HOUSE SPECIAL COMMITTEE ON ECONOMIC DEVELOPMENT AND TOURISM February 9, 2000 5:10 p.m. MEMBERS PRESENT Representative Gail Phillips, Chair Representative Ramona Barnes Representative Fred Dyson Representative Andrew Halcro Representative Sharon Cissna Representative Beth Kerttula MEMBERS ABSENT Representative Norman Rokeberg COMMITTEE CALENDAR HOUSE BILL NO. 265 "An Act extending the termination date of the Alaska regional economic assistance program; and providing for an effective date." - MOVED HB 265 OUT OF COMMITTEE COMPLETION OF THE REVIEW ON TRANSPORTATION CORRIDOR ISSUES PREVIOUS ACTION BILL: HB 265 SHORT TITLE: ALASKA REGIONAL ECONOMIC AID PROGRAM Jrn-Date Jrn-Page Action 1/10/00 1889 (H) PREFILE RELEASED 12/30/99 1/10/00 1889 (H) READ THE FIRST TIME - REFERRALS 1/10/00 1889 (H) EDT, CRA 1/10/00 1889 (H) REFERRED TO EDT 2/09/00 (H) EDT AT 5:00 PM CAPITOL 124 WITNESS REGISTER REPRESENTATIVE ALAN AUSTERMAN Alaska State Legislature Capitol Building, Room 434 Juneau, Alaska 99801 POSITION STATEMENT: Presented HB 265. GARY STEVENS P.O. Box 201 Kodiak, Alaska 99615 POSITION STATEMENT: Testified in support of HB 265. PAT POLAND, Director Central Office Municipal & Regional Assistance Division Department of Community & Economic Development 333 West Fourth Avenue, Suite 220 Anchorage, Alaska 99501 POSITION STATEMENT: Testified in support of HB 265. FRANK HOMAN, Executive Director Southeast Conference 213 Third Street, Number 124 Juneau, Alaska 99801 POSITION STATEMENT: Testified in support of HB 265. ACTION NARRATIVE TAPE 00-2, SIDE A Number 0001 CHAIR GAIL PHILLIPS called the House Special Committee on Economic Development and Tourism meeting to order at 5:10 p.m. Members present at the call to order were Representatives Phillips, Barnes, Dyson, Halcro and Cissna. Representative Kerttula arrived as the meeting was in progress. HB 265 - ALASKA REGIONAL ECONOMIC AID PROGRAM Number 0065 CHAIR PHILLIPS announced the first order of business as House Bill No. 265, "An Act extending the termination date of the Alaska regional economic assistance program; and providing for an effective date." Number 0095 REPRESENTATIVE ALAN AUSTERMAN, Alaska State Legislature, sponsor of HB 265, came forward to present it. In 1988 the ARDOR (Alaska Regional Development Organizations) program was formed which helped fund some of the economic development in the rural areas of Alaska. When he served on the Kodiak Island Borough assembly there was talk about how to get economic development going. The Southwest Municipal Conference was formed and several regional conferences have been formed around the state of Alaska. Now there are 13 regional development organizations. The money placed into the ARDOR program is seed money which when matched has been able to bring in about $3.5 million a year. This bill extends the sunset date on the ARDOR program. Number 0302 GARY STEVENS testified from Kodiak via teleconference. He stated that Kodiak is one of the ARDOR through the Southwest Municipal Conference. The Kodiak Island Borough and the Alaska Municipal League have been very supportive of the ARDOR program. The ARDOR program has had an impact on Southwest Alaska, and he hopes the committee will consider reauthorizing it. It has been used to help people get businesses started by helping them in the planning stages and giving them assistance in creating promotional material. The ARDOR program has provided a tremendous advantage, and if it is continued, it will continue to have an impact on his part of the state as well as the other areas where ARDOR exist. He encouraged the committee to consider this. Number 0423 CHARLES PARKER, Executive Director, Mat-Su [Matanuska-Susitna] Resource Conservation and Development Council (RCDC), testified from the Mat-Su LIO [Legislative Information Office] via teleconference. In his experience in development in rural Alaska, there is no comparison for the ARDOR program. With very little state money, the ARDOR program has accomplished a great deal of work. Statewide they have managed to leverage over $5 in private and federal money for every one dollar invested by the state for local development projects just in the last two years. In the Mat-Su Valley the RCDC also managed accounts for numerous community organizations many of which may not have been able to accomplish their goals without the specific help. The managed accounts have totaled over $300,000 in the past two years. These figures, while actually substantial, are actually very conservative as they also provide technical assistance in a lot of development projects in the region which brings in more private and federal funds which is almost impossible to quantify. MR. PARKER indicated the financial impact of the ARDOR activities in the long-term is also substantial. As the ARDOR work to create jobs, it reduces unemployment and decreases the burden on public assistance programs. As the local economy and the quality of life are improved, a community's dependency on direct state and federal services is