SCS CSHB 526(FIN) AM S: "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(FIN) am S 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. FINDINGS, POLICY, AND INTENT. It is the policy and intent of the 07 legislature that the financial integrity of the Alaska Industrial Development and Export 08 Authority remain secure so the authority can continue to fulfill its vital economic development 09 mission for the state. The legislature finds that this Act fulfills this intent. 10 * Sec. 2. AS 36.30.850(b) is amended by adding a new paragraph to read: 11 (34) contracts of the Alaska Industrial Development and Export 12 Authority made with the developer of an integrated transportation and port facility 13 owned by the authority. 14 * Sec. 3. AS 44.88 is amended by adding a new section to article 3 to read:
01 Sec. 44.88.088. PAYMENT OF DIVIDEND TO STATE. (a) The authority 02 shall adopt a policy for payment of a dividend to the state each fiscal year. The 03 amount of the dividend for a fiscal year may not be less than 25 percent nor more than 04 50 percent of the net income of the authority for the base fiscal year. In no event, 05 however, shall the dividend for a fiscal year exceed the total unrestricted net income 06 of the authority for the base fiscal year. The dividend for a fiscal year shall be made 07 available by the authority before the end of that fiscal year. The authority shall notify 08 the commissioner of revenue when the dividend for a fiscal year is available for 09 appropriation. 10 (b) In this section, 11 (1) "base fiscal year" means the fiscal year ending two years before the 12 end of the fiscal year in which the payment is made; 13 (2) "net income" means the authority's net income as set out in the 14 audited financial statements of the authority for the base fiscal year; 15 (3) "unrestricted net income" means the authority's unrestricted net 16 income as set out in the audited financial statements of the authority for the base fiscal 17 year. 18 * Sec. 4. AS 44.88.095(g) is amended to read: 19 (g) Before July 1, 1998, the authority may issue bonds in an amount 20 greater than $10,000,000 to assist in the financing of a development project under 21 AS 44.88.172 - 44.88.177 only with legislative approval. Beginning July 1, 1998, 22 and thereafter, without [WITHOUT] prior legislative approval, the authority may not 23 issue bonds, except refunding bonds. 24 * Sec. 5. AS 44.88.159(a) is amended to read: 25 (a) The interest rate on a loan participation purchased [FINANCED] from 26 the proceeds of tax-exempt bonds or expected by the authority to be purchased 27 [FINANCED] from the proceeds of tax-exempt bonds is equal to the cost of funds to 28 the authority. In this subsection "cost of funds" means the true interest cost expressed 29 as a rate on tax-exempt bonds of the authority plus an additional percentage as 30 determined by the authority to represent the allocable expenses of operation, costs of 31 issuance, and loan servicing.
01 * Sec. 6. AS 44.88.159(b) is amended to read: 02 (b) The interest rate on a loan participation purchased [FINANCED] from 03 the proceeds of taxable bonds or expected by the authority to be purchased 04 [FINANCED] from the proceeds of taxable bonds is equal to the cost of funds to the 05 authority. In this subsection "cost of funds" means the true interest cost expressed as 06 a rate on taxable bonds, plus an additional percentage as determined by the authority 07 to represent the allocable expenses of operation, costs of issuance, and loan servicing 08 costs. 09 * Sec. 7. AS 44.88.159(e) is amended to read: 10 (e) The interest rate on a loan participation purchased [FINANCED] directly 11 from the assets of the authority shall be determined under the regulations adopted by 12 the authority under AS 44.88.085(g)(2)(C). However, the interest rate on a loan 13 participation purchased from assets of the authority may not be less than the rate 14 determined 15 (1) under (a) of this section if the project is of a type that could be 16 funded with tax-exempt bonds; or 17 (2) under (b) of this section if the project is of a type that could not 18 be funded with tax-exempt bonds. 19 * Sec. 8. AS 44.88.205(b) is amended to read: 20 (b) To further ensure effective budgetary decision making by the legislature, 21 the authority shall 22 (1) annually review the authority's assets to determine whether assets 23 of the authority exceed an amount required to fulfill the purposes of the authority as 24 defined in this chapter; in making its review, [THE MEMBERS OF] the authority shall 25 determine whether, and to what extent, assets in excess of the amount required to 26 fulfill the purposes of the authority during at least the next fiscal year are available 27 without 28 (A) breaching any agreement entered into by the authority; 29 (B) materially impairing the operations or financial integrity of 30 the authority; or 31 (C) materially affecting the ability of the authority to fulfill the
