SCS CSHB 526(TRA): "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."
00SENATE CS FOR CS FOR HOUSE BILL NO. 526(TRA) 01 "An Act relating to the financing authority, programs, operations, and projects 02 of the Alaska Industrial Development and Export Authority; providing an 03 exemption from the procurement code for certain projects of the authority; and 04 providing 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 made with the developer of an integrated transportation and port facility 09 owned by the authority. 10 * Sec. 2. AS 44.88 is amended by adding a new section to article 3 to read: 11 Sec. 44.88.088. PAYMENT OF DIVIDEND TO STATE. The authority shall 12 adopt a policy for the payment of a portion of the unrestricted net income of the 13 authority to the general fund as a dividend each fiscal year. The amount of the 14 dividend for a fiscal year may not be less than 40 percent of the net income of the
01 authority for that fiscal year, unless that amount exceeds the total unrestricted net 02 income of the authority for that year, in which case, the amount of the dividend equals 03 the total unrestricted net income of the authority for that fiscal year. The dividend for 04 a fiscal year shall be paid before the end of the immediately following fiscal year. For 05 purposes of applying this section, income of the authority is "net income" or 06 "unrestricted net income" based upon how the income is treated in the latest audited 07 financial statement of the authority. 08 * Sec. 3. AS 44.88.095(g) is amended to read: 09 (g) Before July 1, 1998, the authority may issue bonds in an amount 10 greater than $10,000,000 to assist in the financing of a development project under 11 AS 44.88.172 - 44.88.177 only with legislative approval. Beginning July 1, 1998, 12 and thereafter, without [WITHOUT] prior legislative approval, the authority may not 13 issue bonds, except refunding bonds. 14 * Sec. 4. AS 44.88.159(a) is amended to read: 15 (a) The interest rate on a loan participation purchased [FINANCED] from 16 the proceeds of tax-exempt bonds or expected by the authority to be purchased 17 [FINANCED] from the proceeds of tax-exempt bonds is equal to the cost of funds to 18 the authority. In this subsection "cost of funds" means the true interest cost expressed 19 as a rate on tax-exempt bonds of the authority plus an additional percentage as 20 determined by the authority to represent the allocable expenses of operation, costs of 21 issuance, and loan servicing. 22 * Sec. 5. AS 44.88.159(b) is amended to read: 23 (b) The interest rate on a loan participation purchased [FINANCED] from 24 the proceeds of taxable bonds or expected by the authority to be purchased 25 [FINANCED] from the proceeds of taxable bonds is equal to the cost of funds to the 26 authority. In this subsection "cost of funds" means the true interest cost expressed as 27 a rate on taxable bonds, plus an additional percentage as determined by the authority 28 to represent the allocable expenses of operation, costs of issuance, and loan servicing 29 costs. 30 * Sec. 6. AS 44.88.159(e) is amended to read: 31 (e) The interest rate on a loan participation purchased [FINANCED] directly
01 from the assets of the authority shall be determined under the regulations adopted by 02 the authority under AS 44.88.085(g)(2)(C). However, the interest rate on a loan 03 participation purchased from assets of the authority may not be less than the rate 04 determined 05 (1) under (a) of this section if the project is of a type that could be 06 funded with tax-exempt bonds; or 07 (2) under (b) of this section if the project is of a type that could not 08 be funded with tax-exempt bonds. 