SENATE COMMUNITY & REGIONAL AFFAIRS COMMITTEE March 11, 1996 1:35 p.m. MEMBERS PRESENT Senator John Torgerson, Chairman Senator Randy Phillips, Vice Chairman Senator Tim Kelly Senator Fred Zharoff Senator Lyman Hoffman MEMBERS ABSENT All members present COMMITTEE CALENDAR SENATE BILL NO. 287 "An Act relating to the unincorporated community capital project matching grant program; and providing for an effective date." PREVIOUS SENATE COMMITTEE ACTION SB 287 - See Community & Regional Affairs minutes dated 2/28/96. WITNESS REGISTER Deb Davidson, Committee Aide Senate Community & Regional Affairs Committee State Capitol Juneau, AK 99801-1182 POSITION STATEMENT: Offered information on draft CSSB 287(CRA) Mark Hickey 211 4th St., #108 Juneau, AK 99801 POSITION STATEMENT: Testified in support of SB 287 Kim Metcalfe-Helmar, Special Assistant Office of the Commissioner Department of Community & Regional Affairs P.O. Box 112100 Juneau, AK 99811-2100 POSITION STATEMENT: Testimony on SB 287 Lena Simmons Division of Administrative Services Department of Administration P.O. Box 110208 Juneau, AK 99811-0208 POSITION STATEMENT: Offered information on SB 287 Tena Bavard, Grants Administrator Division of Administrative Services Department of Community & Regional Affairs P.O. Box 112100 Juneau, AK 99811-2100 POSITION STATEMENT: Offered information on SB 287 Michael Cushing Division of Municipal Assistance Department of Community & Regional Affairs P.O. Box 112100 Juneau, AK 99811-2100 POSITION STATEMENT: Offered information on SB 287 ACTION NARRATIVE TAPE 96-13, SIDE A Number 001 SB 287 UNINCORP. COMMUNITY MATCHING GRANTS  CHAIRMAN TORGERSON called the Senate Community & Regional Affairs Committee meeting to order at 1:35 p.m. He brought SB 287 before the committee as the only order of business. Number 015 DEB DAVIDSON , committee aide, presenting an overview on the legislation, explained there are two capital matching grant programs in the state today: The Municipal Capital Project Matching Grant Program and the Unincorporated Community Matching Grant Program. The purpose of these programs is to: (1) provide a capital project funding system that is equitable to municipalities and unincorporated communities throughout the state; (2) enhance the role of communities in initiating and prioritizing the construction of capital projects; (3) encourage a sense of local ownership in capital projects by requiring local participation; and (4) improve the process for making grants for capital projects by providing a more orderly and thoughtful planning process that involves the local community, the executive branch and the legislature. SB 287 revises the Unincorporated Community Capital Project Matching Grant to enable unincorporated located within boroughs to participate. Currently, when these communities want a capital project, they must first convince their borough that the project has a higher priority than those which benefit the entire borough, and has a higher than projects for other communities within that borough. Once the project is placed on the borough's list, it then goes through the state process. This legislation allows unincorporated communities within boroughs to apply for a capital projects matching grant provided that the project and the administering agency qualify on the same basic terms as the unincorporated communities in the unorganized borough and have the written approval of the boroughs in which they are in. Ms. Davidson directed attention to a draft committee substitute which adds a new Section 4. Currently, unincorporated communities in the unorganized borough have a 5 percent local share match. Recognizing that because they are in organized boroughs unincorporated communities may receive greater benefits, the new section provides that the local share requirement for unincorporated communities within boroughs would be the same as the borough themselves. Number 080 Summarizing the legislation, SENATOR TORGERSON said the legislation will allow unincorporated areas within organized boroughs to participate in the matching grant program. Criteria includes approval of the community by the borough assembly, project approval by the borough assembly, and the local share match must be the same as the borough's local share. Number 105 MARK HICKEY , representing the Lake & Peninsula Borough, directed attention to a letter from Walt Wrede, borough manager of the Lake & Peninsula Borough, which states the borough sees SB 287 as helpful bill which corrects an inequity in the current program. Mr. Hickey noted there are 17 communities in the Lake & Peninsula Borough, 11 of which are unincorporated. Last year the borough received approximately $44,000 to spend on those 11 communities, which, when divided up, was about $4,000 per community, as compared to the $25,000 that the unincorporated communities otherwise get who are outside boroughs. This year the cut would be $25,000 for those 11 communities, and at $2,000 a community, they can maybe take the top priority or two. He said the current setup penalizes an area that incorporates as a borough in terms in how it treats it unincorporated communities, and SB 287 will correct that inequity. Mr. Hickey stated he has not seen the committee substitute, but he understands what the provision would do and he believes the 30 percent match for their borough is fair. Number 145 KIM METCALFE HELMAR , representing the Department of Community & Regional Affairs, stated SB 287 addresses the department's policy concerns by requiring that a borough have a significant role in the planning and development activities within the borough. In terms of fiscal impact to the department, the addition of an estimated 60 communities to the Unincorporated Community Capital Match Program will double the workload of existing staff and will necessitate the addition of a Range 13 grants administrator position. Number 160 LENA SIMMONS , Grants Administrator, Department of Administration, stated that