehicles to obtain and administer funds for business development specifically relating to military activities. Funding for such zones in Alaska may be available from the Alaska Industrial Development and Export Authority (AIDEA) and/or the Alaska Housing Finance Corporation (AHFC), or from federal New Market Tax Credits. Federal, state, or local public or private funding sources, credit, or guarantee programs can be made available directly to municipalities and boroughs that are working on specifically approved projects within a military facility zone. Military facility zones create opportunities for significant benefits to Alaska and the nation. They will enhance economic activity near military installations and thereby facilitate economic growth and development in the state, especially where local governments are working in close partnership with their military counterparts. The zones promote expansion of infrastructure to benefit both military and civilian objectives, such as civil defense, homeland security and emergency response. They will enhance the nation's military capabilities by helping bases operate more effectively and efficiently. Finally, military facility zones in Alaska will clearly demonstrate the state's continuing and substantive support for the armed forces. 9:48:18 AM CHAIR WIELECHOWSKI opened public testimony. CRAIG CAMPBELL, President and CEO, Alaska Aerospace Corporation, testified in support of HB 316, which provides ways for local communities to help military stay in Alaska. He shared his experience with military bases outside of Alaska where there are many military-related businesses right next to bases. This is not so in Alaska. Other states try to BRAC-proof their bases by creating partnerships with businesses. They make an effort to offset military costs and entice businesses to communities. He maintained that this effort should be made in Alaska in order to support the military. Alaska Aerospace supports this effort due to their involvement with missile activity. He said the bill would make building a launch complex economically feasible to do in Kodiak. 9:53:09 AM MCHUGH PIERRE, Deputy Commissioner, Department of Military & Veterans Affairs, testified in support of HB 316. He stated support for local communities as they bring forward the military facility zone designation. CHAIR WIELECHOWSKI asked if the bill has an impact on Alaska Housing Finance Corporation (AHFC}. ERIN HAVELOCK, Multi-Family Underwriter Supervisor, Alaska Housing Finance Corporation, answered questions related to HB 316. He stated that the statutory authority to finance loans would not be affected; AHFC would simply be notified of the application for the military facility zone. SENATOR PASKVAN asked about federal new market tax credits. MR. HAVELOCK replied that the new market tax program targets commercial businesses, not private home financing. SENATOR PASKVAN asked if the new market tax credits require the creation of a military facility zone. MR. HAVELOCK thought that was a question better directed to Alaska Industrial Development & Export Authority (AIDEA), which handles commercial loans. 9:56:48 AM CHAIR WIELECHOWSKI noted wording in the bill that includes AHFC. MR. HAVELOCK responded that AHFC would be involved if an application for residential housing was presented through a corporation or through partnering lenders. CHAIR WIELECHOWSKI inquired if low interest residential loans would be made available in a military facility zone. MR. HAVELOCK replied that AHFC did not envision having a priority for a military facility zone. CHAIR WIELECHOWSKI addressed the same question to the bill sponsor. REPRESENTATIVE THOMPSON explained that there would be a need for more housing if the Marine Corp Base would expand. A corporation would make a deal with the Marine Corp and build subdivisions of housing, enabling the corporation to receive federal tax credits. AHFC would be involved in providing housing loans to persons interested in buying housing. CHAIR WIELECHOWSKI closed public testimony. REPRESENTATIVE THOMPSON said the bill was another tool in the tool box for communities and military base commanders to use to enhance military expansion. CHAIR WIELECHOWSKI noted HB 316 would be set aside.