HOUSE COMMUNITY AND REGIONAL AFFAIRS STANDING COMMITTEE April 30, 1996 1:35 p.m. MEMBERS PRESENT Representative Ivan Ivan, Co-Chair Representative Alan Austerman, Co-Chair Representative Kim Elton Representative Al Vezey Representative Pete Kott Representative Irene Nicholia MEMBERS ABSENT Representative Jerry Mackie COMMITTEE CALENDAR CS FOR SENATE BILL NO. 287(FIN) "An Act relating to the unincorporated community capital project matching grant program; and providing for an effective date." - PASSED HCS CSSB 287(CRA) OUT OF COMMITTEE PREVIOUS ACTION BILL: SB 287 SHORT TITLE: UNINCORP. COMMUNITY MATCHING GRANTS SPONSOR(S): SENATOR(S) TORGERSON JRN-DATE JRN-DATE ACTION 02/09/96 2358 (S) READ THE FIRST TIME - REFERRAL(S) 02/09/96 2358 (S) CRA, FIN 02/28/96 (S) CRA AT 1:30 PM BUTROVICH ROOM 205 02/28/96 (S) MINUTE(CRA) 03/11/96 (S) CRA AT 1:30 PM BUTROVICH ROOM 205 03/11/96 (S) MINUTE(CRA) 03/20/96 (S) CRA AT 2:00 PM BUTROVICH ROOM 205 03/22/96 2832 (S) CRA RPT CS 2DP 3NR SAME TITLE 03/22/96 2833 (S) FISCAL NOTE TO SB & CS (DCRA) 03/27/96 2928 (S) COSPONSOR(S): HOFFMAN 04/15/96 (S) FIN AT 8:00 AM SENATE FINANCE 532 04/16/96 (S) FIN AT 9:30 AM SENATE FINANCE 532 04/17/96 (S) FIN AT 5:00 PM SENATE FINANCE 532 04/18/96 (S) FIN AT 9:00 AM SENATE FINANCE 532 04/19/96 (S) FIN AT 8:30 AM SENATE FINANCE 532 04/22/96 (S) RLS AT 8:40 PM FAHRENKAMP RM 203 04/22/96 3410 (S) FIN RPT CS 2DP 3NR 1DNP SAME TITLE 04/22/96 3410 (S) FISCAL NOTE TO CS (DCRA) 04/23/96 3448 (S) RULES TO CALENDAR 4/23/96 04/23/96 3452 (S) READ THE SECOND TIME 04/23/96 3453 (S) FIN CS ADOPTED Y12 N8 04/23/96 3453 (S) COSPONSOR'S NAME WITHDRAWN: HOFFMAN 04/23/96 3453 (S) ADVANCE TO THIRD READING FAILED Y12 N8 04/23/96 3453 (S) THIRD READING 4/24 CALENDAR 04/24/96 3536 (S) READ THE THIRD TIME CSSB 287(FIN) 04/24/96 3536 (S) PASSED Y13 N7 04/24/96 3536 (S) EFFECTIVE DATE(S) ADPTD Y14 N6 04/24/96 3536 (S) Duncan NOTICE OF RECONSIDERATION 04/25/96 3575 (S) RECON TAKEN UP - IN THIRD READING 04/25/96 3576 (S) PASSED ON RECONSIDERATION Y14 N6 04/25/96 3576 (S) EFFECTIVE DATE(S) SAME AS PASSAGE 04/25/96 3581 (S) TRANSMITTED TO (H) 04/26/96 4035 (H) READ THE FIRST TIME - REFERRAL(S) 04/26/96 4035 (H) CRA & FINANCE 04/30/96 (H) CRA AT 1:00 PM CAPITOL 124 WITNESS REGISTER JOHN TORGERSON, Senator Alaska State Legislature State Capitol Building, Room 427 Juneau, Alaska 99801 Telephone: (907) 465-2828 POSITION STATEMENT: Sponsor of SB 287. ACTION NARRATIVE TAPE 96-21, SIDE A Number 0001 CO-CHAIR IVAN IVAN called the House Community and Regional Affairs Committee meeting to order at 1:35 p.m. Members present at the call to order were Representatives Ivan, Austerman, Elton and Vezey. Representatives Nicholia and Kott joined the meeting at 1:37 p.m. and 1:40 p.m., respectively. Representative Mackie was absent. SB 287 - UNINCORP. COMMUNITY MATCHING GRANTS Number 0038 CO-CHAIR IVAN noted that committee packets for SB 287 contained copies of the bill, a fiscal note from the Department of Community and Regional Affairs, a sponsor statement, a sectional analysis, and support materials. Also in the packets was a proposed committee substitute. Co-Chair Ivan welcomed Senator Torgerson to speak about the bill. Number 0066 SENATOR JOHN TORGERSON, sponsor of SB 287, explained, "Basically, it would change the unincorporated community matching grant program to allow unincorporated communities within organized boroughs to also participate in the matching grant program. Currently, any community that qualifies ... under the municipal assistance and revenue sharing program is entitled to receive $25,000 a year, whether or not they have a project that is approved.... The money is set aside until they come forward with an approved project. This would change that to where we have projects that are approved before the money is allocated, and all unincorporated communities within the state would participate in the same program, ... irregardless of borough boundaries or other things." Number 0138 SENATOR TORGERSON continued, "If you are in a borough, ... this legislation requires the borough assembly to recognize you as the unincorporated area or community for that area. It also requires a borough assembly to approve your project. And the bill also maintains the local matching share that is currently for `unincorporateds' outside of boroughs, and it requires that the local share for inside boroughs be whatever the qualifying share is for that borough, which I believe is 30 percent in most cases, but there might be some less than that." SENATOR TORGERSON indicated he had not seen the committee substitute, then said, "There is also a transition period in here