HB 526: "An Act relating to the financing authority, programs, operations, and projects of the Alaska Industrial Development and Export Authority; providing an exemption from the procurement code for certain projects of the authority; and providing for an effective date."
00HOUSE BILL NO. 526 01 "An Act relating to the financing authority, programs, operations, and projects of 02 the Alaska Industrial Development and Export Authority; providing an exemption 03 from the procurement code for certain projects of the authority; and providing 04 for an effective date." 05 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF ALASKA: 06 * Section 1. AS 36.30.850(b) is amended by adding a new paragraph to read: 07 (34) contracts of the Alaska Industrial Development and Export 08 Authority related to integrated transportation and port facilities owned by the authority. 09 * Sec. 2. AS 44.88.159(a) is amended to read: 10 (a) The interest rate on a loan participation purchased [FINANCED] from 11 the proceeds of tax-exempt bonds or expected by the authority to be purchased 12 [FINANCED] from the proceeds of tax-exempt bonds is equal to the cost of funds to 13 the authority. In this subsection "cost of funds" means the true interest cost expressed 14 as a rate on tax-exempt bonds of the authority plus an additional percentage as
01 determined by the authority to represent the allocable expenses of operation, costs of 02 issuance, and loan servicing. 03 * Sec. 3. AS 44.88.159(b) is amended to read: 04 (b) The interest rate on a loan participation purchased [FINANCED] from 05 the proceeds of taxable bonds or expected by the authority to be purchased 06 [FINANCED] from the proceeds of taxable bonds is equal to the cost of funds to the 07 authority. In this subsection "cost of funds" means the true interest cost expressed as 08 a rate on taxable bonds, plus an additional percentage as determined by the authority 09 to represent the allocable expenses of operation, costs of issuance, and loan servicing 10 costs. 11 * Sec. 4. AS 44.88.159(e) is amended to read: 12 (e) The interest rate on a loan participation purchased [FINANCED] directly 13 from the assets of the authority shall be determined under the regulations adopted by 14 the authority under AS 44.88.085(g)(2)(C). 15 * Sec. 5. AS 44.88.205(b) is amended to read: 16 (b) To further ensure effective budgetary decision making by the legislature, 17 the authority shall 18 (1) annually review the authority's assets to determine whether assets 19 of the authority exceed an amount required to fulfill the purposes of the authority as 20 defined in this chapter; in making its review, [THE MEMBERS OF] the authority shall 21 determine whether, and to what extent, assets in excess of the amount required to 22 fulfill the purposes of the authority during at least the next fiscal year are available 23 without 24 (A) breaching any agreement entered into by the authority; 25 (B) materially impairing the operations or financial integrity of 26 the authority; or 27 (C) materially affecting the ability of the authority to fulfill the 28 authority's purposes set out in AS 44.88.070; and 29 (2) present to the legislature by January 10 of each year a complete 30 accounting of all assets of the authority and a report of the review and determination 31 made under (1) of this subsection; the accounting shall be audited by the auditor who
01 conducts the audit required by AS 44.88.200 and must include a full description of all 02 loan interest and principal payments and program receipts, including 03 (A) loan commitment fees received by or accrued to the 04 authority during the preceding fiscal year; [,] and 05 (B) all income earned on assets of the authority during that 06 period. 07 * Sec. 6. AS 44.88.500(a) is amended to read: 08 (a) [THE BUSINESS ASSISTANCE FUND IS ESTABLISHED IN THE 09 AUTHORITY FROM MONEY IN THE AUTHORITY'S RESERVES DESIGNATED 10 BY THE AUTHORITY FOR THE PURPOSE.] Subject to the requirements of 11 AS 44.88.500 - 44.88.599, the authority may [USE MONEY IN THE FUND] 12 (1) [TO] guarantee new business assistance loans; and 13 (2) [TO] guarantee new business assistance loans made to refinance 14 existing loans. 