reduced. Many of the regional development organizations would not survive without the support of the ARDOR program, and their loss would be felt for many years to come. He urged the committee to pass HB 265 and fully fund the ARDOR program. CHAIR PHILLIPS noted in last year's budget there was $620,000 in grant money available to the 13 different ARDOR and that leveraged about $3.5 million. She asked Mr. Parker if the money is program specific or is there overhead built into the grant. MR. PARKER said the grants they receive from the state is for direct program services. That pays for staff time and travel out to do the work and set up meetings. PAT POLAND, Director, Central Office, Municipal & Regional Assistance Division, Department of Community & Economic Development (DCED), testified from Anchorage via teleconference. The DCED serves as administrator of the ARDOR grants. He explained there is $650,000 that has historically gone for the ARDOR program, $30,000 of which has been used for the administrative overhead, and the remainder of the $620,000 goes as grants to the ARDOR themselves. He expressed support by DCED for the ARDOR program. FRANK HOMAN, Executive Director, Southeast Conference, came forward to testify. He agreed with the other members of the ARDOR who testified that it has been a very successful program. It has helped Southeast to expand its services over the years. When the program first started in 1988, there was not a permanent office and it was an informal association. Although the Southeast Conference has been around for years since statehood when they came together to promote the Alaska Marine Highway System, it was never fully staffed or able to take care of a lot of the economic development promotion that needed to be done in the region. Since the ARDOR grants became available, it has been staffed with a full-time position and has been able to leverage a lot of outside funds for the region. MR. HOMAN said the Southeast Conference has also been designated as a Resource Conservation and Development (RC&D) district which provided a federal staff employee that works with the Southeast Conference and provided access to additional federal funds that help to fund specific programs and projects. One of the benefits of the ARDOR program is that it forces the region to come to a consensus on projects that it would like to work on. The membership of the Southeast Conference consists of almost all the communities of Southeast Alaska so it represents the majority of the population. The Southeast Conference works on region-wide transportation issues, power issues, solid waste, so it has been a catalyst to help bring the region together. For that reason it is a very useful program. CHAIR PHILLIPS referred to the fiscal note. The $650,000 comes to the DCED via a Reimbursable Services Agreement (RSA) from the Alaska Industrial Development and Export Authority. REPRESENTATIVE BARNES pointed out that it cannot be a zero fiscal note. There is an explanation at the bottom that DCED gets the money from a RSA and then awards $620,000 in grants and $30,000 for personal services, and it shows a zero above. REPRESENTATIVE AUSTERMAN agreed that is correct. It is a $650,00 general fund appropriation. REPRESENTATIVE BARNES stated they will need a revised fiscal note to be presented to the next committee. Number 1077 REPRESENTATIVE BARNES made a motion to move HB 265 from the committee with individual recommendations with a revised fiscal note to reflect the analysis at the bottom of the page of the fiscal note and asked for unanimous consent. There being no objection, HB 265 moved from the House Special Committee on Economic Development and Tourism. COMPLETION OF THE REVIEW ON TRANSPORTATION CORRIDOR ISSUES Number 1157 REPRESENTATIVE HALCRO gave a brief report on the Donlin Creek mine. The Donlin Creek mine is a gold exploration about 15 miles north of the village of Crooked Creek. In the 1980s significant sources of gold were determined to exist. The problem is access. Design and engineering studies need to be done for the 24 mile road from Donlin Creek to the Kuskokwim River which will allow supplies and equipment to be moved in to build the mine and continue operating it. There is $500,000 available for the studies which will include environmental, construction and cost estimates. REPRESENTATIVE HALCRO noted this is a rich area and there are substantial resources to be explored which would benefit the state. There is significant private investment, and an airstrip has already been built. The Chulista Native Corporation strongly supports this. When this project is up and running, it will provide 400 full-time jobs which will benefit the area. CHAIR PHILLIPS announced that the next meeting will be February 23, 2000, and they will hear presentations which will review mining operations. ADJOURNMENT Number 1511 There being no further business before the committee, the House Special Committee on Economic Development and Tourism meeting was adjourned at 5:30 p.m.