09 * Sec. 7. AS 44.88.205(b) is amended to read: 10 (b) To further ensure effective budgetary decision making by the legislature, 11 the authority shall 12 (1) annually review the authority's assets to determine whether assets 13 of the authority exceed an amount required to fulfill the purposes of the authority as 14 defined in this chapter; in making its review, [THE MEMBERS OF] the authority shall 15 determine whether, and to what extent, assets in excess of the amount required to 16 fulfill the purposes of the authority during at least the next fiscal year are available 17 without 18 (A) breaching any agreement entered into by the authority; 19 (B) materially impairing the operations or financial integrity of 20 the authority; or 21 (C) materially affecting the ability of the authority to fulfill the 22 authority's purposes set out in AS 44.88.070; and 23 (2) make available [PRESENT] to the legislature by January 10 of 24 each year a complete accounting of all assets of the authority and a report of the 25 review and determination made under (1) of this subsection; the accounting shall be 26 audited by the auditor who conducts the audit required by AS 44.88.200 and must 27 include a full description of all loan interest and principal payments and program 28 receipts, including 29 (A) loan commitment fees received by or accrued to the 30 authority during the preceding fiscal year; [,] and 31 (B) all income earned on assets of the authority during that
01 period. 02 * Sec. 8. AS 44.88.500(a) is amended to read: 03 (a) [THE BUSINESS ASSISTANCE FUND IS ESTABLISHED IN THE 04 AUTHORITY FROM MONEY IN THE AUTHORITY'S RESERVES DESIGNATED 05 BY THE AUTHORITY FOR THE PURPOSE.] Subject to the requirements of 06 AS 44.88.500 - 44.88.599, the authority may [USE MONEY IN THE FUND] 07 (1) [TO] guarantee new business assistance loans; and 08 (2) [TO] guarantee new business assistance loans made to refinance 09 existing loans. 10 * Sec. 9. AS 44.88.530 is amended to read: 11 Sec. 44.88.530. APPLICABILITY OF PROVISIONS. AS 44.88.535 - 12 44.88.560 apply to 13 [(1)] new loan guarantees and refinancing guarantees under 14 AS 44.88.500 [AS 44.88.500(a)(1); AND 15 (2) DEBT REFINANCING GUARANTEES UNDER 16 AS 44.88.500(a)(2)]. 17 * Sec. 10. AS 44.88.535 is amended to read: 18 Sec. 44.88.535. CONDITIONS OF LOAN GUARANTEE. (a) The authority 19 may guarantee a loan under AS 44.88.500 - 44.88.599 if the 20 (1) loan 21 (A) is commercially reasonable; 22 (B) contains amortization provisions satisfactory to the 23 authority; 24 (C) is secured by adequate collateral; however, the authority 25 may waive on a case-by-case basis the requirement of collateral for a loan 26 guarantee of $100,000 [$75,000] or less for which the proposed loan 27 amortization period does not exceed five years, but the ability to waive the 28 requirement of this subparagraph or the grant of a waiver does not prevent the 29 financial institution that holds the loan guaranteed by the authority from 30 requiring reasonable collateral for the loan; 31 (2) net cash flow from the borrower provides adequate coverage for the
01 debt service on the loan; 02 (3) term of the loan does not exceed 20 years; 03 (4) loan is originated with and serviced by a state chartered or federally 04 chartered financial institution; 05 (5) portion of the loan not guaranteed by the authority is held by the 06 originating financial institution or another [FINANCIAL] institution approved by the 07 authority; 08 (6) proceeds of the loan will be used [IS MADE] to benefit a business 09 conducted in the [WITH A MAJORITY INTEREST HELD BY] state [RESIDENTS]; 10 and 11 (7) loan guarantee provides a benefit to the borrower. 12 (b) The authority may provide a guarantee [FROM THE FUND 13 (1)] of up to 80 percent of a loan [OF $50,000 OR LESS] that qualifies 14 under AS 44.88.500 - 44.88.599. The [; 15 (2) FOR UP TO 80 PERCENT OF A LOAN OF MORE THAN 16 $50,000 THAT QUALIFIES UNDER AS 44.88.500 - 44.88.599; THE] ratio of the 17 guarantee to the outstanding principal of the loan may not increase over the term of 18 the loan. 19 (c) The authority may [NOT] guarantee the payment of interest on the 20 guaranteed portion of a loan in the manner established by the authority by 21 regulation and for a period of time not to exceed 90 days. 22 * Sec. 11. AS 44.88.540 is amended to read: 23 Sec. 44.88.540. LIMITATIONS OF GUARANTEES [FROM THE FUND]. 24 The authority may not issue a total of more than [GUARANTEE] 25 (1) [A TOTAL OF MORE THAN] $50,000,000 of loan guarantees 26 [LOANS]; 27 (2) [MORE THAN] $25,000,000 of loan guarantees [LOANS] in 28 which the amount of the loan guarantee exceeds $500,000. 29 * Sec. 12. AS 44.88.550(a) is amended to read: 30 (a) The maximum interest rate that may be charged by a financial 31 institution on a loan guaranteed by the authority is two and three-quarters percentage
