(a) Except as provided in (f) of this section, a sponsor receiving a grant under AS 47.65.010 - 47.65.050 shall contribute to the total cost of the program or project. The contribution may be in cash or in-kind services. The amount of the sponsor's required contribution is determined by the application of the following formula: average per capita full and true value of all property in the municipality or community in which the project or program takes place divided by the average per capita full and true value of all property in the state, and then multiplied by the contribution percentage to the estimated total program or project cost as determined by the department at the time of approval of a grant application. However, the amount of the sponsor's contribution may not amount to more than 10 percent of the total program or project cost.

(b) For purposes of this section,

(1) the contribution percentage for

(A) a program or project in a municipality or community having a population of 5,000 or less is 10 percent of the total program or project cost;

(B) a program or project in a municipality or community having a population of 5,001 to 10,000 is 20 percent of the total program or project cost; and

(C) a program or project in a municipality or community having a population of more than 10,000 is 30 percent of the total program or project cost.

(c) If an application is submitted for a program or project in a municipality or community for which no average per capita full and true property value determination has been made,

(1) if the population of the municipality or community is 750 or more, the department shall request the state assessor to compute the average per capita full and true property value of that municipality or community and report it;

(2) if the population is less than 750, the department may substitute for the average per capita full and true value of property in the municipality or community an amount equal to the average per capita full and true value of property in the smallest municipality for which that amount has been determined by the state assessor.

(d) The required contribution rate of the sponsor may not exceed the contribution percentage established in (b) of this section;

(e) The grant awarded by the department may not exceed the estimated total program or project cost as determined by the department less the contribution by the sponsor determined in accordance with this section.

(f) When awarding a grant to support a pilot project under AS 47.65.010 - 47.65.050, the department may waive all or part of the sponsor contribution required under this section if waiver is in the public interest. The department shall adopt regulations establishing standards for granting waivers under this subsection.