that says that areas ... that might already be under a project and had been granted money toward that project, that we would continue on funding those projects. The bill that came over from the Senate side also has language in there that says you must be ... an incorporated nonprofit community in order to receive the funds. And the transition period is actually speaking to entities that may not have been incorporated but have received funds under waivers or other general law practices that have been in place in the past." Number 0253 CO-CHAIR IVAN noted that Representative Nicholia had joined the meeting. He expressed appreciation to the sponsor for giving communities in the unorganized borough an opportunity to participate in the program. He said, "The only difference I have is the amendment on requiring nonprofit corporations to administer grants. I just didn't agree with that portion, but I'm certainly supportive of the bill. And however it ends up, with whatever language in the end, I'll certainly support the intent...." Number 0353 CO-CHAIR IVAN acknowledged that Representative Kott had joined the meeting and noted there was a committee substitute. REPRESENTATIVE ALAN AUSTERMAN made a motion that House CS for CS for Senate Bill No. 287(CRA), version M, dated 4/27/96, be adopted as a working draft. There being no objection, it was so ordered. Number 0397 REPRESENTATIVE AL VEZEY asked the sponsor the reason for changing the wording. He referred to page 2, line 21, of the Senate bill and page 2, line 22, of the committee substitute. He said, "We're changing that to be a nonprofit corporation." He asked what the difference is between an incorporated nonprofit entity and a nonprofit corporation. Number 0479 SENATOR TORGERSON replied the intent of the amendment made in the Senate Finance Committee was that the disbursement of money would not go to any entity not organized within the state of Alaska. REPRESENTATIVE VEZEY indicated that was not his question. He said, "The current statute reads `an incorporated nonprofit entity' and the proposed wording is `a nonprofit corporation'. To me, ... those two things say exactly the same thing." SENATOR TORGERSON responded that disbursements were being changed to only go to nonprofit organizations recognized under Alaska law. "A nonprofit entity does not have to be a corporation," he said. "And we wanted to make sure that the corporation was nonprofit, and not just a corporation ... that was recognized under the laws of the state of Alaska, so that the corporations wouldn't have the opportunity to take money out of the appropriation as a profit- making for the shareholders of the corporation. ... That was the intent of the amendment." Number 0589 REPRESENTATIVE VEZEY said current statute limits the grants to nonprofit corporations. He asked: "Is that really what we want to do? ... Are we limiting ourselves to who can administer these grants unnecessarily, by saying you have to be a nonprofit corporation, as opposed to a for-profit corporation?" SENATOR TORGERSON replied, "It's an interesting question and one that we've been wrestling with. A for-profit corporation most generally is not organized to serve a public purpose. That's where you run into a problem. They serve a purpose for the shareholders of their corporation, and that's not necessarily a public service." Number 0651 CO-CHAIR IVAN said, "There's ANCSA corporations that are also incorporated under state law. This separate nonprofit would be a group that incorporates under the state statutes and be eligible to receive matching grants. That's separate from the for-profit." SENATOR TORGERSON responded, "We heard in different testimony that ... the for-profit corporations are taking ... up to 39 percent overhead to administer these programs. So, the idea was to keep it to a nonprofit, and we're not paying for corporations to make money to share back to their shareholders." Number 0697 REPRESENTATIVE VEZEY said nonprofit corporations have as much overhead as for-profit corporations. He noted that the University of Alaska's standard overhead was 45 percent. SENATOR TORGERSON stated, "I believe in some instances overhead is considered an amount of profit that they take off of everything. ... It's the charge of a for-profit corporation to make money on anything that they do." Number 0782 REPRESENTATIVE IRENE NICHOLIA referred to the Senate Finance Committee version of the bill and said that, to her, it was an attack on the Native people, some of whom were dissolving their municipalities. SENATOR TORGERSON said he assumed she was referring to the amendment adopted in the Senate committee substitute. 