01 points above the prime rate. 02 * Sec. 13. AS 44.88.560 is amended to read: 03 Sec. 44.88.560. POWERS OF THE AUTHORITY. The authority may 04 (1) adopt regulations to implement AS 44.88.500 - 44.88.599; 05 (2) establish terms and conditions for loan guarantees and refinancing 06 agreements subject to the requirements of AS 44.88.500 - 44.88.599; 07 (3) make and execute contracts and other instruments to implement 08 AS 44.88.500 - 44.88.599; 09 (4) charge 10 (A) one percent of the amount guaranteed for the service it 11 provides under AS 44.88.500 - 44.88.599; and 12 (B) any other reasonable fee that the authority may establish by 13 regulation; 14 (5) acquire real or personal property by purchase, transfer, or 15 foreclosure when the acquisition is necessary to protect the authority's [AN] interest 16 in a loan or a loan guarantee [THE FUND]; 17 (6) exercise any other power necessary to implement AS 44.88.500 - 18 44.88.599; and 19 (7) to the extent the authority considers it to be in its best interest to 20 do so, use money [IN THE BUSINESS ASSISTANCE FUND] to pay expenses 21 relating to the liquidation of collateral securing loans guaranteed by the authority 22 [BUSINESS ASSISTANCE FUND]. 23 * Sec. 14. AS 44.88.599(2) is amended to read: 24 (2) "prime rate" means the lowest United States money center prime 25 rate of interest that is published in the Wall Street Journal. 26 * Sec. 15. AS 44.88.900(3) is amended to read: 27 (3) "development project" has the meaning given to "project" in (9)(A) 28 and (D) - (F) [, (D), AND (E)] of this section; 29 * Sec. 16. AS 44.88.900(7) is repealed and reenacted to read: 30 (7) "loan participation" means the purchase of a portion of a loan from 31 a financial institution if the financial institution has obtained a commitment from the
01 authority to purchase the portion of that loan before the financial institution has 02 disbursed money as part of the loan to the borrower; 03 * Sec. 17. AS 44.88.900(9) is amended to read: 04 (9) "project" means 05 (A) a plant or facility used or intended for use in connection 06 with making, processing, preparing, transporting, or producing in any manner, 07 goods, products, or substances of any kind or nature or in connection with 08 developing or utilizing a natural resource, or extracting, smelting, transporting, 09 converting, assembling, or producing in any manner, minerals, raw materials, 10 chemicals, compounds, alloys, fibers, commodities and materials, products, or 11 substances of any kind or nature; 12 (B) a plant or facility used or intended for use in connection 13 with a business enterprise; 14 (C) commercial activity by a business [SMALL] enterprise; 15 (D) a plant or facility demonstrating technological advances of 16 new methods and procedures and prototype commercial applications for the 17 exploration, development, production, transportation, conversion, and use of 18 energy resources; 19 (E) infrastructure for a new tourism destination facility or for 20 the expansion of a tourism destination facility; 21 (F) a plant or facility, other than a plant or facility described in 22 (D) of this paragraph, for the generation, transmission, development, 23 transportation, conversion, or use of energy resources; 24 * Sec. 18. Section 2(a), ch. 27, SLA 1993 is amended to read: 25 Sec. 2. (a) The Alaska Industrial Development and Export Authority may 26 issue bonds to finance the acquisition, design, and construction of a port facility and 27 related loading and conveyor equipment related to the development and operation of 28 a bulk commodity loading and shipping terminal. The terminal may be located 29 anywhere within Cook Inlet. The facility will be [DIRECT REDUCTION IRON 30 ORE PROCESSING FACILITY FOR USE BY THE MIDREX CORPORATION, TO 31 BE LOCATED AT POINT MACKENZIE AND] owned by the authority. The