01 authority's purposes set out in AS 44.88.070; and 02 (2) make available [PRESENT] to the legislature by January 10 of 03 each year a complete accounting of all assets of the authority and a report of the 04 review and determination made under (1) of this subsection; the accounting shall be 05 audited by the auditor who conducts the audit required by AS 44.88.200 and must 06 include a full description of all loan interest and principal payments and program 07 receipts, including 08 (A) loan commitment fees received by or accrued to the 09 authority during the preceding fiscal year; [,] and 10 (B) all income earned on assets of the authority during that 11 period. 12 * Sec. 9. AS 44.88.500(a) is amended to read: 13 (a) [THE BUSINESS ASSISTANCE FUND IS ESTABLISHED IN THE 14 AUTHORITY FROM MONEY IN THE AUTHORITY'S RESERVES DESIGNATED 15 BY THE AUTHORITY FOR THE PURPOSE.] Subject to the requirements of 16 AS 44.88.500 - 44.88.599, the authority may [USE MONEY IN THE FUND] 17 (1) [TO] guarantee new business assistance loans; and 18 (2) [TO] guarantee new business assistance loans made to refinance 19 existing loans. 20 * Sec. 10. AS 44.88.530 is amended to read: 21 Sec. 44.88.530. APPLICABILITY OF PROVISIONS. AS 44.88.535 - 22 44.88.560 apply to 23 [(1)] new loan guarantees and refinancing guarantees under 24 AS 44.88.500 [AS 44.88.500(a)(1); AND 25 (2) DEBT REFINANCING GUARANTEES UNDER 26 AS 44.88.500(a)(2)]. 27 * Sec. 11. AS 44.88.535 is amended to read: 28 Sec. 44.88.535. CONDITIONS OF LOAN GUARANTEE. (a) The authority 29 may guarantee a loan under AS 44.88.500 - 44.88.599 if the 30 (1) loan 31 (A) is commercially reasonable;
01 (B) contains amortization provisions satisfactory to the 02 authority; 03 (C) is secured by adequate collateral; however, the authority 04 may waive on a case-by-case basis the requirement of collateral for a loan 05 guarantee of $100,000 [$75,000] or less for which the proposed loan 06 amortization period does not exceed five years, but the ability to waive the 07 requirement of this subparagraph or the grant of a waiver does not prevent the 08 financial institution that holds the loan guaranteed by the authority from 09 requiring reasonable collateral for the loan; 10 (2) net cash flow from the borrower provides adequate coverage for the 11 debt service on the loan; 12 (3) term of the loan does not exceed 20 years; 13 (4) loan is originated with and serviced by a state chartered or federally 14 chartered financial institution; 15 (5) portion of the loan not guaranteed by the authority is held by the 16 originating financial institution or another [FINANCIAL] institution approved by the 17 authority; 18 (6) loan is made to a business with a majority interest held by state 19 residents; and 20 (7) loan guarantee provides a benefit to the borrower. 21 (b) The authority may provide a guarantee [FROM THE FUND 22 (1)] of up to 80 percent of a loan [OF $50,000 OR LESS] that qualifies 23 under AS 44.88.500 - 44.88.599. The [; 24 (2) FOR UP TO 80 PERCENT OF A LOAN OF MORE THAN 25 $50,000 THAT QUALIFIES UNDER AS 44.88.500 - 44.88.599; THE] ratio of the 26 guarantee to the outstanding principal of the loan may not increase over the term of 27 the loan. 28 (c) The authority may [NOT] guarantee the payment of interest on the 29 guaranteed portion of a loan in the manner established by the authority by 30 regulation and for a period of time not to exceed 90 days. 31 * Sec. 12. AS 44.88.540 is amended to read:
01 Sec. 44.88.540. LIMITATIONS OF GUARANTEES [FROM THE FUND]. 02 The authority may not issue a total of more than [GUARANTEE] 03 (1) [A TOTAL OF MORE THAN] $50,000,000 of loan guarantees 04 [LOANS]; 05 (2) [MORE THAN] $25,000,000 of loan guarantees [LOANS] in 06 which the amount of the loan guarantee exceeds $500,000. 07 * Sec. 13. AS 44.88.550(a) is amended to read: 08 (a) The maximum interest rate that may be charged by a financial 09 institution on a loan guaranteed by the authority is two and three-quarters percentage 10 points above the prime rate. 11 * Sec. 14. AS 44.88.560 is amended to read: 12 Sec. 44.88.560. POWERS OF THE AUTHORITY. The authority may 13 (1) adopt regulations to implement AS 44.88.500 - 44.88.599; 14 (2) establish terms and conditions for loan guarantees and refinancing 15 agreements subject to the requirements of AS 44.88.500 - 44.88.599; 16 (3) make and execute contracts and other instruments to implement 17 AS 44.88.500 - 44.88.599; 18 (4) charge 19 (A) one percent of the amount guaranteed for the service it 20 provides under AS 44.88.500 - 44.88.599; and 21 (B) any other reasonable fee that the authority may establish by 22 regulation; 23 (5) acquire real or personal property by purchase, transfer, or 24 foreclosure when the acquisition is necessary to protect the authority's [AN] interest 25 in a loan or a loan guarantee [THE FUND]; 26 (6) exercise any other power necessary to implement AS 44.88.500 - 27 44.88.599; and 28 (7) to the extent the authority considers it to be in its best interest to 29 do so, use money [IN THE BUSINESS ASSISTANCE FUND] to pay expenses 30 relating to the liquidation of collateral securing loans guaranteed by the authority 31 [BUSINESS ASSISTANCE FUND].
01 * Sec. 15. AS 44.88.599(2) is amended to read: 02 (2) "prime rate" means the lowest United States money center prime 03 rate of interest that is published in the Wall Street Journal. 04 * Sec. 16. AS 44.88.900(3) is amended to read: 05 (3) "development project" has the meaning given to "project" in (9)(A) 06 and (D) - (F) [, (D), AND (E)] of this section; 07 * Sec. 17. AS 44.88.900(7) is repealed and reenacted to read: 08 (7) "loan participation" means the purchase of a portion of a loan from 09 a financial institution if the financial institution has obtained a commitment from the 10 authority to purchase the portion of that loan before the financial institution has 11 disbursed money as part of the loan to the borrower; 12 * Sec. 18. AS 44.88.900(9) is amended to read: 13 (9) "project" means 14 (A) a plant or facility used or intended for use in connection 15 with making, processing, preparing, transporting, or producing in any manner, 16 goods, products, or substances of any kind or nature or in connection with 17 developing or utilizing a natural resource, or extracting, smelting, transporting, 18 converting, assembling, or producing in any manner, minerals, raw materials, 19 chemicals, compounds, alloys, fibers, commodities and materials, products, or 20 substances of any kind or nature; 21 (B) a plant or facility used or intended for use in connection 22 with a business enterprise; 23 (C) commercial activity by a business [SMALL] enterprise; 24 (D) a plant or facility demonstrating technological advances of 25 new methods and procedures and prototype commercial applications for the 26 exploration, development, production, transportation, conversion, and use of 27 energy resources; 28 (E) infrastructure for a new tourism destination facility or for 29 the expansion of a tourism destination facility; 30 (F) a plant or facility, other than a plant or facility described in 31 (D) of this paragraph, for the generation, transmission, development,
01 transportation, conversion, or use of energy resources; 02 * Sec. 19. Section 2(a), ch. 27, SLA 1993 is amended to read: 03 Sec. 2. (a) The Alaska Industrial Development and Export Authority may 04 issue bonds to finance the acquisition, design, and construction of a port facility and 05 related loading and conveyor equipment related to the development and operation of 06 a bulk commodity loading and shipping terminal. The terminal may be located 07 anywhere within Cook Inlet. The facility will be [DIRECT REDUCTION IRON 08 ORE PROCESSING FACILITY FOR USE BY THE MIDREX CORPORATION, TO 09 BE LOCATED AT POINT MACKENZIE AND] owned by the authority. The 10 principal amount of the bonds may not exceed $50,000,000. 11 * Sec. 20. Section 4, ch. 162, SLA 1988, as amended by sec. 4, ch. 25, SLA 1991, and 12 sec. 4, ch. 27, SLA 1993, is amended to read: 13 Sec. 4. AS 44.88.500 - 44.88.599 are repealed July 1, 1998 . 14 * Sec. 21. AS 44.88.542, 44.88.599(1), and 44.88.900(14) are repealed. 