2REPRESENTATIVE NICHOLIA concurred. SENATOR TORGERSON explained there were lawsuits in Alaska trying to define the meaning and authority of tribal status and tribal land status. "And along with that, we have communities that are sucked up into this thing, if they like to or not, based on just the fact that they may be an IRA or some other entity that is not a recognized entity to handle funds for the state of Alaska," he said. "Now, what we do is we have them sign a waiver that says, `we know you're not a recognized nonprofit and not formed for a public purpose, but we'd like you to sign this waiver that says that you are, and that you will come under the laws of the state of Alaska as far as filing suit for reimbursement of funds or non- performance of the grant or other provisions that might be in that waiver.' This takes those communities out of the loop of any lawsuits that happen in the future, that is going over ... the tribal issue." SENATOR TORGERSON continued, "Now, if the tribal issues weren't in court, and if we weren't having this issue out there, then, this wouldn't be before us. That's my opinion of it. It's not taking on anybody's rights one way or the other. It's not arguing about what issues a tribal government has, or what authorities that they have. We already know what they're asserting that they have. And we already know that we can possibly be drug into the argument by recognizing that they have the authority to waive the authority. And what this amendment does is take it completely off the table. It says, `Be a nonprofit. Let's not get into that argument.' It has nothing to do with how they feel about it. There's many, many groups that are not in the Native sovereignty issue. They don't necessarily agree with it. But there are many, many that are. And there are some that are suing. And they're suing for fish and game rights. They're suing for court rights. They're suing for a lot of rights that we don't recognize that they currently have." SENATOR TORGERSON indicated it required only $50 and filling out a form to form a nonprofit corporation. Number 0979 CO-CHAIR IVAN stated his concern that the money get to the villages while the issue was being debated. SENATOR TORGERSON replied that was how he felt, too. He acknowledged the issue would not be resolved soon. He said, "And if we're going to have this hanging over our head, eventually there's going to be some intervention in the money that we disburse to communities who say, by waiver, that they want to participate in the program and are organized for a public purpose. This just takes it completely off the table." He concluded, "And I really believe that if the state of Alaska had taken this approach to begin with, it wouldn't be in this particular instance. You had two things to offer: either sign a waiver or become a nonprofit. And they just continued on with signing the waivers." Number 1059 CO-CHAIR IVAN pointed out that was for a previous version. "I think we have a substitute before us that gets away from that discussion," he stated. REPRESENTATIVE NICHOLIA thanked the chairman for his leeway and indicated she had wanted to hear the sponsor's thoughts on the previous version. Referring to the committee substitute on the table, she asked: "How would this CS impact matching grant requirements for federal funds?" CO-CHAIR IVAN asked if someone from the Department of Community and Regional Affairs was available to answer the question. No one responded. Number 1130 SENATOR TORGERSON said the Senate version did not change requirements on how the money was used, only for who could participate. If the money was currently used for federal match funds, nothing in the bill changed that. REPRESENTATIVE NICHOLIA, saying she had the answer, referred to page 2, line 23, and noted that would meet the federal funds requirement. Number 1190 CO-CHAIR IVAN asked if there was further discussion or anyone wishing to testify. REPRESENTATIVE ELTON thanked Co-Chair Ivan for the committee substitute and said it avoided many of the problems. CO-CHAIR IVAN stated he liked the program and wished to see the bill move on. Number 1244 REPRESENTATIVE PETE KOTT made a motion that House CS for CSSB 287(CRA) move from committee with individual recommendations and the accompanying fiscal note. There being no objection, it was so ordered. ADJOURNMENT CO-CHAIR IVAN announced this was the final meeting, unless otherwise noticed. He thanked committee members and the committee secretary, Nancy Vidal, for their participation during the session. The House Community and Regional Affairs Committee meeting was adjourned at 1:57p.m.