01 principal amount of the bonds may not exceed $50,000,000. 02 * Sec. 19. Section 4, ch. 162, SLA 1988, as amended by sec. 4, ch. 25, SLA 1991, and 03 sec. 4, ch. 27, SLA 1993, is amended to read: 04 Sec. 4. AS 44.88.500 - 44.88.599 are repealed July 1, 1998 . 05 * Sec. 20. AS 44.88.542, 44.88.599(1), and 44.88.900(14) are repealed. 06 * Sec. 21. Section 1, ch. 27, SLA 1993, is repealed. 07 * Sec. 22. TRANSITION. (a) On the effective date of this Act, assets of the business 08 assistance fund (AS 44.88.500(a)) shall be transferred to the Alaska Industrial Development 09 and Export Authority revolving fund (AS 44.88.060). 10 (b) The first dividend payment to the state under AS 44.88.088, enacted by sec. 2 of 11 this Act, is due during fiscal year 1997 based upon unrestricted net income of the Alaska 12 Industrial Development and Export Authority for fiscal year 1996. 13 * Sec. 23. (a) The Alaska Industrial Development and Export Authority (AIDEA) may 14 issue bonds to finance the expansion, improvement, and modification of the existing port 15 facilities owned by AIDEA with respect to the DeLong Mountain transportation system and 16 to finance the construction of new facilities to be owned by AIDEA related to the DeLong 17 Mountain transportation system, or may finance these projects by other means available to 18 AIDEA. The principal amount of the bonds and other financing provided by AIDEA may not 19 exceed $85,000,000. 20 (b) Before bonds or notes authorized under (a) of this section may be issued, the 21 Alaska Industrial Development and Export Authority shall comply with AS 44.88.173 and 22 shall incorporate into the final finance plan and agreement for the project the following terms 23 and conditions: 24 (1) Cominco, Ltd., is required to agree in writing that Cominco, Ltd., will pay 25 for all or a portion of the operation and maintenance of facilities constructed, expanded, 26 improved, or modified as part of the project based on the use Cominco Alaska makes of the 27 facilities compared to the use made by others; 28 (2) a toll schedule, which may include adjustments related to the price of zinc, 29 is established for use of facilities constructed, expanded, improved, or modified as part of the 30 project that 31 (A) ensures full repayment of and a reasonable return on the state's
01 entire investment in the project; 02 (B) ensures an additional return on AIDEA's investment made under 03 this section that is commensurate with the return earned on the original DeLong 04 Mountain Transportation System project and the risks assumed by AIDEA; 05 (C) guarantees equitable access to the facilities by all users and 06 potential users, including access to private property and access for travel necessary and 07 related to resource exploration and development for which valid permits have been 08 obtained and travel in support of resource exploration and development; 09 (3) reasonable access to the port and road is guaranteed to all users and 10 potential users. 11 (c) Subsection (a) of this section constitutes the legislative approval required by 12 AS 44.88.095(g). 13 * Sec. 24. (a) Upon approval of the Alaska Industrial Development and Export Authority 14 (AIDEA), AIDEA may acquire the Snettisham hydroelectric project and related assets from 15 the Alaska Power Administration. 16 (b) AIDEA may issue bonds to finance the acquisition of the Snettisham hydroelectric 17 project and related assets, or may finance the acquisition by other means available to AIDEA. 18 The principal amount of the bonds and other financing provided by AIDEA to finance the 19 acquisition of the Snettisham hydroelectric project may not exceed $100,000,000. 20 (c) To secure bonds issued under (b) of this section, AIDEA may establish a capital 21 reserve fund with respect to those bonds under AS 44.88.105. If AIDEA establishes a capital 22 reserve fund as provided in this subsection, the executive director of AIDEA shall annually, 23 no later than January 2 of each year, certify in writing to the governor and the legislature the 24 amount, if any, required to restore the capital reserve fund to the capital reserve fund 25 requirement as defined in AS 44.88.105(h). The legislature may appropriate to AIDEA the 26 amount so certified by the executive director of AIDEA. AIDEA shall deposit the amounts 27 appropriated under this subsection during a fiscal year in the capital reserve fund. Nothing 28 in this section creates a debt or liability of the state. 29 (d) Subsection (b) of this section grants the legislative approval required by 30 AS 44.88.095(g). 31 * Sec. 25. This Act takes effect immediately under AS 01.10.070(c).