15 * Sec. 22. Section 1, ch. 27, SLA 1993, is repealed. 16 * Sec. 23. TRANSITION. (a) On the effective date of this Act, assets of the business 17 assistance fund (AS 44.88.500(a)) shall be transferred to the Alaska Industrial Development 18 and Export Authority revolving fund (AS 44.88.060). 19 (b) The first dividend payment to the state under AS 44.88.088, enacted by sec. 3 of 20 this Act, shall be made available during fiscal year 1997 based upon net income and 21 unrestricted net income of the Alaska Industrial Development and Export Authority for fiscal 22 year 1995. 23 * Sec. 24. (a) The Alaska Industrial Development and Export Authority (AIDEA) may 24 issue bonds to finance the expansion, improvement, and modification of the existing port 25 facilities owned by AIDEA with respect to the DeLong Mountain transportation system and 26 to finance the construction of new facilities to be owned by AIDEA related to the DeLong 27 Mountain transportation system, or may finance these projects by other means available to 28 AIDEA. The principal amount of the bonds and other financing provided by AIDEA may not 29 exceed $85,000,000. 30 (b) Before bonds or notes authorized under (a) of this section may be issued, the 31 Alaska Industrial Development and Export Authority shall comply with AS 44.88.173 and
01 shall incorporate into the final finance plan and agreement for the project the following terms 02 and conditions: 03 (1) Cominco, Ltd., is required to agree in writing that Cominco, Ltd., will pay 04 for all or a portion of the operation and maintenance of facilities constructed, expanded, 05 improved, or modified as part of the project based on the use Cominco Alaska makes of the 06 facilities compared to the use made by others; 07 (2) a toll schedule, which may include adjustments related to the price of zinc, 08 is established for use of facilities constructed, expanded, improved, or modified as part of the 09 project that 10 (A) ensures full repayment of and a reasonable return on the state's 11 entire investment in the project; 12 (B) ensures an additional return on AIDEA's investment made under 13 this section that is commensurate with the return earned on the original DeLong 14 Mountain Transportation System project and the risks assumed by AIDEA; 15 (C) guarantees equitable access to the facilities by all users and 16 potential users, including access to private property and access for travel necessary and 17 related to resource exploration and development for which valid permits have been 18 obtained and travel in support of resource exploration and development; 19 (3) reasonable access to the port and road is guaranteed to all users and 20 potential users. 21 (c) Subsection (a) of this section constitutes the legislative approval required by 22 AS 44.88.095(g). 23 * Sec. 25. (a) Upon approval of the Alaska Industrial Development and Export Authority 24 (AIDEA), AIDEA may acquire the Snettisham hydroelectric project and related assets from 25 the Alaska Power Administration. 26 (b) AIDEA may issue bonds to finance the acquisition of the Snettisham hydroelectric 27 project and related assets, or may finance the acquisition by other means available to AIDEA. 28 The principal amount of the bonds and other financing provided by AIDEA to finance the 29 acquisition of the Snettisham hydroelectric project may not exceed $100,000,000. 30 (c) To secure bonds issued under (b) of this section, AIDEA may establish a capital 31 reserve fund with respect to those bonds under AS 44.88.105. If AIDEA establishes a capital
01 reserve fund as provided in this subsection, the executive director of AIDEA shall annually, 02 no later than January 2 of each year, certify in writing to the governor and the legislature the 03 amount, if any, required to restore the capital reserve fund to the capital reserve fund 04 requirement as defined in AS 44.88.105(h). The legislature may appropriate to AIDEA the 05 amount so certified by the executive director of AIDEA. AIDEA shall deposit the amounts 06 appropriated under this subsection during a fiscal year in the capital reserve fund. Nothing 07 in this section creates a debt or liability of the state. 08 (d) Subsection (b) of this section grants the legislative approval required by 09 AS 44.88.095(g). 10 * Sec. 26. This Act takes effect immediately under AS 01.10.070(c).