15 * Sec. 7. AS 44.88.530 is amended to read: 16 Sec. 44.88.530. APPLICABILITY OF PROVISIONS. AS 44.88.535 - 17 44.88.560 apply to 18 [(1)] new loan guarantees and refinancing guarantees under 19 AS 44.88.500 [AS 44.88.500(a)(1); AND 20 (2) DEBT REFINANCING GUARANTEES UNDER 21 AS 44.88.500(a)(2)]. 22 * Sec. 8. AS 44.88.535 is amended to read: 23 Sec. 44.88.535. CONDITIONS OF LOAN GUARANTEE. (a) The authority 24 may guarantee a loan under AS 44.88.500 - 44.88.599 if the 25 (1) loan 26 (A) is commercially reasonable; 27 (B) contains amortization provisions satisfactory to the 28 authority; 29 (C) is secured by adequate collateral; however, the authority 30 may waive on a case-by-case basis the requirement of collateral for a loan 31 guarantee of $100,000 [$75,000] or less for which the proposed loan
01 amortization period does not exceed five years, but the ability to waive the 02 requirement of this subparagraph or the grant of a waiver does not prevent the 03 financial institution that holds the loan guaranteed by the authority from 04 requiring reasonable collateral for the loan; 05 (2) net cash flow from the borrower provides adequate coverage for the 06 debt service on the loan; 07 (3) term of the loan does not exceed 20 years; 08 (4) loan is originated with and serviced by a state chartered or federally 09 chartered financial institution; 10 (5) portion of the loan not guaranteed by the authority is held by the 11 originating financial institution or another [FINANCIAL] institution approved by the 12 authority; 13 (6) proceeds of the loan will be used [IS MADE] to benefit a business 14 conducted in the [WITH A MAJORITY INTEREST HELD BY] state [RESIDENTS]; 15 and 16 (7) loan guarantee provides a benefit to the borrower. 17 (b) The authority may provide a guarantee [FROM THE FUND 18 (1)] of 80 percent of a loan [OF $50,000 OR LESS] that qualifies under 19 AS 44.88.500 - 44.88.599. The [; 20 (2) FOR UP TO 80 PERCENT OF A LOAN OF MORE THAN 21 $50,000 THAT QUALIFIES UNDER AS 44.88.500 - 44.88.599; THE] ratio of the 22 guarantee to the outstanding principal of the loan may not increase over the term of 23 the loan. 24 (c) The authority may [NOT] guarantee the payment of interest on the 25 guaranteed portion of a loan for the time and in the manner established by the 26 authority by regulation. 27 * Sec. 9. AS 44.88.540 is amended to read: 28 Sec. 44.88.540. LIMITATIONS OF GUARANTEES [FROM THE FUND]. 29 The authority may not issue a total of more than [GUARANTEE] 30 (1) [A TOTAL OF MORE THAN] $50,000,000 of loan guarantees 31 [LOANS];
01 (2) [MORE THAN] $25,000,000 of loan guarantees [LOANS] in 02 which the amount of the loan guarantee exceeds $500,000. 03 * Sec. 10. AS 44.88.550(a) is amended to read: 04 (a) The maximum interest rate that may be charged by a financial 05 institution on a loan guaranteed by the authority is two and three-quarters percentage 06 points above the prime rate. 07 * Sec. 11. AS 44.88.560 is amended to read: 08 Sec. 44.88.560. POWERS OF THE AUTHORITY. The authority may 09 (1) adopt regulations to implement AS 44.88.500 - 44.88.599; 10 (2) establish terms and conditions for loan guarantees and refinancing 11 agreements subject to the requirements of AS 44.88.500 - 44.88.599; 12 (3) make and execute contracts and other instruments to implement 13 AS 44.88.500 - 44.88.599; 14 (4) charge 15 (A) one percent of the amount guaranteed for the service it 16 provides under AS 44.88.500 - 44.88.599; and 17 (B) any other reasonable fee that the authority may establish by 18 regulation; 19 (5) acquire real or personal property by purchase, transfer, or 20 foreclosure when the acquisition is necessary to protect the authority's [AN] interest 21 [IN THE FUND]; 22 (6) exercise any other power necessary to implement AS 44.88.500 - 23 44.88.599; and 24 (7) to the extent the authority considers it to be in its best interest to 25 do so, use money [IN THE BUSINESS ASSISTANCE FUND] to pay expenses 26 relating to the liquidation of collateral securing loans guaranteed by the authority 27 [BUSINESS ASSISTANCE FUND]. 28 * Sec. 12. AS 44.88.900(3) is amended to read: 29 (3) "development project" has the meaning given to "project" in (9)(A) 30 and (D) - (F) [, (D), AND (E)] of this section; 31 * Sec. 13. AS 44.88.900(7) is repealed and reenacted to read:
01 (7) "loan participation" means the purchase of a portion of a loan from 02 a financial institution if the financial institution has obtained a commitment from the 03 authority to purchase the portion of that loan before the financial institution has 04 disbursed money as part of the loan to the borrower; 05 * Sec. 14. AS 44.88.900(9) is amended to read: 06 (9) "project" means 07 (A) a plant or facility used or intended for use in connection 08 with making, processing, preparing, transporting, or producing in any manner, 09 goods, products, or substances of any kind or nature or in connection with 10 developing or utilizing a natural resource, or extracting, smelting, transporting, 11 converting, assembling, or producing in any manner, minerals, raw materials, 12 chemicals, compounds, alloys, fibers, commodities and materials, products, or 13 substances of any kind or nature; 14 (B) a plant or facility used or intended for use in connection 15 with a business enterprise; 16 (C) commercial activity by a business [SMALL] enterprise; 17 (D) a plant or facility demonstrating technological advances of 18 new methods and procedures and prototype commercial applications for the 19 exploration, development, production, transportation, conversion, and use of 20 energy resources; 21 (E) infrastructure for a new tourism destination facility or for 22 the expansion of a tourism destination facility; 23 (F) a plant or facility, other than a plant or facility described in 24 (D) of this paragraph, for the generation, transmission, development, 25 transportation, conversion, or use of energy resources; 26 * Sec. 15. AS 44.88.500(b), 44.88.542, 44.88.599(1), and 44.88.900(14) are repealed. 27 * Sec. 16. The following are repealed: 28 (1) Sections 1 and 2, ch. 27, SLA 1993; and 29 (2) Section 4, ch. 162, SLA 1988, as amended by sec. 4, ch. 25, SLA 1991, 30 as amended by sec. 4, ch. 27, SLA 1993. 31 * Sec. 17. (a) The Alaska Industrial Development and Export Authority (AIDEA) may
01 issue bonds to finance the expansion, improvement, and modification of the existing port 02 facilities owned by AIDEA with respect to the DeLong Mountain transportation system and 03 to finance the construction of new facilities to be owned by AIDEA related to the DeLong 04 Mountain transportation system, or may finance these projects by other means available to 05 AIDEA. The principal amount of the bonds and other financing provided by AIDEA may not 06 exceed $60,000,000. 07 (b) Subsection (a) of this section constitutes the legislative approval required by 08 AS 44.88.095(g). 09 * Sec. 18. (a) Upon approval of the Alaska Industrial Development and Export Authority 10 (AIDEA), AIDEA may acquire the Snettisham hydroelectric project and related assets from 11 the Alaska Power Administration. 12 (b) AIDEA may issue bonds to finance the acquisition of the Snettisham hydroelectric 13 project and related assets, or may finance the acquisition by other means available to AIDEA. 14 The principal amount of the bonds and other financing provided by AIDEA to finance the 15 acquisition of the Snettisham hydroelectric project may not exceed $100,000,000. 16 (c) To secure bonds issued under (b) of this section, AIDEA may establish a capital 17 reserve fund with respect to those bonds under AS 44.88.105. If AIDEA establishes a capital 18 reserve fund as provided in this subsection, the executive director of AIDEA shall annually, 19 no later than January 2 of each year, certify in writing to the governor and the legislature the 20 amount, if any, required to restore the capital reserve fund to the capital reserve fund 21 requirement as defined in AS 44.88.105(h). The legislature may appropriate to AIDEA the 22 amount so certified by the executive director of AIDEA. AIDEA shall deposit the amounts 23 appropriated under this subsection during a fiscal year in the capital reserve fund. Nothing 24 in this section creates a debt or liability of the state. 25 (d) Subsection (b) of this section grants the legislative approval required by 26 AS 44.88.095(g). 27 * Sec. 19. This Act takes effect immediately under AS 01.10.070(c).