administratively the legislation would not have an impact on their department. However, depending upon how the Legislature decides to fund the program, it could cause a decrease in the allocations to the municipalities if the same dollar amount is appropriated this year and split between the unincorporated side and the municipal side. Number 185 TENA BAVARD , Grants Administrator, Department of Community & Regional Affairs, said the legislation would double the amount of eligible communities and it could potentially triple or quadruple the amount of work. She explained a grantee is allowed multiple projects with the dollars that they get each year, and there is no way to estimate the amount of workload. Number 205 SENATOR TORGERSON said another option would be to make it a pure grant program with a maximum of $25,000. There would be a criteria and the communities would have to compete for the grant program. He asked if the department would prefer that type of an approach. MS. BAVARD responded that never having a done a program of that type, she is not sure what the impact would be to her specific office. SENATOR TORGERSON asked if the Administration supports the legislation. MICHAEL CUSHING of the Division of Municipal & Regional Assistance, DCRA, responded no one from the department was present who could give a response to a question which really speaks to departmental policy. Speaking to Senator Torgerson's suggestion of a competitive grant program with a $25,000 maximum, he said it would essentially be like their Rural Development Assistance Program, which has $100,000 per community. He also pointed out if there were 60 new participants in the unincorporated matching program, there are two things to keep separate in mind: one is the programmatic changes and on the other side is the appropriation concept. There are two programs within the capital matching grant program, and how they are funded is entirely up to the Legislature. In the past, the unincorporated side has been fully funded, but on the municipal side, whatever was left of the overall appropriation to the capital match program went to the municipal side. SENATOR TORGERSON asked if under the capital matching grants program, eligible communities could accumulate up to $125,000 over a five-year period. TENA BAVARD acknowledged that was correct, and she added that if the funds are appropriated by the Legislature, the money is automatically put into their community account, if the community was eligible the prior year. Number 330 SENATOR TORGERSON commented what he is trying to do is to change the system into a grant driven system to where a community comes in with a project, and, if certain criteria is met and the project is approved, the money is given towards the project regardless of whether the community is inside or outside a borough without changing any of the appropriation process. MICHAEL CUSHING pointed out the money is held by the department in an account in the community's name, and when the community comes up with a plan and the matching funds for a project, then they can receive the money. SENATOR TORGERSON said his point is that it is money driving a project instead of a project looking for money, because every unincorporated community knows that money is sitting there and knows it doesn't go away for five years. Number 364 SENATOR HOFFMAN stated he would favor leaving the program as it is in current statute and to make the changes originally contemplated. SENATOR TORGERSON reiterated his intent is to make the program into a pure grant program whereby all the communities will apply for a grant, and the automatic hold-over of $125,000 won't be a part of it. The project would have to be approved before a community could accumulate the money. Number 390 SENATOR HOFFMAN asked what type of criteria would be used to evaluate which community would get a project. SENATOR TORGERSON answered it was his intent to let the department draft the criteria that would be needed. SENATOR RANDY PHILLIPS asked how the communities make decisions on their priority projects. TENA BAVARD responded they have community meetings, and they have to submit their priority project by resolution by a certain date. Number 415 SENATOR KELLY questioned if any consideration has been given to the fiscal note on the legislation. He suggested the program could be made self paying by having the community pay an amount for every grant that was awarded so that it was program receipt money paying for the program and not general fund money. He added that anything that impacts the general fund will have a problem in the process. MICHAEL CUSHING briefly discussed the department's selection process and evaluation of potential new applicants, and he said they may have to install regulations so there is a process that's recognized in place where a borough would have a participation in the selection of which communities are recognized by a borough. He pointed out the borough has the right to recognize the entity, but it's not clear in the legislation that the department can then say the entity does not meet the criteria and is not eligible. SENATOR TORGERSON agreed that provision may have to be put in a new committee substitute. Number 487 SENATOR ZHAROFF asked if there is an appeal process for a community that may want to participate in some degree, but is denied by the borough and the department. MICHAEL CUSHING replied there is no such provision in the legislation and the department might have to provide for such a process through regulation. SENATOR TORGERSON commented there is already the administrative appeal process that is currently under regulations, and he wasn't sure he would want to set up something more. Number 505 There being no further testimony on SB 287, SENATOR TORGERSON stated a new committee substitute would be drafted to reflect the discussion on the legislation and that it would be back before the committee at its next meeting. He then adjourned the meeting at 2:12 p.m.