The state may grant aid to agricultural and industrial fair associations, incorporated under the laws of the state, to assist in the payment of (1) costs of operation and maintenance and (2) project costs for capital improvements of annual agricultural and industrial fairs.

The commissioner may require an association to expend not more than 10 percent of the state operation and maintenance aid granted, for the purpose of buying nonperishable exhibits. Those exhibits shall be held by the association subject to the order of the commissioner.

The commissioner may collect and ship, for display outside of the state, exhibits of Alaska produce, mining, and manufacturing, and other exhibits, including the Native arts. The commissioner may expend not more than $2,000 a year for that purpose. The commissioner shall account for and report the funds disbursed under this section.

Nothing in this chapter prohibits the formation of more than one agricultural and industrial fair association in each house district or the holding of an agricultural and industrial fair in several places in each district. When more than one association is formed in a house district or when a fair is held in more than one place in the district, the minimum operational aid is $250. When more than one association applies for the benefits of this chapter, the commissioner shall divide the money allotted to the district among the applicants in proportion to the amount justified at the time of application.

(a) If an association has received state operation and maintenance funds under this chapter and fails to hold a fair in accordance with its program, or does not disburse all of the state funds paid to it for that purpose, the association shall return those funds, or the unexpended portions, to the department within 60 days after the date set for the fair. If an association fails to comply with this section the attorney general shall institute proceedings to recover the funds.

(b) If an association has received state capital improvement funds under this chapter and fails to expend them within five years for capital improvements designated in its long-term capital improvement plan in effect at the time of the grant, the commissioner may, after investigation, require that the unexpended funds be returned to the department.

(a) Each agricultural and industrial fair association desiring to apply for a capital improvement grant shall apply to the commissioner before August 1 of the year preceding the fiscal year for which the grant is sought. It shall submit with the application a proposed long-term capital improvement plan of the fair covering five years from the time the application is submitted, which shall be certified by the president and secretary of the association as having been reviewed and approved by the governing body of the association. When satisfied that the association is entitled to receive state aid under the provisions of this section, the commissioner shall have a warrant drawn in favor of the association, in the sum to which it is entitled.

(b) Each association receiving state capital improvement aid shall furnish receipts to the commissioner for money paid to them. The commissioner shall prescribe the form of the receipt. The association shall make a full report of its receipts and expenditures made for capital improvements and this report shall be transmitted to the next legislature following the receipts and expenditures.

For purposes of this chapter,

(1) 'agricultural and industrial fair' means a fair, the major focus of which is displays, exhibitions, demonstrations, contests, or promotions of agricultural or industrial concern to the region in which the fair is located, or any fair that, before July 1, 1980, has received a grant under this chapter;

(2) 'project costs for capital improvements' includes, in addition to costs directly related to the project, the sum total of all costs of financing and carrying out the project; these include, but are not limited to, the costs of all necessary studies, surveys, plans and specifications, architectural, engineering, or other special services, acquisition of real property, site preparation and development, purchase, construction, reconstruction, and improvement of real property, and the acquisition of machinery and equipment as may be necessary in connection with the project; an allocable portion of the administrative and operating expenses of the grantee; the cost of financing the project, including interest on bonds issued to finance the project; and the cost of other items, including any indemnity and surety bonds and premiums on insurance, legal fees, fees and expenses of trustees, depositaries, financial advisors, and paying agents for the bonds issued as the issuer considers necessary.

(a) Each agricultural and industrial fair association desiring to apply for an operation and maintenance grant shall apply to the commissioner before August 1 of the year preceding the fiscal year for which the grant is sought. It shall submit with the application a planned program of operation and maintenance of the proposed fair, the rules and regulations governing the fair, and a certificate signed by the president and secretary of the association, certifying that the association will spend for the proposed fair, a sum of money from their own funds equal in amount to the benefits requested under this chapter. When satisfied that the association is entitled to receive state aid under the provisions of this chapter, the commissioner shall have a warrant drawn in favor of the association, in the sum to which it is entitled. The commissioner shall pay annually the sum to be paid under the provisions of this chapter.

(b) The commissioner shall require each association receiving state operation and maintenance aid to furnish receipts for money paid to them. The commissioner may prescribe the form of the receipt. Each association shall furnish a statement executed and acknowledged by the president and secretary, covering the disbursements by the association of all operation and maintenance funds, for fairs held under this chapter. The statement must definitely set forth that wherever any state aid money has been disbursed that a like amount of fair association fund money has been expended and that in no instance has the expenditure of state money exceeded the expenditure of fair association money. The association shall make a full report of receipts and expenditures including the sums expended for prizes and awards to the commissioner and this report shall be transmitted to the next legislature.

(c) A sum equal to at least 25 percent of the state operation and maintenance aid received under this chapter shall be used for premiums or transportation cost of exhibits.

(a) Fairs may be held each year in each of the house districts, and state aid for the operation and maintenance of the fairs may not exceed a basic grant of $10,000; however, fairs in existence five years or longer may receive an increment grant not to exceed $2,500 per year of existence to a maximum of $75,000. The people of each district sponsoring a fair are not eligible for state aid unless they subscribe to spend from their own funds for that purpose an amount equal to the amount of the state aid and have or organize an agricultural and industrial fair association for the operation and maintenance of the fairs. Each fair receiving state aid is open to entries by the people of the whole state, and special provision shall be made for exhibits from boys' and girls' clubs.

(b) An agricultural and industrial fair association qualifying for and applying for operation and maintenance grants may also apply for capital improvement grants.

(c) For the purpose of matching state fair aid allocations, a fair whose local resources are not sufficient to match dollar for dollar may, in preparing its annual report, place a reasonable itemized monetary value on donated labor, materials, and equipment used in the construction, repairing, and maintenance of fairgrounds, buildings, and facilities in place of dollar matching up to 50 percent of its annual requests. The commissioner shall determine when local resources are insufficient to allow the community to match the amount of state aid requested under (a) of this section, and shall approve the reasonableness of the value assigned the donations by the fair.

(d) Premiums and prizes that qualify for listing for allocation purposes under this section shall be those paid for exhibits and educational contests, displays, and demonstrations of an educational nature. This does not include prizes or premiums for promotion or entertainment activities such as queen contests, parades, dances, rodeos, or races. A listing of fund allocations under this section containing the names of all premium and prize winners, including the amount and value of all awards, shall be maintained by the fair association.